WASHINGTON, D.C. — U.S. Senator Angus King (I-ME) is co-sponsoring bipartisan legislation that would allow workers to use their tax-free educational savings plans to pay for credentialing and training. The Freedom to Invest in Tomorrow’s Workforce Act would change existing policy and allow tax-free 529 plan education funds to pay for the expenses of a post-secondary credential, such as a commercial driver’s license. The bill also grants the Department of Labor authority to determine what activities count as valid credentialing to help determine whether or not a 529 plan can be used tax-free.

A 529 plan is a tax-advantaged savings account for educational expenses such as tuition, textbooks, living costs and meal plans. Distributions from 529 plans are tax-free as long as they pay for qualified educational expenses, so the plans work well for students studying at a two- or four-year college. However, under current law, students studying a vocation or trade that requires credentialing can use 529 plans but must pay federal income taxes on all 529 plan distributions that pay for credentialing.

“Financial barriers are one of the biggest challenges people face when seeking an education,” said Senator King. “With expenses adding up quickly, 529 plans are a fantastic way for future professionals to invest in their growth and not incur more debt. The bipartisan Freedom to Invest in Tomorrow’s Workforce Act will keep money in the pockets of hard-working Maine people while also making it more cost efficient for the next generation of highly-skilled trade workers to access the valuable training they need to succeed.”

Previously, Senator King introduced the Developing Responsible Individuals for a Vibrant Economy (DRIVE-Safe) Act, a bipartisan bill that aims to address the driver shortage in the trucking and logistics industry while enhancing safety training and job opportunities for young truckers. He also recently introduced the Right Start to Child Care and Education Act, which would help cut child care costs by increasing the amount of tax-free money Maine families can save through dedicated flexible spending accounts, as well as expanding employer-provided and small business child care credits.

Additional sponsors of the bill are Senators Mike Braun (R-IN), Susan Collins (R-ME), Tammy Duckworth (D-IL), Joni Ernst (R-IA),  John Fetterman (D-PA), Martin Heinrich (D-NM), John Hickenlooper (D-CO), Mazie Hirono (D-HI), Cindy Hyde-Smith (R-MS), Mark Kelly (D-AZ), Amy Klobuchar (D-MN), James Lankford (R-OK), Joe Manchin (D-WV), Roger Marshall (R-KS), Eric Schmitt (R-MO), Tommy Tuberville (R-AL) and Peter Welch (D-VT).

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