A new bill introduced by U.S. Sen. John Kennedy will help ease the financial burden for parents to afford the cost of tuition for K-12 students.

The Inflation-Adjusted Education Investment Act was introduced on Thursday and if passed will permanently increase the withdrawal cap for a 529 plan from $10,000 to $12,000.

A 529 plan is an investment account, similar to that of a Roth IRA, that offers tax benefits for education related expenses.

Tax benefits for such accounts were introduced with the 2017 Tax Cuts and Jobs Acts. Parents are able to withdraw funds out of a 529 plan for qualified education expenses – tuition, fees, room and board, books, supplies and special needs services – tax-free. The benefits are applicable to private and religious schooling.

This increase adjusts for the ever-rising inflation. “Parents know their kids best and have the right to choose the educational path that’s best for their kids,” said Kennedy. “Now that raging inflation is making alternatives to government school less accessible, I’m introducing a bill to help families afford more private education options.”

At the start of 2023, $11,436.95 had the same buying power as $10,000. It is anticipated that this inflation will increase by the end of the year. To account for this, the bill would also make the new cap of $12,000 adjustable for any future inflation, beginning in 2024.