Sandra Vasquez

What families need to know for 2025 enrollment, FAFSA season, and benefit elections.

Fall is the perfect season to consider and evaluate additional tax deductions and how they may impact your tax liability before the end of the year. Contributions to HSAs, FSAs, dependent care, and 529s have been expanded and may be the new option for you, to include in your tax planning.  

It is important to remember that on November 1st, what is known as “the open enrollment period” for health insurance and changes to an existing insurance plan begins. This period ends on January 15th of the following year.  

Along with health insurance enrollment and or changes to an existing insurance plan, a Health Savings Account (HSA) may be a benefit for many taxpayers this year. HSAs provide triple tax advantages. The contributions are pre-tax via payroll deduction, or tax-deductible if after-tax contribution, their earnings are tax-free, and the withdrawals are non-taxable for qualified medical expenses. The rules to open and maintain HSA accounts were also expanded by the One Big Beautiful Bill Act (OBBBA) to include Bronze and Catastrophic health insurance plans, previously excluded in the High-Deductible Health Plan (HDHPs) definition and requirements. 

During the following months, many students and families will be submitting college, FAFSA applications, applying for scholarships, grants, loans and other options to pay for higher education. 

Many taxpayers will be using 529 funds to pay for education expenses. We have discussed these accounts in previous articles, but it is important to mention that in Montana, the contributions are tax deductible up to $6000 (if married filing jointly). The earnings and withdrawals are nontaxable when used for qualified educational expenses.  

Under the One Big Beautiful Bill Act (OBBBA), the list of qualified educational expenses incorporated the following: 

• Curriculum materials, books, online educational materials, tutoring, standardized test fees, dual enrollment fees, educational therapies for students with disabilities, and postsecondary credentialing expenses, like continuing education to maintain a credential.  

• The annual withdrawal limit for k-12 expenses increased from $10,000 to $20,000 

So, if you are on a higher income bracket, wondering how to lower your adjusted gross income (AGI) for the current year, to qualify for scholarships and financial aid, consider opening, contributing, and/or maximizing your contributions to HAS accounts, and Flexible Spending Accounts (FSAs), which are also pre-tax. Additionally, if you typically pay more taxes at the state level than the federal government, consider opening and contributing to a 529 account for your child, or grandchild. Remember that under the new rules the child does not need to attend a four-year university, so long as he or she is enrolled in a qualified educational or vocational school, most of the expenses can be covered by these accounts.  

These are just a few highlights to consider this fall season. Swanson Agency is happy to provide additional information, discuss your specific situation, and design the best tax plan for you and your loved ones. Reach out to us before the end of the year.