H.R. 2543

119 HR 2543 IH: Tax-Free Pell Grant Act
 U.S. House of Representatives
 2025-04-01
 text/xml
 EN
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 I  119th CONGRESS  1st Session  H. R. 2543  IN THE HOUSE OF REPRESENTATIVES   April 1, 2025   Mr. Doggett  (for himself,  Mr. Kelly of Pennsylvania ,  Mr. Davis of Illinois , and  Mr. Feenstra ) introduced the following bill; which was referred to the  Committee on Ways and Means    A BILL
To amend the Internal Revenue Code of 1986 to expand the exclusion of Pell Grants from gross income, and for other purposes.
1.
Short title
This Act may be cited as the   Tax-Free Pell Grant Act  .
2.
Expansion of Pell Grant exclusion from gross income
(a)
In general
 Section 117(b)(1)  of the Internal Revenue Code of 1986 is amended by striking  received by an individual  and all that follows and inserting
received by an individual—
(A)
as a scholarship or fellowship grant to the extent the individual establishes that, in accordance with the conditions of the grant, such amount was used for qualified tuition and related expenses, or
(B)
as a Federal Pell Grant under section 401 of the Higher Education Act of 1965 (as in effect on the date of the enactment of the  Tax-Free Pell Grant Act ).
 .
(b)
No adjustment under American Opportunity and Lifetime Learning Credits
Section 25A(g)(2)(A) of such Code is amended by striking  a qualified scholarship which  and inserting  a qualified scholarship which is described in section 117(b)(1)(A) and which .
(c)
Effective date
The amendments made by this section shall apply to taxable years beginning after December 31, 2024.
3.
Expansion of American Opportunity and Lifetime Learning Credits
(a)
In general
 Section 25A  of the Internal Revenue Code of 1986 is amended—
(1)
in subsection (f)(1)—
(A)
in subparagraph (A), by striking  tuition and fees  and inserting  tuition, fees, computer or peripheral equipment, child and dependent care expenses, and course materials ,
(B)
by striking subparagraph (D), and
(C)
by adding at the end the following new subparagraphs:
(D)
Child and dependent care expenses
For purposes of this paragraph—
(i)
In general
The term  child and dependent care expenses  means amounts paid for the following expenses, but only if such expenses are incurred to enable the taxpayer to be enrolled in an eligible educational institution for any period for which there are 1 or more qualifying individuals with respect to the taxpayer:
(I)
expenses for household services, and
(II)
expenses for the care of a qualifying individual.
  Such term shall not include any amount paid for services outside the taxpayer’s household at a camp where the qualifying individual stays overnight.
(ii)
Qualifying individual
The term  qualifying individual  has the meaning given such term in section 21(b)(1).
(iii)
Exception, dependent care centers
Rules similar to the rules of subparagraphs (B), (C), and (D) of section 21(b)(2) shall apply, except the term  child and dependent care expenses  shall be substituted for the term  employment-related expenses  each place it appears in such subparagraphs.
(E)
Child and dependent care expenses only qualified expenses when claimed by eligible student
Amounts paid for an expense described in subparagraph (E) may not be taken into account under this paragraph for a taxable year unless required for the enrollment or attendance of an individual described in subparagraph (A)(i) or subparagraph (A)(ii).
(F)
Computer or peripheral equipment
(i)
Defined
For purposes of this paragraph, the term  computer or peripheral equipment  means expenses for the purchase of computer or peripheral equipment (as defined in section 168(i)(2)(B), computer software (as defined in section 197(e)(3)(B))), or internet access and related services, if such equipment, software, or services are to be used primarily by the individual during any of the years the individual is enrolled at an eligible educational institution.
(ii)
Dollar limit on amount creditable
The aggregate of the amounts paid or expenses incurred for computer or peripheral equipment which may be taken into account under this paragraph for a taxable year by the taxpayer shall not exceed $1,000.
 , and
(2)
in subsection (g)(5)—
(A)
in the heading, by adding
or credit   at the end, and
(B)
by inserting  or credit  after  a deduction .
(b)
Effective date
The amendments made by this section shall apply to taxable years beginning after December 31, 2024.