Sponsors (3)
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Adds a new subsection (d) to 26 U.S.C. §103 that conditions the tax-exempt treatment of interest on State or local bonds on issuance by a 'minimum school choice State' or its political subdivisions; establishes partial exclusion rules for states meeting higher thresholds; defines 'minimum school choice State', 'school choice program', and 'specified school age child'.
Adds a new paragraph (3) to section 2503(b) providing that the per-donee annual gift tax exclusion amount is increased by gifts made to qualified tuition programs (section 529) with respect to which the donee is the designated beneficiary, not to exceed $20,000.
Amends 26 U.S.C. 529(e)(3)(A) by striking the flush matter at the end and inserting the text " 0,000".
Read twice and referred to the Committee on Finance.
Introduced January 29, 2025 by Mike Lee · Last progress January 29, 2025
Allows many K–12 education costs to be paid from 529 college-savings accounts as qualified distributions, creates a special gift-tax adjustment to let larger 529 contributions count toward the annual exclusion, and conditions federal tax-exempt status for state and local bonds on states meeting new “minimum school choice” criteria. Some changes take effect immediately for account distributions; other tax-code changes and the new gift-tax treatment start for taxable years or gifts after December 31, 2026; the bond rule applies to bonds issued after the law is enacted.
ACE Act
Student Empowerment Act
Read twice and referred to the Committee on Finance.
Introduced in Senate