H.R. 2543
119th CONGRESS 1st Session
To amend the Internal Revenue Code of 1986 to expand the exclusion of Pell Grants from gross income, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES · April 1, 2025 · Sponsor: Mr. Doggett · Committee: Committee on Ways and Means
Table of contents
SEC. 1. Short title
- This Act may be cited as the Tax-Free Pell Grant Act.
SEC. 2. Expansion of Pell Grant exclusion from gross income
- (a) In general
- of the Internal Revenue Code of 1986 is amended by striking and all that follows and inserting Section 117(b)(1)
- received by an individual—
- 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
- 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 ).
- received by an individual—
- of the Internal Revenue Code of 1986 is amended by striking and all that follows and inserting Section 117(b)(1)
- (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 whichand insertinga qualified scholarship which is described in section 117(b)(1)(A) and which.
- Section 25A(g)(2)(A) of such Code is amended by striking
- (c) Effective date
- The amendments made by this section shall apply to taxable years beginning after December 31, 2024.
SEC. 3. Expansion of American Opportunity and Lifetime Learning Credits
- (a) In general
- of the Internal Revenue Code of 1986 is amended— Section 25A
- in subsection (f)(1)—
- in subparagraph (A), by striking
tuition and feesand insertingtuition, fees, computer or peripheral equipment, child and dependent care expenses, and course materials, - by striking subparagraph (D), and
- by adding at the end the following new subparagraphs:
- (D) Child and dependent care expenses
- For purposes of this paragraph—
- (i) The term 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:
child and dependent care expenses - expenses for household services, and
- 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) The term has the meaning given such term in section 21(b)(1).
qualifying individual - (iii) Rules similar to the rules of subparagraphs (B), (C), and (D) of section 21(b)(2) shall apply, except the term shall be substituted for the term each place it appears in such subparagraphs.
child and dependent care expensesemployment-related expenses
- (i) The term 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:
- For purposes of this paragraph—
- (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) For purposes of this paragraph, the term 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) 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.
- (i) For purposes of this paragraph, the term means expenses for the purchase of
- (D) Child and dependent care expenses
- in subparagraph (A), by striking
- in subsection (g)(5)—
- in the heading, by adding at the end, and
or credit - by inserting after .
- in the heading, by adding at the end, and
- in subsection (f)(1)—
- of the Internal Revenue Code of 1986 is amended— Section 25A
- (b) Effective date
- The amendments made by this section shall apply to taxable years beginning after December 31, 2024.