119-hr2543

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2543 Introduced in House

    (IH) ]

<DOC>

119th CONGRESS
 1st Session
 H. R. 2543

 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

 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.

 Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 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.--

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.

SEC. 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.
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