119-hr464

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 464 Introduced in House

    (IH) ]

<DOC>

119th CONGRESS
 1st Session
 H. R. 464

 To amend the Internal Revenue Code of 1986 to provide for lifelong 
 learning accounts, and for other purposes.

_______________________________________________________________________

 IN THE HOUSE OF REPRESENTATIVES

 January 15, 2025

 Mr. Thompson of Pennsylvania (for himself, Ms. Bonamici, Mr. 
 Fitzpatrick, and Mr. Schneider) 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 provide for lifelong 
 learning accounts, 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 ``Skills Investment Act of 2025''.

SEC. 2. COVERDELL LIFELONG LEARNING ACCOUNTS.

    (a) In General.--

    (1) Renaming of coverdell education savings accounts.--
 

Section 530 of the Internal Revenue Code of 1986 is amended--
        (A) by striking ``Coverdell education savings 
 account'' each place it appears and inserting 
 ``Coverdell lifelong learning account''; and
        (B) by striking ``coverdell education savings 
 accounts'' in the heading and inserting ``coverdell 
 lifelong learning accounts''.

    (2) Conforming amendments.--
        (A) Section 26

    (b)

    (2)
        (E) of the Internal Revenue 
 Code of 1986 is amended by striking ``Coverdell 
 education savings accounts'' and inserting ``Coverdell 
 lifelong learning accounts''.
        (B) Section 72

    (e)

    (9) of such Code is amended--
            (i) by striking ``Coverdell education 
 savings account'' and inserting ``Coverdell 
 lifelong learning account''; and
            (ii) by striking ``Coverdell education 
 savings accounts'' in the heading and inserting 
 ``Coverdell lifelong learning accounts''.
            (C) Section 135
            (c) (2)
            (C) of such Code is amended--
            (i) by striking ``Coverdell education 
 savings account'' and inserting ``Coverdell 
 lifelong learning account''; and
            (ii) by striking ``Coverdell education 
 savings accounts'' in the heading and inserting 
 ``Coverdell lifelong learning accounts''.
            (D) Section 408A

    (e)

    (2)
        (A)
            (ii) of such Code is 
 amended by striking ``Coverdell education savings 
 account'' and inserting ``Coverdell lifelong learning 
 account''.
        (E) Section 529
            (c) of such Code is amended--
            (i) by striking ``Coverdell education 
 savings accounts'' in the heading of paragraph

    (3)
        (B)
            (vi) and inserting ``Coverdell lifelong 
 learning account''; and
            (ii) by striking ``Coverdell education 
 savings account'' in paragraph

    (6) and 
 inserting ``Coverdell lifelong learning 
 account''.
        (F) Section 877A

    (e)

    (2) of such Code is amended by 
 striking ``Coverdell education savings account'' and 
 inserting ``Coverdell lifelong learning account''.
        (G) Section 4973 of such Code is amended--
            (i) by striking ``Coverdell education 
 savings account'' each place it appears in 
 subsections

    (a)

    (4) and

    (e)

    (2)
        (A) and inserting 
 ``Coverdell lifelong learning account'';
            (ii) by striking ``Coverdell education 
 savings accounts'' in subsection

    (e)

    (1) and 
 inserting ``Coverdell lifelong learning 
 accounts''; and
            (iii) by striking ``Coverdell Education 
 Savings Accounts'' in the heading of subsection

    (e) and inserting ``Coverdell Lifelong Learning 
 Account''.
        (H) Section 4975 of such Code is amended--
            (i) by striking ``Coverdell education 
 savings account'' each place it appears in 
 subsections
            (c) (5) and

    (e)

    (1)
        (F) and inserting 
 ``Coverdell lifelong learning account''; and
            (ii) by striking ``Coverdell education 
 savings accounts'' in the heading of subsection
            (c) (5) and inserting ``Coverdell lifelong 
 learning accounts''.
            (I) Section 6693

    (a)

    (2)
        (F) of such Code is amended 
 by striking ``Coverdell education savings accounts'' 
 and inserting ``Coverdell lifelong learning accounts''.
        (J) The table of sections for part VIII of 
 subchapter F of chapter 1 of such Code is amended by 
 striking ``Coverdell education savings accounts'' and 
 inserting ``Coverdell lifelong learning accounts''.

    (3) Treatment of existing accounts.--For purposes of 
 

section 530

    (b)

    (1) of the Internal Revenue Code of 1986, any 
 account established before January 1, 2024, and designated as a 
 Coverdell education savings account shall be deemed to have 
 been designated as a Coverdell lifelong learning account.

    (b) Expanded Use of Accounts.--

    (1) Eligible expenses.--
        (A) In general.--

Section 530

    (b)

    (2)
        (A) of the 
 Internal Revenue Code of 1986 is amended by striking 
 ``and'' at the end of clause
            (i) , by striking the 
 period at the end of clause
            (ii) and inserting ``, 
 and'', and by adding at the end the following new 
 clause:
 ``
            (iii) qualified educational or skill 
 development expenses (as defined in paragraph

    (5) ).''.
        (B) Qualified educational or skill development 
 expenses.--

Section 530

    (b) of such Code is amended by 
 adding at the end the following new paragraph:
 ``

    (5) Qualified educational or skill development 
 expenses.--The term `qualified educational or skill development 
 expenses' means--
 ``
        (A) expenses paid or incurred--
 ``
            (i) after the beneficiary attains age 16, 
 and
 ``
            (ii) for participation or enrollment of 
 the beneficiary in services or activities that 
 are--
 ``
            (I) training services described 
 in 

section 134
            (c) (3)
            (D) of the 
 Workforce Innovation and Opportunity 
 Act (29 U.S.C. 3174
            (c) (3)
            (D) ) that are 
 offered by a provider included on the 
 list of eligible providers of training 
 services described in 

section 122 of 
 such Act (29 U.S.C. 3152),
 ``
            (II) career and technical 
 education activities defined in 

section 3 of the Carl D. Perkins Career and 
 Technical Education Act of 2006 (20 
 U.S.C. 2302) that are offered through 
 an eligible institution (as defined in 
 such section),
 ``
            (III) career services described 
 in clauses
            (iii) ,
            (iv) , and
            (xi) of 
 

section 134
            (c) (2)
        (A) of the Workforce 
 Innovation and Opportunity Act (29 
 U.S.C. 3174
            (c) (2)
        (A) ) that are provided 
 by providers eligible under 

section 134
            (c) (2)
            (C) of such Act,
 ``
            (IV) youth activities described 
 in 

section 129
            (c) (2) of the Workforce 
 Innovation and Opportunity Act (29 
 U.S.C. 3164
            (c) (2) ) that are provided by 
 eligible providers of youth workforce 
 investment activities under 

section 123 
 of such Act, or
 ``
            (V) adult education and literacy 
 activities, as defined in 

section 203 
 of the Adult Education and Family 
 Literacy Act (29 U.S.C. 3272), that are 
 provided by eligible providers of adult 
 education and literacy activities under 
 

section 231 of such Act (29 U.S.C. 
 3321),
 ``
        (B) expenses for transportation required for or 
 provided by any of the services or activities described 
 in subparagraph
        (A) ,
 ``
            (C) expenses for testing necessary for enrollment 
 in, or certification in connection with, services or 
 activities described in subparagraph
        (A) , or
 ``
            (D) expenses for the purchase of any computer 
 software (as defined by 

section 197

    (e)

    (3)
        (B) ), computer 
 or peripheral equipment (as defined by 

section 168
            (i) (2)
        (B) ), fiber optic cable related to computer 
 use, internet access and related services, if such 
 software, equipment, or services are to be used by the 
 beneficiary for services or activities described in 
 subparagraph
        (A) during any of the years the 
 beneficiary is participating in or enrolled in any of 
 the services or activities described in subparagraph
        (A) .''.
            (c) Modification of Rules Relating to Age Restrictions and 
Contributions.--

    (1) $10,000 account limit after age 30.--
        (A) In general.--Subparagraph
        (E) of 

section 530

    (b)

    (1) of the Internal Revenue Code of 1986 is 
 amended by inserting ``in excess of $10,000'' after 
 ``any balance to the credit of the designated 
 beneficiary''.
        (B) Contribution limit.--Subparagraph
        (A) of 
 

section 530

    (b)

    (1) of such Code is amended by striking 
 ``or'' at the end of clause
            (ii) , by striking the 
 period at the end of clause
            (iii) and inserting ``, 
 or'', and by adding at the end the following new 
 clause:
 ``
            (iv) in the case of a beneficiary who is 
 over the age of 30, if such contribution would 
 result in the balance of the account exceeding 
 $10,000.''.

    (2) Increased age limit for contributions.--Clause
            (ii) of 
 

section 530

    (b)

    (1)
        (A) of the Internal Revenue Code of 1986 is 
 amended by striking ``age 18'' and inserting ``age 70''.

    (3) Increased contribution limitation for individuals over 
 age 30.--
        (A) In general.--

Section 530

    (b)

    (1)
        (A)
            (iii) of the 
 Internal Revenue Code of 1986 is amended by inserting 
 ``($4,000 in the case of an account the designated 
 beneficiary of which has attained age of 30 before the 
 end of the taxable year)'' after ``$2,000''.
        (B) Conforming amendment.--

Section 4973

    (e)

    (1)
        (A) of 
 such Code is amended by striking ``$2,000'' and 
 inserting ``the limitation applicable under 

section 530

    (b)

    (1)
        (A)
            (iii) ''.

    (4) No change in beneficiary after age 30.--Paragraph

    (6) of 

section 530
            (d) of the Internal Revenue Code of 1986 is 
 amended by striking ``shall not be treated as a distribution 
 for purposes of paragraph

    (1) if the new beneficiary'' and 
 inserting ``shall not be treated as a distribution for purposes 
 of paragraph

    (1) if--
 ``
        (A) the old beneficiary has not attained age 30 
 before the date of the change in beneficiary, and
 ``
        (B) the new beneficiary''.
            (d) Credit for Employer Contributions.--

    (1) In general.--Subpart D of part IV of subchapter A of 
 chapter 1 of the Internal Revenue Code of 1986 is amended by 
 adding at the end the following new section:

``

SEC. 45BB. EMPLOYEE EDUCATIONAL SKILLS AND DEVELOPMENT EXPENSES.

 ``

    (a) General Rule.--For purposes of 

section 38, the employee 
educational skills and development contribution credit determined under 
this section for any taxable year is 25 percent of the nonelective 
contributions made by the taxpayer during the taxable year to a 
Coverdell lifelong learning account (as defined in 

section 530

    (b) ) the 
designated beneficiary of which is an employee of the taxpayer.
 ``

    (b) Special Rules and 

=== Definitions. ===
-For purposes of this 
section--
 ``

    (1) Employee.--
 ``
        (A) Certain employees excluded.--The term 
 `employee' shall not include--
 ``
            (i) an employee within the meaning of 
 

section 401
            (c) (1) ,
 ``
            (ii) any 2-percent shareholder (as 
 defined in 

section 1372

    (b) ) of an S 
 corporation,
 ``
            (iii) any 5-percent owner (as defined in 
 

section 416
            (i) (1)
        (B)
            (i) ) of taxpayer, or
 ``
            (iv) any individual who bears any of the 
 relationships described in subparagraphs
        (A) through
        (G) of 

section 152
            (d) (2) to, or is a 
 dependent described in 

section 152
            (d) (2)
        (H) of, 
 an individual described in clause
            (i) ,
            (ii) , or
            (iii) .
 ``
        (B) Leased employees.--The term `employee' shall 
 include a leased employee within the meaning of 

section 414

    (n) .
 ``

    (2) Nonelective contribution.--The term `nonelective 
 contribution' means an employer contribution other than an 
 employer contribution pursuant to a salary reduction 
 arrangement.
 ``

    (3) Aggregation and other rules made applicable.--
 ``
        (A) Aggregation rules.--All employers treated as 
 a single employer under subsection

    (b) ,
            (c) ,
            (m) , or

    (o) of 

section 414 shall be treated as a single 
 employer for purposes of this section.
 ``
        (B) Other rules.--Rules similar to the rules of 
 subsections
            (c) ,
            (d) , and

    (e) of 

section 52 shall 
 apply.''.

    (2) Credit treated as part of general business credit.--
 

Section 38

    (b) of such Code is amended by striking ``plus'' at 
 the end of paragraph

    (40) , by striking the period at the end of 
 paragraph

    (41) and inserting ``, plus'', and by adding at the 
 end the following new paragraph:
 ``

    (42) the employee educational skills and development 
 contribution credit determined under 

section 45BB

    (a) .''.

    (3) Clerical amendment.--The table of sections for subpart 
 D of part IV of subchapter A of chapter 1 of such Code is 
 amended by adding at the end the following new item:

``

Sec. 45BB. Employee educational skills and development expenses.''.

    (e) Allowance of Deduction for Beneficiary.--

    (1) In general.--Part VIII of subchapter B of chapter 1 of 
 the Internal Revenue Code of 1986 is amended by redesignating 
 

section 224 as 

section 225 and by inserting after 

section 223 
 the following new section:

``

SEC. 224. COVERDELL LIFELONG LEARNING ACCOUNT CONTRIBUTIONS.

 ``

    (a) In General.--In the case of an individual who--
 ``

    (1) is the designated beneficiary of a Coverdell lifelong 
 learning account (as defined in 

section 530

    (b)

    (1) ), and
 ``

    (2) has attained the age of 18 before the close of the 
 taxable year,
there shall be allowed as a deduction an amount equal to the 
contributions for the taxable year by or on behalf of such individual 
to the account described in paragraph

    (1) .
 ``

    (b) Recontributed Amounts.--No deduction shall be allowed under 
this section with respect to a rollover contribution described in 

section 530
            (d) (5) .''.

    (2) Increase in additional tax.--
        (A) Increase.--
            (i) In general.--

Section 530
            (d) (4)
        (A) of 
 the Internal Revenue Code of 1986 is amended by 
 striking ``10 percent'' and inserting ``20 
 percent''.
            (ii) Conforming amendment.--

Section 529
            (c) (6) of such Code is amended by inserting 
 ``, except that `10 percent' shall be 
 substituted for `20 percent' in subparagraph
        (A) thereof'' before the period at the end of 
 the first sentence.
        (B) Modification of tax treatment of deductible 
 contributions.--Paragraph

    (1) of 

section 530
            (d) of such 
 Code is amended to read as follows:
 ``

    (1) Inclusion in gross income.--
 ``
        (A) In general.--Any distribution shall be 
 includible in the gross income of the distributee as 
 follows:
 ``
            (i) So much of the distribution as is 
 equal to or less than the deductible amount 
 shall be fully included in gross income.
 ``
            (ii) So much of the distribution which 
 exceeds the deductible amount shall be included 
 in gross income in the manner as provided in 
 

section 72 (determined by applying such section 
 without regard to any amounts to which clause
            (i) applies).
 ``
        (B) Deductible amount.--For purposes of this 
 paragraph, the term `deductible amount' means the 
 excess of--
 ``
            (i) the sum of contributions to the 
 account for which a deduction was allowed under 
 

section 224 in such year and any preceding 
 taxable year, over
 ``
            (ii) the amount of distributions to which 
 subparagraph
        (A)
            (i) applied to in any preceding 
 taxable year.''.

    (3) Clerical amendment.--The table of sections for part 
 VIII of subchapter B of chapter 1 of such Code is amended by 
 redesignating the item relating to 

section 224 as relating to 
 

section 225 and by inserting after the item relating to 

section 223 the following new item:

``

Sec. 224. Coverdell lifelong learning account contributions.''.

    (f) Effective Date.--

    (1) In general.--Except as otherwise provided in this 
 subsection, the amendments made by this section shall take 
 effect on January 1, 2026.

    (2) Eligible expenses.--The amendments made by subsection

    (b) shall apply to distributions made after December 31, 2025.

    (3) Contributions.--The amendments made by paragraphs

    (1)
        (B) and

    (2) of subsection
            (c) shall apply to contributions 
 made after December 31, 2025.

    (4) Employer contribution credit and beneficiary 
 deductions.--The amendments made by subsections
            (d) and

    (e) shall apply to taxable years beginning after December 31, 2025.
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