H.R. 2543

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

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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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