H.R. 8714

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 8714 Introduced in House (IH)]

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119th CONGRESS
2d Session
H. R. 8714

To amend the Internal Revenue Code of 1986 to establish skill savings 
accounts.

_______________________________________________________________________

IN THE HOUSE OF REPRESENTATIVES

May 7, 2026

Mr. Thompson of Pennsylvania (for himself and Ms. Bonamici) 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 establish skill savings 
accounts.

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 ``Skill Savings Account Act of 2026''.

SEC. 2. SKILL SAVINGS ACCOUNT.

(a) In General.--Part III of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 is amended by inserting after section 
139L the following new section:

``SEC. 139M. SKILL SAVINGS ACCOUNT.

``(a) Exclusion From Gross Income.--Gross income of an eligible 
employee does not include--
``(1) amounts contributed to a skill savings account of 
such employee by such employee or the employer of such 
employee, or
``(2) any amount paid or distributed out of a skill savings 
account which is used exclusively to pay the qualified 
education expenses of the account beneficiary.
``(b) Eligible Employee.--For purposes of this section, the term 
`eligible employee' means an individual, with respect to any taxable 
year--
``(1) employed in the United States during such taxable 
year, and
``(2) who is not a dependent (as defined in section 152) of 
any other taxpayer for such taxable year.
``(c) Limitation on Exclusion.--Subsection (a) shall not apply to 
so much of any contribution to a skill savings account of an employee 
for a taxable year as exceeds--
``(1) in the case of a contribution by an employer, the 
excess of--
``(A) $5,250, over
``(B) the amount (if any) excluded from the gross 
income of such employee under section 127(a)(1) for 
such taxable year, and
``(2) in the case of a contribution by the employee, any 
amount which taken in aggregate with all contributions made by 
such employee during the taxable year exceeds $10,000.
``(d) Skill Savings Account.--For purposes of this section, the 
term `skill savings account' means a trust created or organized in the 
United States as a skill savings account exclusively for the purpose of 
paying the qualified education expenses of the account beneficiary, but 
only if the written governing instrument creating the trust meets the 
following requirements:
``(1) No contribution will be accepted unless it is in 
cash.
``(2) The trustee is a bank (as defined in section 408(n)), 
an insurance company (as defined in section 816), or another 
person who demonstrates to the satisfaction of the Secretary 
that the manner in which such person will administer the trust 
will be consistent with the requirements of this section.
``(3) The assets of the trust will not be commingled with 
other property except in a common trust fund or common 
investment fund.
``(4) No part of the trust assets will be invested in life 
insurance contracts.
``(5) The interest of an individual in the balance in his 
account is nonforfeitable.
``(e) Qualified Education Expenses.--For purposes of this section, 
the term `qualified education expenses' means amounts paid or incurred 
by the employee if such amount would be educational assistance (as 
defined in section 127(c)(1)) if such amount were paid by the employer 
of such employee.
``(f) Amounts Not Used for Qualified Education Expenses.--
``(1) In general.--Any amount paid or distributed from a 
skill savings account which is not used exclusively to pay the 
qualified education expenses of the account beneficiary shall 
be included in the gross income of such account beneficiary.
``(2) Additional tax on distributions not used for 
qualified educational expenses.--The tax imposed by this 
chapter on the account beneficiary who has not attained age 65 
for any taxable year in which there is a payment or 
distribution from a skill savings account of such beneficiary 
which is includible in gross income under paragraph (1) shall 
be increased by 20 percent of the amount which is so 
includible.
``(3) Excess contribution returned before due date of 
return.--If any excess contribution is contributed for a 
taxable year to any skill savings account of an individual, 
paragraph (1) shall not apply to distributions from the skill 
savings accounts of such individual (to the extent such 
distributions do not exceed the aggregate excess contributions 
to all such accounts of such individual for such year) if--
``(A) such distribution is received by the 
individual on or before the last day prescribed by law 
(including extensions of time) for filing such 
individual's return for such taxable year, and
``(B) such distribution is accompanied by the 
amount of net income attributable to such excess 
contribution.
Any net income described in subparagraph (B) shall be included 
in the gross income of the individual for the taxable year in 
which it is received.
``(4) Excess contribution.--For purposes of paragraph (3), 
the term `excess contribution' means any contribution which is 
not excludable from gross income under subsection (a).
``(g) Tax Treatment of Account.--A skill savings account is exempt 
from taxation under this subtitle unless such account has ceased to be 
a skill savings account. Notwithstanding the preceding sentence, any 
such account is subject to the taxes imposed by section 511.
``(h) Employee; Employer.--For purposes of this section, the terms 
`employee' and `employer' shall be applied as such terms are applied in 
section 127.
``(i) Reporting.--The Secretary may require the trustee of a skill 
savings account to make such reports (at such time and in such manner 
as the Secretary determines appropriate) regarding such account to the 
Secretary and to the account beneficiary with respect to contributions, 
distributions, the return of excess contributions, and such other 
matters as the Secretary determines appropriate.''.
(b) Implementing Regulations.--Not later than 1 year after the date 
of the enactment of this Act, the Secretary of the Treasury shall issue 
such implementing regulations as the Secretary determines appropriate 
to implement the amendments made by this section.
(c) Excess Contributions.--Section 4973 of such Code is amended--
(1) in subsection (a)--
(A) in paragraph (5), by striking ``or'',
(B) in paragraph (6), by inserting ``or'' after the 
comma, and
(C) by inserting after paragraph (6) the following 
new paragraph:
``(7) a skill savings account (within the meaning of 
section 127A(d)).'', and
(2) by adding at the end the following new subsection:
``(i) Skill Savings Account.--For purposes of this section, in the 
case of skill savings accounts (within the meaning of section 127A(d)), 
the term `excess contribution' means the sum of--
``(1) the aggregate amount contributed for the taxable year 
to the accounts which is not excludable from gross income under 
section 139M(a), and
``(2) the amount determined under this subsection for the 
preceding taxable year, reduced by the sum of--
``(A) the distributions out of the accounts which 
were included in gross income under section 139M(f)(1), 
and
``(B) the excess (if any) of--
``(i) the maximum amount excludable from 
gross income under section 139 (a)(1) for the 
taxable year, over
``(ii) the amount contributed to the 
accounts for the taxable year.
For purposes of this subsection, any contribution which 
is distributed out of the skill savings account in a 
distribution to which section 139M(f)(1) applies shall 
be treated as an amount not contributed.''.
(d) Clerical Amendment.--The table of sections for part III of 
subchapter B of chapter 1 of such Code is amended by inserting after 
the item relating to section 139L the following new item:

``Sec. 139M. Skill savings account.''.
(e) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2025.
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