ACE Act Achieving Choice in Education Act
The proposed legislation significantly impacts the financial landscape of education funding. By increasing the limit on distributions from 529 plans for elementary and secondary school expenses from $10,000 to $20,000, it encourages families to allocate more resources towards educational endeavors at earlier stages. Furthermore, the bill introduces tax exclusions for contributions made to 529 plans, allowing families to maximize their savings potential for educational expenses without being burdened by gift tax considerations. This could lead to higher enrollment in and funding for private education, especially among families seeking alternatives to public schooling.
House Bill 6795, known as the Achieving Choice in Education Act (ACE Act), aims to amend the Internal Revenue Code to provide greater financial incentives for families to invest in education, particularly focusing on elementary and secondary education. One of the key features of the bill is the expansion of the types of expenses that can be covered under 529 accounts, which are typically used for higher education savings. The bill allows these accounts to cover various educational costs for students enrolled in public, private, or religious schools, as well as those being homeschooled. Such expenses include tuition, curriculum materials, tutoring, and educational therapies for students with disabilities.
Notable points of contention surrounding the ACE Act include concerns about equity in educational funding and the implications for public education. Critics argue that incentivizing private education and homeschooling through tax benefits could undermine public school funding by diverting resources away from these institutions. Furthermore, there are apprehensions regarding the accessibility of education choices for low-income families, who may not have the same capacity to benefit from 529 accounts as wealthier families. The debate around the ACE Act thus highlights the larger conversation regarding educational equity and the role of government in supporting various educational pathways.