I
119THCONGRESS
1
STSESSION 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
APRIL1, 2025
Mr. D
OGGETT(for himself, Mr. KELLYof Pennsylvania, Mr. DAVISof Illinois,
and Mr. F
EENSTRA) 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 Representa-1
tives of the United States of America in Congress assembled, 2
SECTION 1. SHORT TITLE. 3
This Act may be cited as the ‘‘Tax-Free Pell Grant 4
Act’’. 5
SEC. 2. EXPANSION OF PELL GRANT EXCLUSION FROM 6
GROSS INCOME. 7
(a) I
NGENERAL.—Section 117(b)(1) of the Internal 8
Revenue Code of 1986 is amended by striking ‘‘received 9
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by an individual’’ and all that follows and inserting ‘‘re-1
ceived by an individual— 2
‘‘(A) as a scholarship or fellowship grant 3
to the extent the individual establishes that, in 4
accordance with the conditions of the grant, 5
such amount was used for qualified tuition and 6
related expenses, or 7
‘‘(B) as a Federal Pell Grant under section 8
401 of the Higher Education Act of 1965 (as 9
in effect on the date of the enactment of the 10
Tax-Free Pell Grant Act).’’. 11
(b) N
OADJUSTMENT UNDERAMERICANOPPOR-12
TUNITY AND LIFETIMELEARNINGCREDITS.—Section 13
25A(g)(2)(A) of such Code is amended by striking ‘‘a 14
qualified scholarship which’’ and inserting ‘‘a qualified 15
scholarship which is described in section 117(b)(1)(A) and 16
which’’. 17
(c) E
FFECTIVEDATE.—The amendments made by 18
this section shall apply to taxable years beginning after 19
December 31, 2024. 20
SEC. 3. EXPANSION OF AMERICAN OPPORTUNITY AND 21
LIFETIME LEARNING CREDITS. 22
(a) I
NGENERAL.—Section 25A of the Internal Rev-23
enue Code of 1986 is amended— 24
(1) in subsection (f)(1)— 25
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(A) in subparagraph (A), by striking ‘‘tui-1
tion and fees’’ and inserting ‘‘tuition, fees, com-2
puter or peripheral equipment, child and de-3
pendent care expenses, and course materials’’, 4
(B) by striking subparagraph (D), and 5
(C) by adding at the end the following new 6
subparagraphs: 7
‘‘(D) C
HILD AND DEPENDENT CARE EX -8
PENSES.—For purposes of this paragraph— 9
‘‘(i) I
N GENERAL.—The term ‘child 10
and dependent care expenses’ means 11
amounts paid for the following expenses, 12
but only if such expenses are incurred to 13
enable the taxpayer to be enrolled in an el-14
igible educational institution for any period 15
for which there are 1 or more qualifying 16
individuals with respect to the taxpayer: 17
‘‘(I) expenses for household serv-18
ices, and 19
‘‘(II) expenses for the care of a 20
qualifying individual. 21
Such term shall not include any amount 22
paid for services outside the taxpayer’s 23
household at a camp where the qualifying 24
individual stays overnight. 25
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‘‘(ii) QUALIFYING INDIVIDUAL .—The 1
term ‘qualifying individual’ has the mean-2
ing given such term in section 21(b)(1). 3
‘‘(iii) E
XCEPTION, DEPENDENT CARE 4
CENTERS.—Rules similar to the rules of 5
subparagraphs (B), (C), and (D) of section 6
21(b)(2) shall apply, except the term ‘child 7
and dependent care expenses’ shall be sub-8
stituted for the term ‘employment-related 9
expenses’ each place it appears in such 10
subparagraphs. 11
‘‘(E) C
HILD AND DEPENDENT CARE EX -12
PENSES ONLY QUALIFIED EXPENSES WHEN 13
CLAIMED BY ELIGIBLE STUDENT .—Amounts 14
paid for an expense described in subparagraph 15
(E) may not be taken into account under this 16
paragraph for a taxable year unless required for 17
the enrollment or attendance of an individual 18
described in subparagraph (A)(i) or subpara-19
graph (A)(ii). 20
‘‘(F) C
OMPUTER OR PERIPHERAL EQUIP -21
MENT.— 22
‘‘(i) D
EFINED.—For purposes of this 23
paragraph, the term ‘computer or periph-24
eral equipment’ means expenses for the 25
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purchase of computer or peripheral equip-1
ment (as defined in section 168(i)(2)(B), 2
computer software (as defined in section 3
197(e)(3)(B))), or internet access and re-4
lated services, if such equipment, software, 5
or services are to be used primarily by the 6
individual during any of the years the indi-7
vidual is enrolled at an eligible educational 8
institution. 9
‘‘(ii) D
OLLAR LIMIT ON AMOUNT 10
CREDITABLE.—The aggregate of the 11
amounts paid or expenses incurred for 12
computer or peripheral equipment which 13
may be taken into account under this para-14
graph for a taxable year by the taxpayer 15
shall not exceed $1,000.’’, and 16
(2) in subsection (g)(5)— 17
(A) in the heading, by adding ‘‘
OR CRED-18
IT’’ at the end, and 19
(B) by inserting ‘‘or credit’’ after ‘‘a de-20
duction’’. 21
(b) E
FFECTIVEDATE.—The amendments made by 22
this section shall apply to taxable years beginning after 23
December 31, 2024. 24
Æ
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