I
119THCONGRESS
1
STSESSION 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
JANUARY15, 2025
Mr. T
HOMPSON of Pennsylvania (for himself, Ms. BONAMICI, Mr.
F
ITZPATRICK, 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 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 ‘‘Skills Investment Act 4
of 2025’’. 5
SEC. 2. COVERDELL LIFELONG LEARNING ACCOUNTS. 6
(a) I
NGENERAL.— 7
(1) R
ENAMING OF COVERDELL EDUCATION SAV -8
INGS ACCOUNTS.—Section 530 of the Internal Rev-9
enue Code of 1986 is amended— 10
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(A) by striking ‘‘Coverdell education sav-1
ings account’’ each place it appears and insert-2
ing ‘‘Coverdell lifelong learning account’’; and 3
(B) by striking ‘‘
COVERDELL EDU -4
CATION SAVINGS ACCOUNTS ’’ in the heading 5
and inserting ‘‘
COVERDELL LIFELONG 6
LEARNING ACCOUNTS ’’. 7
(2) C
ONFORMING AMENDMENTS .— 8
(A) Section 26(b)(2)(E) of the Internal 9
Revenue Code of 1986 is amended by striking 10
‘‘Coverdell education savings accounts’’ and in-11
serting ‘‘Coverdell lifelong learning accounts’’. 12
(B) Section 72(e)(9) of such Code is 13
amended— 14
(i) by striking ‘‘Coverdell education 15
savings account’’ and inserting ‘‘Coverdell 16
lifelong learning account’’; and 17
(ii) by striking ‘‘C
OVERDELL EDU -18
CATION SAVINGS ACCOUNTS ’’ in the head-19
ing and inserting ‘‘C
OVERDELL LIFELONG 20
LEARNING ACCOUNTs’’. 21
(C) Section 135(c)(2)(C) of such Code is 22
amended— 23
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(i) by striking ‘‘Coverdell education 1
savings account’’ and inserting ‘‘Coverdell 2
lifelong learning account’’; and 3
(ii) by striking ‘‘C
OVERDELL EDU -4
CATION SAVINGS ACCOUNTS ’’ in the head-5
ing and inserting ‘‘C
OVERDELL LIFELONG 6
LEARNING ACCOUNTS ’’. 7
(D) Section 408A(e)(2)(A)(ii) of such Code 8
is amended by striking ‘‘Coverdell education 9
savings account’’ and inserting ‘‘Coverdell life-10
long learning account’’. 11
(E) Section 529(c) of such Code is amend-12
ed— 13
(i) by striking ‘‘C
OVERDELL EDU -14
CATION SAVINGS ACCOUNTS ’’ in the head-15
ing of paragraph (3)(B)(vi) and inserting 16
‘‘C
OVERDELL LIFELONG LEARNING AC -17
COUNT’’; and 18
(ii) by striking ‘‘Coverdell education 19
savings account’’ in paragraph (6) and in-20
serting ‘‘Coverdell lifelong learning ac-21
count’’. 22
(F) Section 877A(e)(2) of such Code is 23
amended by striking ‘‘Coverdell education sav-24
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ings account’’ and inserting ‘‘Coverdell lifelong 1
learning account’’. 2
(G) Section 4973 of such Code is amend-3
ed— 4
(i) by striking ‘‘Coverdell education 5
savings account’’ each place it appears in 6
subsections (a)(4) and (e)(2)(A) and in-7
serting ‘‘Coverdell lifelong learning ac-8
count’’; 9
(ii) by striking ‘‘Coverdell education 10
savings accounts’’ in subsection (e)(1) and 11
inserting ‘‘Coverdell lifelong learning ac-12
counts’’; and 13
(iii) by striking ‘‘C
OVERDELLEDU-14
CATIONSAVINGSACCOUNTS’’ in the head-15
ing of subsection (e) and inserting 16
‘‘C
OVERDELLLIFELONGLEARNINGAC-17
COUNT’’. 18
(H) Section 4975 of such Code is amend-19
ed— 20
(i) by striking ‘‘Coverdell education 21
savings account’’ each place it appears in 22
subsections (c)(5) and (e)(1)(F) and in-23
serting ‘‘Coverdell lifelong learning ac-24
count’’; and 25
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(ii) by striking ‘‘COVERDELL EDU -1
CATION SAVINGS ACCOUNTS ’’ in the head-2
ing of subsection (c)(5) and inserting 3
‘‘C
OVERDELL LIFELONG LEARNING AC -4
COUNTS’’. 5
(I) Section 6693(a)(2)(F) of such Code is 6
amended by striking ‘‘Coverdell education sav-7
ings accounts’’ and inserting ‘‘Coverdell lifelong 8
learning accounts’’. 9
(J) The table of sections for part VIII of 10
subchapter F of chapter 1 of such Code is 11
amended by striking ‘‘Coverdell education sav-12
ings accounts’’ and inserting ‘‘Coverdell lifelong 13
learning accounts’’. 14
(3) T
REATMENT OF EXISTING ACCOUNTS .—For 15
purposes of section 530(b)(1) of the Internal Rev-16
enue Code of 1986, any account established before 17
January 1, 2024, and designated as a Coverdell edu-18
cation savings account shall be deemed to have been 19
designated as a Coverdell lifelong learning account. 20
(b) E
XPANDEDUSE OFACCOUNTS.— 21
(1) E
LIGIBLE EXPENSES.— 22
(A) I
N GENERAL.—Section 530(b)(2)(A) of 23
the Internal Revenue Code of 1986 is amended 24
by striking ‘‘and’’ at the end of clause (i), by 25
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striking the period at the end of clause (ii) and 1
inserting ‘‘, and’’, and by adding at the end the 2
following new clause: 3
‘‘(iii) qualified educational or skill de-4
velopment expenses (as defined in para-5
graph (5)).’’. 6
(B) Q
UALIFIED EDUCATIONAL OR SKILL 7
DEVELOPMENT EXPENSES .—Section 530(b) of 8
such Code is amended by adding at the end the 9
following new paragraph: 10
‘‘(5) Q
UALIFIED EDUCATIONAL OR SKILL DE -11
VELOPMENT EXPENSES .—The term ‘qualified edu-12
cational or skill development expenses’ means— 13
‘‘(A) expenses paid or incurred— 14
‘‘(i) after the beneficiary attains age 15
16, and 16
‘‘(ii) for participation or enrollment of 17
the beneficiary in services or activities that 18
are— 19
‘‘(I) training services described in 20
section 134(c)(3)(D) of the Workforce 21
Innovation and Opportunity Act (29 22
U.S.C. 3174(c)(3)(D)) that are of-23
fered by a provider included on the 24
list of eligible providers of training 25
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services described in section 122 of 1
such Act (29 U.S.C. 3152), 2
‘‘(II) career and technical edu-3
cation activities defined in section 3 of 4
the Carl D. Perkins Career and Tech-5
nical Education Act of 2006 (20 6
U.S.C. 2302) that are offered through 7
an eligible institution (as defined in 8
such section), 9
‘‘(III) career services described in 10
clauses (iii), (iv), and (xi) of section 11
134(c)(2)(A) of the Workforce Inno-12
vation and Opportunity Act (29 13
U.S.C. 3174(c)(2)(A)) that are pro-14
vided by providers eligible under sec-15
tion 134(c)(2)(C) of such Act, 16
‘‘(IV) youth activities described 17
in section 129(c)(2) of the Workforce 18
Innovation and Opportunity Act (29 19
U.S.C. 3164(c)(2)) that are provided 20
by eligible providers of youth work-21
force investment activities under sec-22
tion 123 of such Act, or 23
‘‘(V) adult education and literacy 24
activities, as defined in section 203 of 25
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the Adult Education and Family Lit-1
eracy Act (29 U.S.C. 3272), that are 2
provided by eligible providers of adult 3
education and literacy activities under 4
section 231 of such Act (29 U.S.C. 5
3321), 6
‘‘(B) expenses for transportation required 7
for or provided by any of the services or activi-8
ties described in subparagraph (A), 9
‘‘(C) expenses for testing necessary for en-10
rollment in, or certification in connection with, 11
services or activities described in subparagraph 12
(A), or 13
‘‘(D) expenses for the purchase of any 14
computer software (as defined by section 15
197(e)(3)(B)), computer or peripheral equip-16
ment (as defined by section 168(i)(2)(B)), fiber 17
optic cable related to computer use, internet ac-18
cess and related services, if such software, 19
equipment, or services are to be used by the 20
beneficiary for services or activities described in 21
subparagraph (A) during any of the years the 22
beneficiary is participating in or enrolled in any 23
of the services or activities described in sub-24
paragraph (A).’’. 25
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(c) MODIFICATION OFRULESRELATING TOAGERE-1
STRICTIONS ANDCONTRIBUTIONS.— 2
(1) $10,000
ACCOUNT LIMIT AFTER AGE 30 .— 3
(A) I
N GENERAL.—Subparagraph (E) of 4
section 530(b)(1) of the Internal Revenue Code 5
of 1986 is amended by inserting ‘‘in excess of 6
$10,000’’ after ‘‘any balance to the credit of 7
the designated beneficiary’’. 8
(B) C
ONTRIBUTION LIMIT.—Subparagraph 9
(A) of section 530(b)(1) of such Code is amend-10
ed by striking ‘‘or’’ at the end of clause (ii), by 11
striking the period at the end of clause (iii) and 12
inserting ‘‘, or’’, and by adding at the end the 13
following new clause: 14
‘‘(iv) in the case of a beneficiary who 15
is over the age of 30, if such contribution 16
would result in the balance of the account 17
exceeding $10,000.’’. 18
(2) I
NCREASED AGE LIMIT FOR CONTRIBU -19
TIONS.—Clause (ii) of section 530(b)(1)(A) of the 20
Internal Revenue Code of 1986 is amended by strik-21
ing ‘‘age 18’’ and inserting ‘‘age 70’’. 22
(3) I
NCREASED CONTRIBUTION LIMITATION 23
FOR INDIVIDUALS OVER AGE 30 .— 24
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(A) I N GENERAL .—Section 1
530(b)(1)(A)(iii) of the Internal Revenue Code 2
of 1986 is amended by inserting ‘‘($4,000 in 3
the case of an account the designated bene-4
ficiary of which has attained age of 30 before 5
the end of the taxable year)’’ after ‘‘$2,000’’. 6
(B) C
ONFORMING AMENDMENT .—Section 7
4973(e)(1)(A) of such Code is amended by 8
striking ‘‘$2,000’’ and inserting ‘‘the limitation 9
applicable under section 530(b)(1)(A)(iii)’’. 10
(4) N
O CHANGE IN BENEFICIARY AFTER AGE 11
30.—Paragraph (6) of section 530(d) of the Internal 12
Revenue Code of 1986 is amended by striking ‘‘shall 13
not be treated as a distribution for purposes of para-14
graph (1) if the new beneficiary’’ and inserting 15
‘‘shall not be treated as a distribution for purposes 16
of paragraph (1) if— 17
‘‘(A) the old beneficiary has not attained 18
age 30 before the date of the change in bene-19
ficiary, and 20
‘‘(B) the new beneficiary’’. 21
(d) C
REDIT FOREMPLOYERCONTRIBUTIONS.— 22
(1) I
N GENERAL.—Subpart D of part IV of 23
subchapter A of chapter 1 of the Internal Revenue 24
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Code of 1986 is amended by adding at the end the 1
following new section: 2
‘‘SEC. 45BB. EMPLOYEE EDUCATIONAL SKILLS AND DEVEL-3
OPMENT EXPENSES. 4
‘‘(a) G
ENERALRULE.—For purposes of section 38, 5
the employee educational skills and development contribu-6
tion credit determined under this section for any taxable 7
year is 25 percent of the nonelective contributions made 8
by the taxpayer during the taxable year to a Coverdell life-9
long learning account (as defined in section 530(b)) the 10
designated beneficiary of which is an employee of the tax-11
payer. 12
‘‘(b) S
PECIALRULES ANDDEFINITIONS.—For pur-13
poses of this section— 14
‘‘(1) E
MPLOYEE.— 15
‘‘(A) C
ERTAIN EMPLOYEES EXCLUDED .— 16
The term ‘employee’ shall not include— 17
‘‘(i) an employee within the meaning 18
of section 401(c)(1), 19
‘‘(ii) any 2-percent shareholder (as de-20
fined in section 1372(b)) of an S corpora-21
tion, 22
‘‘(iii) any 5-percent owner (as defined 23
in section 416(i)(1)(B)(i)) of taxpayer, or 24
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‘‘(iv) any individual who bears any of 1
the relationships described in subpara-2
graphs (A) through (G) of section 3
152(d)(2) to, or is a dependent described 4
in section 152(d)(2)(H) of, an individual 5
described in clause (i), (ii), or (iii). 6
‘‘(B) L
EASED EMPLOYEES .—The term 7
‘employee’ shall include a leased employee with-8
in the meaning of section 414(n). 9
‘‘(2) N
ONELECTIVE CONTRIBUTION .—The term 10
‘nonelective contribution’ means an employer con-11
tribution other than an employer contribution pursu-12
ant to a salary reduction arrangement. 13
‘‘(3) A
GGREGATION AND OTHER RULES MADE 14
APPLICABLE.— 15
‘‘(A) A
GGREGATION RULES .—All employ-16
ers treated as a single employer under sub-17
section (b), (c), (m), or (o) of section 414 shall 18
be treated as a single employer for purposes of 19
this section. 20
‘‘(B) O
THER RULES.—Rules similar to the 21
rules of subsections (c), (d), and (e) of section 22
52 shall apply.’’. 23
(2) C
REDIT TREATED AS PART OF GENERAL 24
BUSINESS CREDIT.—Section 38(b) of such Code is 25
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amended by striking ‘‘plus’’ at the end of paragraph 1
(40), by striking the period at the end of paragraph 2
(41) and inserting ‘‘, plus’’, and by adding at the 3
end the following new paragraph: 4
‘‘(42) the employee educational skills and devel-5
opment contribution credit determined under section 6
45BB(a).’’. 7
(3) C
LERICAL AMENDMENT .—The table of sec-8
tions for subpart D of part IV of subchapter A of 9
chapter 1 of such Code is amended by adding at the 10
end the following new item: 11
‘‘Sec. 45BB. Employee educational skills and development expenses.’’.
(e) ALLOWANCE OF DEDUCTION FOR BENE-12
FICIARY.— 13
(1) I
N GENERAL.—Part VIII of subchapter B 14
of chapter 1 of the Internal Revenue Code of 1986 15
is amended by redesignating section 224 as section 16
225 and by inserting after section 223 the following 17
new section: 18
‘‘SEC. 224. COVERDELL LIFELONG LEARNING ACCOUNT 19
CONTRIBUTIONS. 20
‘‘(a) I
NGENERAL.—In the case of an individual 21
who— 22
‘‘(1) is the designated beneficiary of a Coverdell 23
lifelong learning account (as defined in section 24
530(b)(1)), and 25
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‘‘(2) has attained the age of 18 before the close 1
of the taxable year, 2
there shall be allowed as a deduction an amount equal to 3
the contributions for the taxable year by or on behalf of 4
such individual to the account described in paragraph (1). 5
‘‘(b) R
ECONTRIBUTED AMOUNTS.—No deduction 6
shall be allowed under this section with respect to a roll-7
over contribution described in section 530(d)(5).’’. 8
(2) I
NCREASE IN ADDITIONAL TAX .— 9
(A) I
NCREASE.— 10
(i) I
N GENERAL .—Section 11
530(d)(4)(A) of the Internal Revenue Code 12
of 1986 is amended by striking ‘‘10 per-13
cent’’ and inserting ‘‘20 percent’’. 14
(ii) C
ONFORMING AMENDMENT .—Sec-15
tion 529(c)(6) of such Code is amended by 16
inserting ‘‘, except that ‘10 percent’ shall 17
be substituted for ‘20 percent’ in subpara-18
graph (A) thereof’’ before the period at the 19
end of the first sentence. 20
(B) M
ODIFICATION OF TAX TREATMENT 21
OF DEDUCTIBLE CONTRIBUTIONS .—Paragraph 22
(1) of section 530(d) of such Code is amended 23
to read as follows: 24
‘‘(1) I
NCLUSION IN GROSS INCOME .— 25
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‘‘(A) IN GENERAL.—Any distribution shall 1
be includible in the gross income of the dis-2
tributee as follows: 3
‘‘(i) So much of the distribution as is 4
equal to or less than the deductible amount 5
shall be fully included in gross income. 6
‘‘(ii) So much of the distribution 7
which exceeds the deductible amount shall 8
be included in gross income in the manner 9
as provided in section 72 (determined by 10
applying such section without regard to 11
any amounts to which clause (i) applies). 12
‘‘(B) D
EDUCTIBLE AMOUNT .—For pur-13
poses of this paragraph, the term ‘deductible 14
amount’ means the excess of— 15
‘‘(i) the sum of contributions to the 16
account for which a deduction was allowed 17
under section 224 in such year and any 18
preceding taxable year, over 19
‘‘(ii) the amount of distributions to 20
which subparagraph (A)(i) applied to in 21
any preceding taxable year.’’. 22
(3) C
LERICAL AMENDMENT .—The table of sec-23
tions for part VIII of subchapter B of chapter 1 of 24
such Code is amended by redesignating the item re-25
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lating to section 224 as relating to section 225 and 1
by inserting after the item relating to section 223 2
the following new item: 3
‘‘Sec. 224. Coverdell lifelong learning account contributions.’’.
(f) EFFECTIVEDATE.— 4
(1) I
N GENERAL.—Except as otherwise pro-5
vided in this subsection, the amendments made by 6
this section shall take effect on January 1, 2026. 7
(2) E
LIGIBLE EXPENSES .—The amendments 8
made by subsection (b) shall apply to distributions 9
made after December 31, 2025. 10
(3) C
ONTRIBUTIONS.—The amendments made 11
by paragraphs (1)(B) and (2) of subsection (c) shall 12
apply to contributions made after December 31, 13
2025. 14
(4) E
MPLOYER CONTRIBUTION CREDIT AND 15
BENEFICIARY DEDUCTIONS .—The amendments 16
made by subsections (d) and (e) shall apply to tax-17
able years beginning after December 31, 2025. 18
Æ
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