ACE Act Achieving Choice in Education Act
The bill proposes specific amendments to existing tax regulations related to 529 plans, including an increase in the limit for distributions used for elementary and secondary school expenses from $10,000 to $20,000. This could significantly impact how families save and spend on education, making it easier to cover a wider array of educational costs such as tuition, books, and tutoring. Additionally, the legislation introduces higher gift tax exclusions for contributions made to 529 plans, enabling parents and relatives to contribute more significantly to educational savings without incurring taxes on those gifts.
House Bill 750, titled the 'Achieving Choice in Education Act' or 'ACE Act', seeks to amend the Internal Revenue Code of 1986 by enhancing the incentives for education, particularly focusing on the funding mechanisms for elementary and secondary education. One of the primary focuses of the bill involves expanding the use of 529 plans, traditionally aimed at higher education expenses, to include a broader range of educational costs associated with public, private, and homeschooling options. This change is intended to provide more flexibility for families in how they choose to allocate funds for their children's education.
Notably, HB750 could spark debate regarding its implication on school choice laws across various states. It stipulates that tax-exempt bonds would be restricted to states that implement specific school choice initiatives, which can include voucher programs and tax credit scholarship programs. This aspect of the legislation may be contentious as it ties federal incentives to state-level policies on education, potentially creating disparities among states that adopt such programs versus those that do not. Advocates argue this could promote greater educational opportunities, while critics may see it as undermining public school funding and support.