ACE Act | ChamberLight

IN COMMITTEE· 119TH CONGRESS

House BillHR 750Taxation

ACE Act

INTRO JAN 28· LAST ACTION JAN 28

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In Committee

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Passed Senate

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Became Law

WHAT THE BILL DOES

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This bill matters because it significantly broadens the financial tools available to families for K-12 education, moving 529 plans beyond just college savings. For families currently paying for private school, religious school, or homeschooling, this could offer substantial tax relief and make these options more affordable. By increasing the annual withdrawal limit and adding a gift tax exclusion, it encourages greater use of these plans for younger students.

Crucially, the bill introduces a federal incentive for states to adopt 'school choice' programs. If this bill becomes law, states might face pressure to create or expand such programs to avoid higher borrowing costs, which could lead to more public funds being directed towards private or alternative education options. This could spark a national debate about the role of federal tax policy in influencing state education systems and how public education is funded. Voters should care because it could shift educational funding priorities, impact the affordability of different schooling options, and change how their state and local governments finance public services.

KEY PROVISIONS

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PROVISION 01

Expands eligible expenses for 529 education savings plans to include a wide range of elementary and secondary school costs, including private school tuition, homeschooling expenses, curriculum, and educational therapies for students with disabilities.

This allows families to use tax-advantaged savings accounts for K-12 education, not just higher education, potentially making private and alternative schooling options more financially accessible.

PROVISION 02

Increases the annual limit for tax-free 529 plan distributions used for K-12 expenses from $10,000 to $20,000 per student.

This doubles the amount families can withdraw tax-free each year for elementary and secondary education, providing greater financial flexibility.

PROVISION 03

Creates a new exclusion from federal gift tax for contributions made to 529 plans, allowing an additional $20,000 per year per beneficiary to be contributed without counting towards gift tax.

This offers a further tax incentive for families and others to save for a child's education through 529 plans, potentially boosting contributions.

PROVISION 04

Conditions the tax-exempt status of state and local government bonds on whether the issuing state has implemented certain 'school choice' programs.

This provision would compel states to adopt or expand school choice programs to maintain lower borrowing costs, significantly impacting state budgets and education policy.

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ACTION TIMELINE

2 EVENTS

JAN 28

Introduced in House

INTROREFERRAL

JAN 28

Referred to the House Committee on Ways and Means.

HOUSE · INTROREFERRAL

BILL INFO

TypeHouse Bill

NumberHR 750

Congress119th

StatusIn Committee

IntroducedJan 28, 2025

Last actionJan 28, 2025

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IN COMMITTEE· 119TH CONGRESS · WAYS AND MEANS COMMITTEE · INTRODUCED JAN 28, 2025

House BillHR 750Taxation

ACE Act

INTRODUCED JAN 28, 2025· LAST ACTION JAN 28, 2025

PASSAGE CHANCES

—%

READING

5 min

COSPONSORS

COMPLEXITY

Moderate

Call my reps Congress.gov

LEGISLATIVE PROGRESS

STEP 2 OF 8

Introduced

In Committee

Reported

Passed House

Passed Senate

Conference

To President

Became Law

Introduced
In Committee
Reported
Passed House
Passed Senate
Conference
To President
Became Law

WHAT THE BILL DOES

AI-written

KEY PROVISIONS

AI-extracted

high

This allows families to use tax-advantaged savings accounts for K-12 education, not just higher education, potentially making private and alternative schooling options more financially accessible.

med

Increases the annual limit for tax-free 529 plan distributions used for K-12 expenses from $10,000 to $20,000 per student.

This doubles the amount families can withdraw tax-free each year for elementary and secondary education, providing greater financial flexibility.

med

Creates a new exclusion from federal gift tax for contributions made to 529 plans, allowing an additional $20,000 per year per beneficiary to be contributed without counting towards gift tax.

This offers a further tax incentive for families and others to save for a child's education through 529 plans, potentially boosting contributions.

high

Conditions the tax-exempt status of state and local government bonds on whether the issuing state has implemented certain 'school choice' programs.

This provision would compel states to adopt or expand school choice programs to maintain lower borrowing costs, significantly impacting state budgets and education policy.

DEADLINES & DATES

AI-extracted

An AI model extracted this from the bill’s official record and can make mistakes. Check the official text ↗ (opens in new tab)

after the date of the enactment of this Act

Distributions made from 529 plans for elementary and secondary expenses will be subject to the new rules.

taxable years beginning after December 31, 2024

The increase in the 529 plan distribution limit for K-12 expenses will apply to.

gifts made after December 31, 2024

The new gift tax exclusion for contributions to 529 plans will apply to.

bonds issued after the date of the enactment of this Act

The restriction on tax-exempt bonds for states without school choice laws will apply to.

PENALTIES & ENFORCEMENT

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An AI model extracted this from the bill’s official record and can make mistakes. Check the official text ↗ (opens in new tab)

TYPE	AMOUNT	WHO
administrative	Loss of full tax-exempt status for state and local bonds (or reduction to 50% interest exemption)	State and local governments in states that do not meet 'minimum school choice State' requirements

GLOSSARY

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529 Plan: A tax-advantaged savings plan designed to encourage saving for future education costs, typically higher education. Contributions are not tax-deductible, but earnings grow tax-free and withdrawals are tax-free when used for qualified education expenses.
Internal Revenue Code of 1986: The official compilation of federal tax laws in the United States, administered by the Internal Revenue Service (IRS).
Tax-Exempt Bond: A bond issued by a state or local government where the interest paid to investors is exempt from federal income tax (and sometimes state and local taxes), making it an attractive investment for some.
School Choice Program: Government programs designed to give parents options for where to send their children to school, including public, private, or religious schools, often through mechanisms like vouchers, education savings accounts, or tax credit scholarships.
Gift Tax Exclusion: The amount of money or property an individual can give to another person in a calendar year without incurring federal gift tax liability or using up part of their lifetime gift tax exemption.
Designated Beneficiary: The individual for whom a 529 education savings account is established and whose qualified education expenses the account is intended to cover.

ACTION TIMELINE

2 EVENTS

JAN 28, 25

Introduced in House

INTROREFERRAL

JAN 28, 25

Referred to the House Committee on Ways and Means.

INTROREFERRAL

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ACE Act

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ACE Act

LEGISLATIVE PROGRESS

WHAT THE BILL DOES

KEY PROVISIONS

DEADLINES & DATES

PENALTIES & ENFORCEMENT

GLOSSARY

ACTION TIMELINE

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