Plain Language Summary
# ACE Act Summary The **Achieving Choice in Education Act (S 311)** would expand what families can buy with tax-free money from 529 education savings plans. Currently, these plans allow up to $10,000 per year to be withdrawn tax-free for private or religious elementary and secondary school tuition. This bill would broaden that to cover additional K-12 education expenses—including homeschooling tuition, textbooks, curriculum materials, online courses, tutoring, and testing fees.
The bill would also make changes to how states can issue certain tax-exempt bonds. **Who it affects:** Primarily families saving for K-12 education through 529 plans, as well as those using homeschooling options. The bill would make it easier for these families to use their savings for a wider range of education-related costs without tax penalties. **Current status:** The bill is currently in committee and has not yet been voted on by the full Senate. As introduced, it reflects Republican priorities around education choice and tax benefits for families with school-age children.
CRS Official Summary
Achieving Choice in Education Act or the ACE ActThis bill expands the expenses that may be paid for with tax-free distributions from a qualified tuition program (known as a 529 plan) to include certain elementary, secondary, and homeschool education expenses and makes other changes related to 529 plans. The bill also limits the tax exclusion for interest on state or local bonds.Under current law, 529 plan distributions are excluded from gross income if they are used to pay for qualified higher education expenses, which includes up to $10,000 (per year and per beneficiary) for tuition at an elementary or secondary public, private, or religious school.The bill expands the expenses that may be paid for with tax-free 529 plan distributions to include homeschooling tuition and the following expenses related to elementary, secondary, and homeschool education:curriculum,books,instructional and online educational materials,tutoring or educational classes outside the home,testing fees,fees for dual enrollment in a higher education institution, andeducational therapies for disabled students.The bill also increases the amount of tax-free 529 plan distributions that may be used to pay for elementary, secondary, and homeschool education expenses to $20,000.The bill increases the annual gift tax exclusion by $20,000 for contributions made to a 529 plan. (Under current law, up to $19,000 may be excluded from taxable gifts in 2025.)Finally, the bill limits the tax exclusion for interest on state or local bonds to bonds issued by states that meet minimum school choice requirements or political subdivisions of such states.
Latest Action
Read twice and referred to the Committee on Finance.