Tax-Free Pell Grant Act
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Progress
Where this bill stands in the legislative process.
- Introduced
- Passed House
- Passed Senate
- To President
- Became Law
Overview
This bill, the Tax-Free Pell Grant Act, amends the Internal Revenue Code to expand the exclusion of Pell Grants from an individual's gross income. Specifically, it clarifies that Pell Grants received as scholarships or fellowships are not considered taxable income, and it expands the American Opportunity and Lifetime Learning Credits to include child and dependent care expenses and computer or peripheral equipment costs incurred for eligible students. These changes will take effect starting January 1, 2025.
Key provisions
- Pell Grants received as scholarships or fellowships are now fully excluded from gross income.
- The American Opportunity and Lifetime Learning Credits are expanded to include child and dependent care expenses.
- The credits can now include expenses for computer or peripheral equipment used by eligible students.
- The definition of ‘child and dependent care expenses’ is broadened to include household services.
- A dollar limit of $1,000 is placed on the amount of computer or peripheral equipment expenses that can be claimed.
- The bill clarifies that these changes apply to taxable years beginning after December 31, 2024.
Who is affected
- Students receiving Pell Grants
- Taxpayers with qualifying children or dependents
- Taxpayers claiming the American Opportunity and Lifetime Learning Credits
Notable changes
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