[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 3520 Introduced in Senate (IS)]

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118th CONGRESS
  1st Session
                                S. 3520

 To amend the Internal Revenue Code of 1986 to provide incentives for 
                               education.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           December 14, 2023

 Mr. Lee (for himself and Mr. Scott of South Carolina) introduced the 
 following bill; which was read twice and referred to the Committee on 
                                Finance

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code of 1986 to provide incentives for 
                               education.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Achieving Choice in Education Act'' 
or the ``ACE Act''.

SEC. 2. 529 ACCOUNT FUNDING FOR HOMESCHOOL AND ADDITIONAL ELEMENTARY 
              AND SECONDARY EXPENSES.

    (a) In General.--Section 529(c)(7) of the Internal Revenue Code of 
1986 is amended to read as follows:
            ``(7) Treatment of elementary and secondary tuition.--Any 
        reference in this section to the term `qualified higher 
        education expense' shall include a reference to the following 
        expenses in connection with enrollment or attendance at, or for 
        students enrolled at or attending, an elementary or secondary 
        public, private, or religious school:
                    ``(A) Tuition.
                    ``(B) Curriculum and curricular materials.
                    ``(C) Books or other instructional materials.
                    ``(D) Online educational materials.
                    ``(E) Tuition for tutoring or educational classes 
                outside of the home, including at a tutoring facility, 
                but only if the tutor or instructor is not related to 
                the student and--
                            ``(i) is licensed as a teacher in any 
                        State,
                            ``(ii) has taught at an eligible 
                        educational institution, or
                            ``(iii) is a subject matter expert in the 
                        relevant subject.
                    ``(F) Fees for a nationally standardized norm-
                referenced achievement test, an advanced placement 
                examination, or any examinations related to college or 
                university admission.
                    ``(G) Fees for dual enrollment in an institution of 
                higher education.
                    ``(H) Educational therapies for students with 
                disabilities provided by a licensed or accredited 
                practitioner or provider, including occupational, 
                behavioral, physical, and speech-language therapies.
        Such term shall include expenses for the purposes described in 
        subparagraphs (A) through (H) in connection with a homeschool 
        (whether treated as a homeschool or a private school for 
        purposes of applicable State law).''.
    (b) Effective Date.--The amendment made by this section shall apply 
to distributions made after the date of the enactment of this Act.

SEC. 3. INCREASE IN LIMITATION ON DISTRIBUTIONS FROM 529 PLANS FOR 
              ELEMENTARY AND SECONDARY SCHOOL EXPENSES.

    (a) In General.--Section 529(e)(3)(A) of the Internal Revenue Code 
of 1986 is amended by striking ``$10,000'' in the flush matter at the 
end and inserting ``$20,000''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2023.

SEC. 4. GIFT TAX EXCLUSIONS.

    (a) Gift Tax Exclusion for Contributions to 529 Plans.--Section 
2503(b) of the Internal Revenue Code of 1986 is amended by adding at 
the end the following new paragraph:
            ``(3) Exclusion for contributions to 529 plans.--The dollar 
        amount in effect under paragraph (1) with respect to gifts (to 
        which such paragraph applies) made to any person during any 
        calendar year shall be increased (not in excess of $20,000) by 
        the amount of such gifts made during such calendar year to 
        qualified tuition programs (as defined in section 529) with 
        respect to which such person is the designated beneficiary.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to gifts made after December 31, 2023.

SEC. 5. TAX-EXEMPT BONDS RESTRICTED TO STATES THAT IMPLEMENT SCHOOL 
              CHOICE LAWS.

    (a) In General.--Section 103 of the Internal Revenue Code of 1986 
is amended by adding at the end the following new subsection:
    ``(d) Restriction to States That Implement School Choice Laws.--
            ``(1) In general.--Subsection (a) shall not apply to any 
        State or local bond unless such bond is issued by a minimum 
        school choice State or a political subdivision of such a State.
            ``(2) Partial exclusion with respect to certain states.--
                    ``(A) In general.--In the case of any State or 
                local bond issued by a minimum school choice State 
                which does not meet the requirements of subparagraph 
                (B) (or issued by any political subdivision of such a 
                State), subsection (a) shall be applied by substituting 
                `50 percent of the interest' for `interest'.
                    ``(B) Requirements.--A minimum school choice State 
                meets the requirements of this subparagraph if the 
                Secretary determines that--
                            ``(i) at least 65 percent of the specified 
                        school age children are eligible for one or 
                        more of such State's school choice programs, 
                        and
                            ``(ii) the average amount spent by such 
                        State on the education of each specified school 
                        age child eligible for one or more of such 
                        State's school choice programs is at least 75 
                        percent of the average amount spent by such 
                        State on the education of each specified school 
                        age child not eligible for one or more of such 
                        programs.
            ``(3) Minimum school choice state.--For purposes of this 
        subsection, the term `minimum school choice State' means any 
        State if the Secretary determines that--
                    ``(A) such State has enacted one or more school 
                choice programs,
                    ``(B) at least 40 percent of the specified school 
                age children are eligible for one or more of such 
                State's school choice programs, and
                    ``(C) the average amount spent by such State on the 
                education of each specified school age child eligible 
                for one or more of such State's school choice programs 
                is at least 60 percent of the average amount spent by 
                such State on the education of each specified school 
                age child not eligible for one or more of such 
                programs.
            ``(4) School choice programs.--For purposes of this 
        subsection, the term `school choice program' means, with 
        respect to any State, each of the following with respect to 
        elementary and secondary education in such State:
                    ``(A) Tax credit scholarship programs.
                    ``(B) Voucher programs.
                    ``(C) Education savings account program.
                    ``(D) Refundable tax credit for private education 
                expenses.
            ``(5) Specified school age child.--For purposes of this 
        subsection, the term `specified school age child' means, with 
        respect to any State, any individual residing in such State who 
        has not attained age 18.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to bonds issued after the date of the enactment of this Act.
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