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S. 311Senate119th Congress (2025-2027)In Committee

ACE Act

Sponsored by Mike LeeSen. Mike Lee (R-UT)
Introduced January 29, 2025

AI-Generated Summary

Updated November 24, 2025 at 3:11 AM UTC

The ACE Act amends the Internal Revenue Code to give families and donors more tax‑benefits when using 529 college‑savings plans for K‑12 education. It broadens what K‑12 costs can be paid with 529 funds, doubles the yearly withdrawal limit, and raises the gift‑tax exclusion for contributions. The bill also ties the tax‑exempt status of state bonds to whether a state has robust school‑choice programs.

Key Provisions

  • Expands the definition of qualified K‑12 education expenses for 529 plans to include tuition, curriculum, books, online materials, tutoring (by licensed or qualified instructors), standardized test fees, dual‑enrollment fees, and therapeutic services for students with disabilities, also covering homeschool costs.
  • Raises the annual amount that can be withdrawn from a 529 plan for K‑12 expenses from $10,000 to $20,000, effective for tax years beginning after Dec. 31, 2026.
  • Increases the gift‑tax exclusion for contributions to 529 plans, allowing an additional amount (up to $20,000) to be excluded from the donor’s annual gift‑tax limit for contributions made after Dec. 31, 2026.
  • Limits the tax‑exempt status of state and local bonds to states that meet defined “school‑choice” criteria, with a partial interest‑exclusion (50 % of interest) for states that meet a lower threshold.

Legislative Activity

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SenateIntro Referral Latest Action

Read twice and referred to the Committee on Finance.

Finance Committee

January 29, 2025

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SenateIntro Referral

Introduced in Senate

January 29, 2025

SenateIntro Referral

Read twice and referred to the Committee on Finance.

Finance Committee

January 29, 2025

Bill Text

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Introduced in SenateIssued January 29, 2025

II

119th CONGRESS

1st Session

S. 311

IN THE SENATE OF THE UNITED STATES

January 29, 2025

Mr. Lee (for himself and Mr. Budd) 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.

1.

Short title

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

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.

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, 2026.

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, 2026.

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.