Skills Investment Act of 2025
Sponsored By: Senator Amy Klobuchar
Introduced
Summary
Creates Coverdell Lifelong Learning Accounts that would expand who can save and what counts as an education expense, and add new tax incentives for employers and beneficiaries. These accounts would let people use education savings for a wider set of job training and skill-building costs and change contribution, age, and tax rules to encourage lifelong learning.
Show full summary
- Families and learners: The bill would widen eligible expenses to include workforce training under WIOA, career and technical education, adult basic education, youth workforce activities, testing, transportation, and computers, software, internet access, and related services when used for the listed programs.
- Account rules and beneficiaries: It would raise the age limit for contributions to age 70 and cap account balances above $10,000 once the designated beneficiary turns 30. It would also create a new deduction for beneficiaries who are adults and increase the penalty on distributions not used for deductible purposes.
- Employers and tax incentives: Employers would get a new credit equal to 25 percent of nonelective contributions to these accounts. The bill would also set a new contribution amount rule for beneficiaries over age 30 and add aggregation and employee-definition rules for the credit.
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Bill Overview
Analyzed Economic Effects
4 provisions identified: 2 benefits, 0 costs, 2 mixed.
Employer credit for employee training
If enacted, employers could claim a nonrefundable tax credit equal to 25% of nonelective contributions they make to employees' Coverdell lifelong learning accounts. The credit would exclude certain owners and related persons, follow employer aggregation rules, and apply for tax years beginning after December 31, 2025.
Adult beneficiary deduction and penalty
If enacted, a designated beneficiary age 18 or older could deduct contributions made for their Coverdell lifelong learning account for the taxable year. Rollovers would not be deductible. The bill would also create ordering rules so some later withdrawals tied to deducted contributions are taxed, and it would raise the extra tax on nonqualified withdrawals from 10% to 20% for tax years after 2025.
Tax-free withdrawals for job training
If enacted, you would be able to take tax-free withdrawals from a Coverdell lifelong learning account for many job-training and skill-development expenses paid after the beneficiary turns 16. Eligible costs would include WIOA training, Perkins career and technical education, certain adult literacy services, testing for enrollment or certification, related transportation, and computers or internet used while in the program. Distributions must be made after December 31, 2025.
New account name, age, and caps
If enacted, Coverdell education savings accounts would be renamed Coverdell lifelong learning accounts starting January 1, 2026, and accounts opened before that date would be treated as renamed. Contributions could be made for beneficiaries up to age 70. But for beneficiaries over age 30, account balances could not be allowed to exceed $10,000 and the annual contribution limit for those over 30 would be $4,000; contributions after December 31, 2025 that would push a balance over $10,000 would be barred.
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Sponsors & CoSponsors
Sponsor
Amy Klobuchar
MN • D
Cosponsors
Sen. McCormick, David [R-PA]
PA • R
Sponsored 11/19/2025
Roll Call Votes
No roll call votes available for this bill.
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