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HR750119th CongressWALLET

ACE Act

Sponsored By: Representative Burlison, Eric [R-MO-7]

Introduced

Summary

Expands 529 college-savings accounts to pay for a wide range of K–12 expenses. The bill would also raise the K–12 distribution cap, tweak gift-tax treatment for 529 contributions, and tie some tax-exempt bond benefits to state school-choice rules.

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  • Families with elementary and secondary students would be able to use 529 funds for tuition, curriculum, books, online materials, tutoring (with tutor qualifications), fees for standardized and college-admission tests, dual enrollment, and many homeschool costs. The bill would raise the K–12 distribution cap from $10,000 to $20,000 for taxable years after December 31, 2024.
  • Homeschooling households are explicitly covered because the rules apply whether the student is treated as a homeschool or a private school under state law.
  • Households with children who have disabilities would be able to use 529 money for licensed educational therapies such as occupational, behavioral, physical, and speech-language therapy.
  • Donors would get a new gift-tax rule that effectively increases the annual gift tax exclusion for contributions to 529 plans by up to $20,000 per beneficiary for gifts made after December 31, 2024.
  • State governments and municipal bond markets would face new conditions. The bill would limit the federal tax exemption for interest on certain tax-exempt bonds unless a state meets a “minimum school choice” test: the state must have at least one school-choice program, make at least 40% of specified children eligible for such programs, and spend at least 60% per eligible child compared with noneligible children. Bonds from nonqualifying issuers would face a 50 percent reduction in the exemption.

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Bill Overview

Analyzed Economic Effects

2 provisions identified: 1 benefits, 1 costs, 0 mixed.

More 529 plan help for families

If enacted, you could use a 529 college savings plan to pay many K–12 and homeschool costs. Eligible costs would include tuition, curriculum and books, online materials, certain tutoring, test and dual-enrollment fees, and licensed educational therapy. You could withdraw up to $20,000 per year tax-free for elementary and secondary expenses for tax years starting after December 31, 2024. Gifts to a 529 for a beneficiary could raise that person’s annual federal gift tax exclusion up to $20,000 for gifts made after December 31, 2024. Tutoring and therapies must meet provider rules in the bill to qualify.

Limits on tax-free municipal bonds

If enacted, federal tax-free status for interest on many state and local bonds would be limited for bonds issued after enactment. Only bonds issued by a "minimum school choice State" or its subdivisions would qualify for the full exemption. A State meets the minimum test if the Secretary finds at least 40% of children are eligible for school choice and average spending per eligible child is at least 60% of that for non-eligible children. For fuller favorable treatment the bill sets 65% eligibility and 75% spending tests. Bonds that fail the higher tests could have only half the interest treated as tax-exempt.

Sponsors & CoSponsors

Sponsor

Burlison, Eric [R-MO-7]

MO • R

Cosponsors

  • Rep. Harris, Andy [R-MD-1]

    MD • R

    Sponsored 1/28/2025

  • Rep. Mann, Tracey [R-KS-1]

    KS • R

    Sponsored 1/28/2025

  • Rep. Weber, Randy K. Sr. [R-TX-14]

    TX • R

    Sponsored 1/28/2025

  • Rep. Carter, John R. [R-TX-31]

    TX • R

    Sponsored 1/28/2025

  • Rep. Bost, Mike [R-IL-12]

    IL • R

    Sponsored 10/17/2025

Roll Call Votes

No roll call votes available for this bill.

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