ACE Act

The ACE Act would expand what families can pay for with tax-free money from 529 education savings plans. Currently, these plans allow up to $10,000 per year in tax-free distributions for K-12 tuition. This bill would increase that limit to $20,000 and expand eligible expenses to include homeschooling tuition, curriculum, books, educational materials, tutoring, testing fees, dual enrollment costs, and educational therapies for students with disabilities. The bill would also increase the annual gift tax exclusion for 529 contributions by $20,000.

The bill also includes a provision that would limit the tax exclusion for interest earned on state and local bonds. Under this proposal, only bonds issued by states that meet certain school choice requirements would qualify for the tax benefit. This is currently under committee consideration and has not yet been voted on by the full House.