Increased Financial Support for Education and School Choice
This act expands the use of 529 savings accounts for a wider range of educational expenses, including homeschooling and private schools. It also increases contribution limits and introduces tax benefits, aiming to help families finance their children's education. Additionally, the act links states' access to preferential bonds with the implementation of school choice programs.
Key points
Expanded 529 Account Usage: Funds from these accounts can be used for tuition, educational materials, tutoring (from licensed teachers), standardized tests, dual enrollment, and therapies for students with disabilities, applicable to public, private, religious, and homeschool settings.
Increased Contribution Limits and Tax Benefits: The annual withdrawal limit from 529 accounts for elementary and secondary school expenses will increase from $10,000 to $20,000. Additionally, contributions to 529 plans can be excluded from gift tax up to $20,000 annually.
Support for School Choice Programs: States that implement school choice programs (e.g., education vouchers, private education tax credits) will have preferential access to tax-exempt bonds. States without such programs or with limited programs may lose part or all of the interest tax exemption on their bonds.
Status:
Introduced
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