What This Bill Does
This bill changes the rules for 529 accounts (special savings accounts used to pay for education) to allow money from these accounts to pay for kindergarten through grade 12 school expenses. Previously, 529 accounts could only be used for college and higher education costs. The bill expands what types of K-12 expenses families can pay for with these accounts.
Who It Affects
Families with 529 accounts. Students attending elementary and secondary public, private or religious schools. Students who are homeschooled. Tutors and educational instructors. Students with disabilities receiving educational therapies.
Key Provisions
• Families can use 529 account money to pay tuition at elementary and secondary public, private or religious schools (Sec. 2)
• Families can use 529 account money to buy curriculum materials, books, instructional materials and online educational materials for K-12 education (Sec. 2)
• Families can use 529 account money to pay for tutoring or educational classes outside the home if the tutor or instructor is licensed as a teacher, has taught at an eligible educational institution, or is a subject matter expert (Sec. 2)
• Families can use 529 account money to pay for test fees, including standardized tests, advanced placement exams and college admission exams (Sec. 2)
• Families can use 529 account money to pay for educational therapies for students with disabilities provided by licensed or accredited practitioners (Sec. 2)
• Families can use 529 account money for all these expenses when connected to homeschooling (Sec. 2)
What Changes
The definition of what counts as an allowable expense from a 529 account expands to include K-12 educational expenses in addition to higher education expenses. Families will now be able to withdraw money from these accounts tax-free (without tax penalties) to pay for a wider range of elementary and secondary school costs.
Important Definitions
The bill does not explicitly define any terms for the purposes of this legislation.
Effective Date
The changes apply to distributions made after the date the bill becomes law (Sec. 2).
II
118TH CONGRESS
1ST SESSION
S. 57
To amend the Internal Revenue Code of 1986 to permit kindergarten through
grade 12 educational expenses to be paid from a 529 account.
IN THE SENATE OF THE UNITED STATES
JANUARY 24 (legislative day, JANUARY 3), 2023
Mr. CRUZ (for himself, Mr. LEE, Mr. SCOTT of Florida, Mr. JOHNSON, Mr.
LANKFORD, and Mr. SCOTT of South Carolina) 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 permit
kindergarten through grade 12 educational expenses to
be paid from a 529 account.
Be it enacted by the Senate and House of Representa-
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tives of the United States of America in Congress assembled,
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SECTION 1. SHORT TITLE.
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This Act may be cited as the ‘‘Student Empowerment
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Act’’.
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•S 57 IS
SEC. 2. 529 ACCOUNT FUNDING FOR HOMESCHOOL AND AD-
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DITIONAL ELEMENTARY AND SECONDARY EX-
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PENSES.
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(a) IN GENERAL.—Section 529(c)(7) of the Internal
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Revenue Code of 1986 is amended to read as follows:
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‘‘(7) TREATMENT OF ELEMENTARY AND SEC-
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ONDARY TUITION.—Any reference in this section to
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the term ‘qualified higher education expense’ shall
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include a reference to the following expenses in con-
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nection with enrollment or attendance at, or for stu-
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dents enrolled at or attending, an elementary or sec-
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ondary public, private, or religious school:
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‘‘(A) Tuition.
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‘‘(B) Curriculum and curricular materials.
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‘‘(C) Books or other instructional mate-
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rials.
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‘‘(D) Online educational materials.
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‘‘(E) Tuition for tutoring or educational
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classes outside of the home, including at a tu-
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toring facility, but only if the tutor or instruc-
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tor is not related to the student and—
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‘‘(i) is licensed as a teacher in any
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State,
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‘‘(ii) has taught at an eligible edu-
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cational institution, or
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•S 57 IS
‘‘(iii) is a subject matter expert in the
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relevant subject.
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‘‘(F) Fees for a nationally standardized
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norm-referenced achievement test, an advanced
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placement examination, or any examinations re-
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lated to college or university admission.
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‘‘(G) Fees for dual enrollment in an insti-
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tution of higher education.
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‘‘(H) Educational therapies for students
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with disabilities provided by a licensed or ac-
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credited practitioner or provider, including oc-
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cupational, behavioral, physical, and speech-lan-
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guage therapies.
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Such term shall include expenses for the purposes
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described in subparagraphs (A) through (H) in con-
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nection with a homeschool (whether treated as a
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homeschool or a private school for purposes of appli-
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cable State law).’’.
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(b) EFFECTIVE DATE.—The amendment made by
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this section shall apply to distributions made after the
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date of the enactment of this Act.
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Æ
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