I 118TH CONGRESS 1ST SESSION H. R. 3000 To amend the Internal Revenue Code of 1986 to expand the exclusion of Pell Grants from gross income, and for other purposes. IN THE HOUSE OF REPRESENTATIVES APRIL 28, 2023 Mr. DOGGETT (for himself, Mr. KELLY of Pennsylvania, Mr. DAVIS of Illinois, Mr. SMITH of Nebraska, Mr. BLUMENAUER, Mr. FITZPATRICK, Mr. CAS- TRO of Texas, and Mr. TONY GONZALES of Texas) introduced the fol- lowing bill; which was referred to the Committee on Ways and Means A BILL To amend the Internal Revenue Code of 1986 to expand the exclusion of Pell Grants from gross income, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Tax-Free Pell Grant 4 Act’’. 5 SEC. 2. EXPANSION OF PELL GRANT EXCLUSION FROM 6 GROSS INCOME. 7 (a) IN GENERAL.—Paragraph section 117(b)(1) of 8 the Internal Revenue Code of 1986 is amended by striking 9 VerDate Sep 11 2014 04:46 May 10, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H3000.IH H3000 kjohnson on DSK79L0C42PROD with BILLS 2 •HR 3000 IH ‘‘received by an individual’’ and all that follows and insert- 1 ing ‘‘received by an individual— 2 ‘‘(A) as a scholarship or fellowship grant 3 to the extent the individual establishes that, in 4 accordance with the conditions of the grant, 5 such amount was used for qualified tuition and 6 related expenses, or 7 ‘‘(B) as a Federal Pell Grant under section 8 401 of the Higher Education Act of 1965 (as 9 in effect on the date of the enactment of the 10 Tax-Free Pell Grant Act).’’. 11 (b) NO ADJUSTMENT UNDER AMERICAN OPPOR- 12 TUNITY AND LIFETIME LEARNING CREDITS.—Section 13 25A(g)(2)(A) of such Code is amended by striking ‘‘a 14 qualified scholarship which’’ and inserting ‘‘a qualified 15 scholarship which is described in section 117(b)(1)(A) and 16 which’’. 17 (c) EFFECTIVE DATE.—The amendments made by 18 this section shall apply to taxable years beginning after 19 December 31, 2022. 20 SEC. 3. EXPANSION OF AMERICAN OPPORTUNITY AND 21 LIFETIME LEARNING CREDITS. 22 (a) IN GENERAL.—Section 25A of the Internal Rev- 23 enue Code of 1986 is amended— 24 (1) in subsection (f)(1)— 25 VerDate Sep 11 2014 04:46 May 10, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H3000.IH H3000 kjohnson on DSK79L0C42PROD with BILLS 3 •HR 3000 IH (A) in subparagraph (A), by striking ‘‘tui- 1 tion and fees’’ inserting ‘‘tuition, fees, computer 2 or peripheral equipment, child and dependent 3 care expenses, and course materials’’, 4 (B) by striking subparagraph (D), and 5 (C) by adding at the end the following new 6 subparagraphs: 7 ‘‘(D) CHILD AND DEPENDENT CARE EX- 8 PENSES.—For purposes of this paragraph— 9 ‘‘(i) IN GENERAL.—The term ‘child 10 and dependent care expenses’ means 11 amounts paid for the following expenses, 12 but only if such expenses are incurred to 13 enable the taxpayer to be enrolled in an el- 14 igible educational institution for any period 15 for which there are 1 or more qualifying 16 individuals with respect to the taxpayer: 17 ‘‘(I) expenses for household serv- 18 ices, and 19 ‘‘(II) expenses for the care of a 20 qualifying individual. 21 Such term shall not include any amount 22 paid for services outside the taxpayer’s 23 household at a camp where the qualifying 24 individual stays overnight. 25 VerDate Sep 11 2014 04:46 May 10, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H3000.IH H3000 kjohnson on DSK79L0C42PROD with BILLS 4 •HR 3000 IH ‘‘(ii) QUALIFYING INDIVIDUAL.—The 1 term ‘qualifying individual’ has the mean- 2 ing given such term in section 21(b)(1). 3 ‘‘(iii) EXCEPTION, DEPENDENT CARE 4 CENTERS.—Rules similar to the rules of 5 subparagraphs (B), (C), and (D) of section 6 21(b)(2) shall apply, except the term ‘child 7 and dependent care expenses’ shall be sub- 8 stituted for the term ‘employment-related 9 expenses’ each place it appears in such 10 subparagraphs. 11 ‘‘(E) CHILD AND DEPENDENT CARE EX- 12 PENSES ONLY QUALIFIED EXPENSES WHEN 13 CLAIMED BY ELIGIBLE STUDENT.—Amounts 14 paid for an expense described in subparagraph 15 (E) may not be taken into account under this 16 paragraph for a taxable year unless required for 17 the enrollment or attendance of an individual 18 described in subparagraph (A)(i) or subpara- 19 graph (A)(ii). 20 ‘‘(F) COMPUTER OR PERIPHERAL EQUIP- 21 MENT.— 22 ‘‘(i) DEFINED.—For purposes of this 23 paragraph, the term ‘computer or periph- 24 eral equipment’ means expenses for the 25 VerDate Sep 11 2014 04:46 May 10, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H3000.IH H3000 kjohnson on DSK79L0C42PROD with BILLS 5 •HR 3000 IH purchase of computer or peripheral equip- 1 ment (as defined in section 168(i)(2)(B), 2 computer software (as defined in section 3 197(e)(3)(B))), or internet access and re- 4 lated services, if such equipment, software, 5 or services are to be used primarily by the 6 individual during any of the years the indi- 7 vidual is enrolled at an eligible educational 8 institution. 9 ‘‘(ii) DOLLAR LIMIT ON AMOUNT 10 CREDITABLE.—The aggregate of the 11 amounts paid or expenses incurred for 12 computer or peripheral equipment which 13 may be taken into account under this para- 14 graph for a taxable year by the taxpayer 15 shall not exceed $1,000.’’, and 16 (2) in subsection (g)(5)— 17 (A) in the heading, by adding ‘‘OR CRED- 18 IT’’ at the end, and 19 (B) by inserting ‘‘or credit’’ after ‘‘a de- 20 duction’’. 21 (b) EFFECTIVE DATE.—The amendments made by 22 this section shall apply to taxable years beginning after 23 December 31, 2022. 24 Æ VerDate Sep 11 2014 04:46 May 10, 2023 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6301 E:\BILLS\H3000.IH H3000 kjohnson on DSK79L0C42PROD with BILLS