Tax-Free Pell Grant Act

Tax-Free Pell Grant Act

This bill excludes from gross income, for income tax purposes, any amount received as a federal Pell Grant. It also expands the definition of qualified tuition and related expenses under the American Opportunity and Lifetime Learning tax credit to include computer or peripheral equipment (up to a maximum of $1,000), child and dependent care expenses, and course materials.

Bill 117 HR 4173, also known as the Tax-Free Pell Grant Act, is a piece of legislation introduced in the US Congress. The main purpose of this bill is to make Pell Grants tax-free for recipients. Pell Grants are federal financial aid awarded to low-income undergraduate students to help cover the cost of their education.

Under current law, Pell Grants are considered taxable income, which means that recipients must report the grant as income on their tax returns. This can result in higher tax liabilities for students who receive Pell Grants, reducing the overall benefit of the grant.

The Tax-Free Pell Grant Act seeks to address this issue by exempting Pell Grants from federal income tax. This would provide much-needed relief to low-income students who rely on Pell Grants to finance their education. By making Pell Grants tax-free, the bill aims to ensure that students can fully benefit from the financial assistance provided by the grants. Supporters of the bill argue that making Pell Grants tax-free will help reduce the financial burden on low-income students and make higher education more accessible and affordable. They believe that this change will encourage more students to pursue higher education and ultimately improve their economic prospects. Opponents of the bill may argue that making Pell Grants tax-free could have negative implications for the federal budget, as it would reduce tax revenue. They may also raise concerns about the potential impact on other federal financial aid programs. Overall, the Tax-Free Pell Grant Act is aimed at providing much-needed financial relief to low-income students and making higher education more accessible. It will be important to monitor the progress of this bill as it moves through the legislative process to see if it ultimately becomes law.