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 118 HR 3000, 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 on their tax returns and may be required to pay taxes on the amount received. The Tax-Free Pell Grant Act seeks to change this by exempting Pell Grants from federal income tax.

Proponents of the bill argue that making Pell Grants tax-free will help alleviate the financial burden on low-income students and make higher education more accessible. They believe that taxing Pell Grants contradicts the original intent of the program, which is to provide financial assistance to those who need it most. Opponents of the bill may argue that making Pell Grants tax-free could have implications for the federal budget and may lead to decreased funding for other programs. They may also raise concerns about the potential for abuse or misuse of tax-free grants. Overall, the Tax-Free Pell Grant Act aims to support low-income students in pursuing higher education by removing the tax burden associated with Pell Grants. The bill is currently being considered by Congress and its outcome will have significant implications for students receiving financial aid.