S. 311: Achieving Choice in Education Act

The Achieving Choice in Education Act, also known as the ACE Act, aims to amend the Internal Revenue Code in various ways to support education and expand funding options for families, particularly regarding school choice. Below is a summary of its key features:

1. Funding for Homeschooling and Education Expenses

The bill allows expenses related to homeschooling and attending elementary and secondary schools (public, private, or religious) to be considered as qualified higher education expenses. This includes:

• Tution fees
• Curriculum materials
• Books and instructional materials
• Online educational resources
• Tutoring fees, provided the tutor is a licensed teacher or expert in their subject
• Fees for standardized tests and college admission exams
• Fees for dual enrollment in higher education institutions
• Educational therapies for students with disabilities

These expenses are recognized for students enrolled in homeschools as well.

2. Increased Distributions from 529 Plans

The bill also proposes to increase the maximum amount that can be distributed from 529 education savings plans for elementary and secondary expenses from $10,000 to $20,000. This change would take effect for taxable years beginning after December 31, 2026.

3. Gift Tax Exclusions for Contributions to 529 Plans

For contributions made to 529 plans, the bill raises the annual gift tax exclusion amount by up to $20,000, encouraging more contributions to these educational savings accounts. This amendment would also apply to gifts made after December 31, 2026.

4. Tax-Exempt Bonds and School Choice Laws

The legislation includes provisions relating to tax-exempt bonds. It specifies that bonds will only be tax-exempt if issued by a state that adheres to certain school choice laws. To qualify, the state must have:

• At least 65% of school-age children eligible for school choice programs.
• A spending average on these children that is at least 75% of what is spent on children not in such programs.

If a state does not meet these requirements but issues bonds, the bill imposes a partial tax exemption, applying only 50% of the interest for tax exclusion. This aspect of the bill seeks to promote school choice programs like tax credit scholarships, vouchers, and education savings accounts.

5. Definition of School Choice Programs

School choice programs as defined in the bill include:

• Tax credit scholarship programs
• Voucher programs
• Education savings account programs
• Refundable tax credits for private education expenses

The overall purpose of the ACE Act is to expand educational options and lessen financial barriers for families by providing greater access to funding for various educational expenses.

Relevant Companies

• EDUC - Educational Development Corporation, may see an increase in demand for educational materials and resources.
• TLRD - Tailored Brands, which owns various educational and tutoring services that could benefit from increased funding for tutoring services.