United States 119th Congress Status: In Committee Bipartisan · 2 D · 2 R cosponsors

HR 2543 — Tax-Free Pell Grant Act

Last action — Referred to the House Committee on Ways and Means.

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  1. ✓
    Introduced
  2. 2
    In Committee
  3. 3
    Passed House
  4. 4
    Passed Senate
  5. 5
    To Executive
  6. 6
    Enacted

This bill is in committee in the House. Introduced April 01, 2025. It must pass committee before a floor vote.

Next likely step: a committee vote, then a floor vote in the House.

Prognosis

Advancing 38% · moderate confidence

Where this bill stands today.

Odds of enactment

Low

How often bills like it became law.

  • In Committee

    Current position in the legislative process.

  • 4 sponsors

    1 primary, 3 co-sponsors signed on.

  • Bipartisan support

    Sponsored across 2 parties (2 D · 2 R) — cross-party backing.

Prognosis reads this bill's own signals — stage, sponsorship breadth, committee status, recorded votes and cross-state momentum. Odds come from a model trained on which bills have become law.

In plain language

HR 2543 aims to improve tax policies for families and small businesses.

This bill proposes updates to tax regulations that could benefit families and small businesses. It is currently under review in the House.

What this means for you
  • Families: This means potential savings on taxes for your household.
  • Small Business: This could provide reduced tax obligations, allowing for reinvestment in your business.

Bill Text

Sections of law this bill changes

2 sections in 1 law

From the bill's own amending language, matched to the official United States Code (current through Public Law 119-124).

Normal taxes and surtaxes · 26 U.S.C. ch. 1 2 sections
  • § 25A American Opportunity and Lifetime Learning credits Amends

    26 U.S.C. § 25A — at 25A(g)(2)(A)

    The law today

    (a) Allowance of credit In the case of an individual, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year the amount equal to the sum of— (1) the American Opportunity Tax Credit, plus (2) the Lifetime Learning Credit. (b) American Opportunity Tax Credit (1) Per student credit In the case of any eligible student for whom an election is in effect under this section for any taxable year, the American Opportunity Tax Credit is an amount equal to the sum of— (A) 100 percent of so much of the qualified tuition and related expenses paid by the taxpayer during the taxable year (for education furnished to the eligible student during any academic period beginning in such taxable year) as does not exceed $2,000, plus (B) 25 percent of such expenses so paid as exceeds $2,000 but does not exceed $4,000. (2) Limitations applicable to American Opportunity Tax Credit (A) Credit allowed only for 4 taxable years An election to have this section apply with respect to any eligible student for purposes of the American Opportunity Tax Credit under subsection (a)(1) may not be made for any taxable year if such an election (by the taxpayer or any other individual) is in effect with respect to such student for any 4 prior taxable years. (B) Credit allowed for year only if individual is at least ½ time student for portion of year The American Opportunity Tax Credit under subsection (a)(1) shall not be allowed for a taxable year with respect to the qualified tuition and related expenses of an individual unless such individual is an eligible student for at least one academic period which begins during such year. (C) Credit allowed only for first 4 years of postsecondary education The American Opportunity Tax Credit under subsection (a)(1) shall not be allowed for a taxable year with respect to the qualified tuition and related expenses of an eligible student if the student has completed (before the beginning of such taxable year) the first 4 years of postsecondary education at an eligible educational institution. (D) Denial of credit if student convicted of a felony drug offense The American Opportunity Tax Credit under subsection (a)(1) shall not be allowed for qualified tuition and related expenses for the enrollment or attendance of a student for any academic period if such student has been convicted of a Federal or State felony offense consisting of the possession or distribution of a controlled substance before the end of the taxable year with or within which such period ends. (3) Eligible student For purposes of this subsection, the term “eligible student” means, with respect to any academic period, a student who— (A) meets the requirements of section 484(a)(1) of the Higher Education Act of 1965 (20 U.S.C. 1091(a)(1)), as in effect on the date of the enactment of this section, and (B) is carrying at least ½ the normal full-time work load for the course of study the student is pursuing. (4) Restrictions on taxpayers who improperly claimed American Opportunity Tax Credit in prior years (A) Taxpayers making prior fraudulent or reckless claims (i) In general No American Opportunity Tax Credit shall be allowed under this section for any taxable year in the disallowance period. (ii) Disallowance period For purposes of subparagraph (A), the disallowance period is— (I) the period of 10 taxable years after the most recent taxable year for which there was a final determination that the taxpayer’s claim of the American Opportunity Tax Credit under this section was due to fraud, and (II) the period of 2 taxable years after the most recent taxable year for which there was a final determination that the taxpayer’s claim of the American Opportunity Tax Credit under this section was due to reckless or intentional disregard of rules and regulations (but not due to fraud). (B) Taxpayers making improper prior claims In the case of a taxpayer who is denied the American Opportunity Tax Credit under this section for any ta...

    27 other bills also change this section · Follow it → Official text at uscode.house.gov ↗

  • § 117 Qualified scholarships Amends

    26 U.S.C. § 117 — at 117(b)(1)

    The law today

    (a) General rule Gross income does not include any amount received as a qualified scholarship by an individual who is a candidate for a degree at an educational organization described in section 170(b)(1)(A)(ii). (b) Qualified scholarship For purposes of this section— (1) In general The term “qualified scholarship” means any amount received by an individual as a scholarship or fellowship grant to the extent the individual establishes that, in accordance with the conditions of the grant, such amount was used for qualified tuition and related expenses. (2) Qualified tuition and related expenses For purposes of paragraph (1), the term “qualified tuition and related expenses” means— (A) tuition and fees required for the enrollment or attendance of a student at an educational organization described in section 170(b)(1)(A)(ii), and (B) fees, books, supplies, and equipment required for courses of instruction at such an educational organization. (c) Limitation (1) In general Except as provided in paragraph (2), subsections (a) and (d) shall not apply to that portion of any amount received which represents payment for teaching, research, or other services by the student required as a condition for receiving the qualified scholarship or qualified tuition reduction. (2) Exceptions Paragraph (1) shall not apply to any amount received by an individual under— (A) the National Health Service Corps Scholarship Program under section 338A(g)(1)(A) of the Public Health Service Act, (B) the Armed Forces Health Professions Scholarship and Financial Assistance program under subchapter I of chapter 105 of title 10, United States Code, or (C) a comprehensive student work-learning-service program (as defined in section 448(e) of the Higher Education Act of 1965) operated by a work college (as defined in such section). (d) Qualified tuition reduction (1) In general Gross income shall not include any qualified tuition reduction. (2) Qualified tuition reduction For purposes of this subsection, the term “qualified tuition reduction” means the amount of any reduction in tuition provided to an employee of an organization described in section 170(b)(1)(A)(ii) for the education (below the graduate level) at such organization (or another organization described in section 170(b)(1)(A)(ii)) of— (A) such employee, or (B) any person treated as an employee (or whose use is treated as an employee use) under the rules of section 132(h). (3) Reduction must not discriminate in favor of highly compensated, etc. Paragraph (1) shall apply with respect to any qualified tuition reduction provided with respect to any highly compensated employee only if such reduction is available on substantially the same terms to each member of a group of employees which is defined under a reasonable classification set up by the employer which does not discriminate in favor of highly compensated employees (within the meaning of section 414(q)). For purposes of this paragraph, the term “highly compensated employee” has the meaning given such term by section 414(q). [(4) Repealed. Pub. L. 101–140, title II, § 203(a)(1), (2), Nov. 8, 1989, 103 Stat. 830] (5) Special rules for teaching and research assistants In the case of the education of an individual who is a graduate student at an educational organization described in section 170(b)(1)(A)(ii) and who is engaged in teaching or research activities for such organization, paragraph (2) shall be applied as if it did not contain the phrase “(below the graduate level)”.

    75 other bills also change this section · Follow it → Official text at uscode.house.gov ↗

How this bill changes current law

9 changes Share ↗

AI-generated reading aid from the bill's amendatory text — verify against the official bill.

The bill expands the exclusion of Pell Grants from gross income and enhances the American Opportunity and Lifetime Learning Credits, including new eligible expenses.

  • Section 117(b)(1)

    received by an individual → received by an individual-- (A) as a scholarship or fellowship grant to the extent the individual establishes that, in accordance with the conditions of the grant, such amount was used for qualified tuition and related expenses, or (B) as a Federal Pell Grant under section 401 of the Higher Education Act of 1965 (as in effect on the date of the enactment of the Tax-Free Pell Grant Act).

    This change allows Pell Grants to be excluded from gross income specifically and clarifies the conditions under which they can be excluded.

  • Section 25A(g)(2)(A)

    a qualified scholarship which → a qualified scholarship which is described in section 117(b)(1)(A) and which

    This change ensures that only scholarships that meet specific criteria regarding their use for tuition and related expenses can be excluded from the American Opportunity and Lifetime Learning Credits adjustments.

  • Section 25A(f)(1)

    tuition and fees → tuition, fees, computer or peripheral equipment, child and dependent care expenses, and course materials

    This broadens the eligible expenses that can qualify for the American Opportunity and Lifetime Learning Credits.

  • Section 25A(f)(1)

    subparagraph (D)

    This removes the previous subparagraph (D), which likely had limitations on eligible expenses.

  • Section 25A(f)(1)

    Child and dependent care expenses.--For purposes of this paragraph-- (i) In general.--The term `child and dependent care expenses' means amounts paid for the following expenses, but only if such expenses are incurred to enable the taxpayer to be enrolled in an eligible educational institution for any period for which there are 1 or more qualifying individuals with respect to the taxpayer: (I) expenses for household services, and (II) expenses for the care of a qualifying individual. Such term shall not include any amount paid for services outside the taxpayer's household at a camp where the qualifying individual stays overnight. (ii) Qualifying individual.--The term `qualifying individual' has the meaning given such term in section 21(b)(1). (iii) Exception, dependent care centers.--Rules similar to the rules of subparagraphs (B), (C), and (D) of section 21(b)(2) shall apply, except the term `child and dependent care expenses' shall be substituted for the term `employment-related expenses' each place it appears in such subparagraphs.

    This adds sections defining eligible child and dependent care expenses that can be included for credit under the American Opportunity and Lifetime Learning Credits.

  • Section 25A(f)(1)

    Amounts paid for an expense described in subparagraph (E) may not be taken into account under this paragraph for a taxable year unless required for the enrollment or attendance of an individual described in subparagraph (A)(i) or subparagraph (A)(ii).

    This condition ensures that claimed expenses are directly tied to enrollment or attendance requirements.

  • Section 25A(f)(1)

    For purposes of this paragraph, the term `computer or peripheral equipment' means expenses for the purchase of computer or peripheral equipment (as defined in section 168(i)(2)(B), computer software (as defined in section 197(e)(3)(B))), or internet access and related services, if such equipment, software, or services are to be used primarily by the individual during any of the years the individual is enrolled at an eligible educational institution.

    This adds a clear definition of what constitutes computer or peripheral equipment as it relates to educational expenses.

  • Section 25A(f)(1)

    The aggregate of the amounts paid or expenses incurred for computer or peripheral equipment which may be taken into account under this paragraph for a taxable year by the taxpayer shall not exceed $1,000.

    This establishes a $1,000 limit on the amount of expenses that can be claimed for computer or peripheral equipment.

  • Section 25A(g)(5)

    deduction → deduction or credit

    This change clarifies that the section refers to both deductions and credits related to the educational expenses.

Action History

  1. Introduced in House

  2. Introduced in House

  3. Referred to the House Committee on Ways and Means.

Sponsors

Sponsorship breakdown

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1 sponsors · 3 co-sponsors · 543 not signed on

Sponsors (1)

Co-sponsors (3)

Not signed on (543)

543 members have not signed on to this bill.

Show all 543 →

"Not signed on" means a member has not sponsored or co-sponsored this bill — it does not imply opposition. Members flagged Voted No have a recorded No vote on this bill.

Whip count is in markup. Polling the chamber and every recorded vote this session. Only the first open is slow. It’s instant for you after this. Calling the roll · Tallying · Engrossing

Subjects

taxation veterans healthcare education
Cross-referencing the record. Reading this bill against every other bill in the corpus by meaning, not keywords. Only the first open is slow. It’s instant for you after this. Matching · Ranking · Engrossing

Frequently asked questions

Who sponsors HR 2543?
HR 2543 is sponsored by Doggett, Lloyd (Democratic), Kelly, Mike (Republican), Davis, Danny K. (Democratic), and Feenstra, Randy (Republican).
What is the current status of HR 2543?
This bill is in committee in the House. Introduced April 01, 2025. It must pass committee before a floor vote.
Where can I track HR 2543?
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