S.1610 - Tax-Free Pell Grant Act (119th Congress)
Summary
S.1610, the Tax-Free Pell Grant Act, aims to amend the Internal Revenue Code of 1986 to expand the exclusion of Pell Grants from gross income. This bill ensures that Federal Pell Grants are not considered taxable income. The bill also clarifies the interaction between Pell Grants and other education tax credits.
Expected Effects
The primary effect will be to provide tax relief to Pell Grant recipients, simplifying their tax obligations. This could increase the financial benefit of Pell Grants, making higher education more accessible. The bill also prevents double benefits by ensuring Pell Grants are properly accounted for when calculating education tax credits.
Potential Benefits
- Reduces the tax burden on Pell Grant recipients, increasing the real value of the grants.
- Simplifies the tax filing process for students receiving Pell Grants.
- Potentially increases college enrollment and completion rates among low-income students.
- Encourages individuals to pursue higher education by reducing financial barriers.
- Provides clarity and prevents unintended tax consequences related to Pell Grants.
Potential Disadvantages
- May slightly reduce federal tax revenue, although the impact is likely to be small.
- Could potentially lead to increased demand for Pell Grants, requiring additional funding.
- The benefits primarily accrue to Pell Grant recipients, potentially creating a perception of unequal tax treatment among different groups.
- May require some adjustments to tax preparation software and guidance to reflect the changes.
- The legislation is relatively narrow in scope, focusing solely on the tax treatment of Pell Grants.
Constitutional Alignment
The bill aligns with the Constitution's general welfare clause (Preamble). Congress has the power to lay and collect taxes and provide for the general welfare of the United States. This bill uses that power to incentivize education, which is seen as promoting the general welfare. The bill does not appear to infringe on any specific constitutional rights or limitations.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).