S.311 - Achieving Choice in Education Act; ACE Act (119th Congress)
Summary
The Achieving Choice in Education Act (ACE Act) proposes amendments to the Internal Revenue Code of 1986 to incentivize education. It expands the use of 529 accounts to include homeschool expenses and other elementary and secondary education costs. The act also increases the limitation on distributions from 529 plans for these expenses and modifies gift tax exclusions for contributions to 529 plans.
Expected Effects
This act would broaden the scope of qualified expenses for 529 savings plans, allowing families to use these funds for a wider range of educational needs, including homeschooling. It could also lead to increased investment in 529 plans due to the expanded gift tax exclusion. Furthermore, the act incentivizes states to adopt school choice programs by linking their eligibility for tax-exempt bonds to the implementation of such programs.
Potential Benefits
- Expanded educational options for families, particularly those who choose homeschooling.
- Increased financial flexibility for covering educational expenses through 529 plans.
- Potential for greater investment in education due to enhanced tax incentives.
- Encouragement for states to adopt school choice programs, potentially leading to more diverse educational opportunities.
- Could stimulate the development of new educational resources and services.
Potential Disadvantages
- Potential strain on state budgets due to increased use of 529 plans for elementary and secondary education.
- Concerns about the equitable distribution of resources, as wealthier families may benefit more from the tax advantages.
- Possible decrease in funding for public schools if more students opt for private or home education.
- The conditionality of tax-exempt bonds on school choice implementation could be seen as federal overreach.
- May exacerbate existing inequalities in educational access and outcomes.
Most Disadvantaged Areas:
Constitutional Alignment
The ACE Act's provisions regarding taxation and spending fall under the purview of Congress's powers outlined in Article I, Section 8 of the Constitution, which grants Congress the power to lay and collect taxes, duties, imposts, and excises, to pay the debts and provide for the common defense and general welfare of the United States. The Act's potential impact on religious schools could raise questions under the First Amendment's Establishment Clause and Free Exercise Clause. However, the bill appears to be neutral, offering benefits to a wide range of educational choices, including religious and secular options.
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).