Bill > S1610

This bill amends the Internal Revenue Code to expand the tax exclusion for Pell Grants, which are federal scholarships providing financial aid to undergraduate students with significant financial need. Specifically, the bill modifies Section 117(b)(1) to explicitly state that Federal Pell Grants received under section 401 of the Higher Education Act of 1965 will be completely excluded from an individual's gross income for tax purposes. Additionally, the bill ensures that Pell Grants will not be considered when calculating education tax credits like the American Opportunity and Lifetime Learning Credits, which prevents these grants from being double-counted or reducing other education-related tax benefits. The provisions of this bill, to be known as the "Tax-Free Pell Grant Act," will take effect for taxable years beginning after December 31, 2025, meaning students receiving Pell Grants in the 2026 tax year and beyond will benefit from this expanded tax exclusion.

Budget and Finance

https://www.congress.gov/bill/119th-congress/senate-bill/1610/all-info