II 

118TH CONGRESS 

1ST SESSION S. 3520 

To amend the Internal Revenue Code of 1986 to provide incentives for 

education. 

IN THE SENATE OF THE UNITED STATES 

DECEMBER 14, 2023 

Mr. LEE (for himself and Mr. SCOTT of South Carolina) introduced the 

following bill; which was read twice and referred to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to provide 

incentives for education. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Achieving Choice in 

5 Education Act’’ or the ‘‘ACE Act’’. 

6 SEC. 2. 529 ACCOUNT FUNDING FOR HOMESCHOOL AND AD7 DITIONAL ELEMENTARY AND SECONDARY EX8 PENSES. 

9 (a) IN GENERAL.—Section 529(c)(7) of the Internal 

10 Revenue Code of 1986 is amended to read as follows: 

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•S 3520 IS

1 ‘‘(7) TREATMENT OF ELEMENTARY AND SEC2 ONDARY TUITION.—Any reference in this section to 

3 the term ‘qualified higher education expense’ shall 

4 include a reference to the following expenses in con5 nection with enrollment or attendance at, or for stu6 dents enrolled at or attending, an elementary or sec7 ondary public, private, or religious school: 

8 ‘‘(A) Tuition. 

9 ‘‘(B) Curriculum and curricular materials. 

10 ‘‘(C) Books or other instructional mate11 rials. 

12 ‘‘(D) Online educational materials. 

13 ‘‘(E) Tuition for tutoring or educational 

14 classes outside of the home, including at a tu15 toring facility, but only if the tutor or instruc16 tor is not related to the student and— 

17 ‘‘(i) is licensed as a teacher in any 

18 State, 

19 ‘‘(ii) has taught at an eligible edu20 cational institution, or 

21 ‘‘(iii) is a subject matter expert in the 

22 relevant subject. 

23 ‘‘(F) Fees for a nationally standardized 

24 norm-referenced achievement test, an advanced 

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1 placement examination, or any examinations re2 lated to college or university admission. 

3 ‘‘(G) Fees for dual enrollment in an insti4 tution of higher education. 

5 ‘‘(H) Educational therapies for students 

6 with disabilities provided by a licensed or ac7 credited practitioner or provider, including oc8 cupational, behavioral, physical, and speech-lan9 guage therapies. 

10 Such term shall include expenses for the purposes 

11 described in subparagraphs (A) through (H) in con12 nection with a homeschool (whether treated as a 

13 homeschool or a private school for purposes of appli14 cable State law).’’. 

15 (b) EFFECTIVE DATE.—The amendment made by 

16 this section shall apply to distributions made after the 

17 date of the enactment of this Act. 

18 SEC. 3. INCREASE IN LIMITATION ON DISTRIBUTIONS 

19 FROM 529 PLANS FOR ELEMENTARY AND SEC20 ONDARY SCHOOL EXPENSES. 

21 (a) IN GENERAL.—Section 529(e)(3)(A) of the Inter22 nal Revenue Code of 1986 is amended by striking 

23 ‘‘$10,000’’ in the flush matter at the end and inserting 

24 ‘‘$20,000’’. 

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1 (b) EFFECTIVE DATE.—The amendment made by 

2 this section shall apply to taxable years beginning after 

3 December 31, 2023. 

4 SEC. 4. GIFT TAX EXCLUSIONS. 

5 (a) GIFT TAX EXCLUSION FOR CONTRIBUTIONS TO

6 529 PLANS.—Section 2503(b) of the Internal Revenue 

7 Code of 1986 is amended by adding at the end the fol8 lowing new paragraph: 

9 ‘‘(3) EXCLUSION FOR CONTRIBUTIONS TO 529

10 PLANS.—The dollar amount in effect under para11 graph (1) with respect to gifts (to which such para12 graph applies) made to any person during any cal13 endar year shall be increased (not in excess of 

14 $20,000) by the amount of such gifts made during 

15 such calendar year to qualified tuition programs (as 

16 defined in section 529) with respect to which such 

17 person is the designated beneficiary.’’. 

18 (b) EFFECTIVE DATE.—The amendments made by 

19 this section shall apply to gifts made after December 31, 

20 2023. 

21 SEC. 5. TAX-EXEMPT BONDS RESTRICTED TO STATES THAT 

22 IMPLEMENT SCHOOL CHOICE LAWS. 

23 (a) IN GENERAL.—Section 103 of the Internal Rev24 enue Code of 1986 is amended by adding at the end the 

25 following new subsection: 

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1 ‘‘(d) RESTRICTION TO STATES THAT IMPLEMENT

2 SCHOOL CHOICE LAWS.— 

3 ‘‘(1) IN GENERAL.—Subsection (a) shall not 

4 apply to any State or local bond unless such bond 

5 is issued by a minimum school choice State or a po6 litical subdivision of such a State. 

7 ‘‘(2) PARTIAL EXCLUSION WITH RESPECT TO

8 CERTAIN STATES.— 

9 ‘‘(A) IN GENERAL.—In the case of any 

10 State or local bond issued by a minimum school 

11 choice State which does not meet the require12 ments of subparagraph (B) (or issued by any 

13 political subdivision of such a State), subsection 

14 (a) shall be applied by substituting ‘50 percent 

15 of the interest’ for ‘interest’. 

16 ‘‘(B) REQUIREMENTS.—A minimum school 

17 choice State meets the requirements of this sub18 paragraph if the Secretary determines that— 

19 ‘‘(i) at least 65 percent of the speci20 fied school age children are eligible for one 

21 or more of such State’s school choice pro22 grams, and 

23 ‘‘(ii) the average amount spent by 

24 such State on the education of each speci25 fied school age child eligible for one or 

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1 more of such State’s school choice pro2 grams is at least 75 percent of the average 

3 amount spent by such State on the edu4 cation of each specified school age child 

5 not eligible for one or more of such pro6 grams. 

7 ‘‘(3) MINIMUM SCHOOL CHOICE STATE.—For 

8 purposes of this subsection, the term ‘minimum 

9 school choice State’ means any State if the Sec10 retary determines that— 

11 ‘‘(A) such State has enacted one or more 

12 school choice programs, 

13 ‘‘(B) at least 40 percent of the specified 

14 school age children are eligible for one or more 

15 of such State’s school choice programs, and 

16 ‘‘(C) the average amount spent by such 

17 State on the education of each specified school 

18 age child eligible for one or more of such 

19 State’s school choice programs is at least 60 

20 percent of the average amount spent by such 

21 State on the education of each specified school 

22 age child not eligible for one or more of such 

23 programs. 

24 ‘‘(4) SCHOOL CHOICE PROGRAMS.—For pur25 poses of this subsection, the term ‘school choice proVerDate Sep 11 2014 18:58 Jan 08, 2024 Jkt 049200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S3520.IS S3520
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1 gram’ means, with respect to any State, each of the 

2 following with respect to elementary and secondary 

3 education in such State: 

4 ‘‘(A) Tax credit scholarship programs. 

5 ‘‘(B) Voucher programs. 

6 ‘‘(C) Education savings account program. 

7 ‘‘(D) Refundable tax credit for private edu8 cation expenses. 

9 ‘‘(5) SPECIFIED SCHOOL AGE CHILD.—For pur10 poses of this subsection, the term ‘specified school 

11 age child’ means, with respect to any State, any in12 dividual residing in such State who has not attained 

13 age 18.’’. 

14 (b) EFFECTIVE DATE.—The amendment made by 

15 this section shall apply to bonds issued after the date of 

16 the enactment of this Act. 

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