II 

117TH CONGRESS 

1ST SESSION S. 2455 

To amend the Internal Revenue Code of 1986 to expand the exclusion of 

Pell Grants from gross income, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JULY 22, 2021 

Mr. WHITEHOUSE (for himself, Mr. WYDEN, Mr. BENNET, Ms. STABENOW, 

Mrs. MURRAY, Mr. BROWN, and Ms. SMITH) 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 expand 

the exclusion of Pell Grants from gross income, and 

for other purposes. 

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 ‘‘Tax-Free Pell Grant 

5 Act’’. 

6 SEC. 2. EXPANSION OF PELL GRANT EXCLUSION FROM 

7 GROSS INCOME. 

8 (a) IN GENERAL.—Paragraph section 117(b)(1) of 

9 the Internal Revenue Code of 1986 is amended by striking 


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1 ‘‘received by an individual’’ and all that follows and insert2 ing ‘‘received by an individual— 

3 ‘‘(A) as a scholarship or fellowship grant 

4 to the extent the individual establishes that, in 

5 accordance with the conditions of the grant, 

6 such amount was used for qualified tuition and 

7 related expenses, or 

8 ‘‘(B) as a Federal Pell Grant under section 

9 401 of the Higher Education Act of 1965 (as 

10 in effect on the date of the enactment of the 

11 Tax-Free Pell Grant Act).’’. 

12 (b) NO ADJUSTMENT UNDER AMERICAN OPPOR13 TUNITY AND LIFETIME LEARNING CREDITS.—Section 

14 25A(g)(2)(A) of such Code is amended by striking ‘‘a 

15 qualified scholarship which’’ and inserting ‘‘a qualified 

16 scholarship which is described in section 117(b)(1)(A) and 

17 which’’. 

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

19 this section shall apply to taxable years beginning after 

20 December 31, 2020. 

21 SEC. 3. EXPANSION OF AMERICAN OPPORTUNITY AND 

22 LIFETIME LEARNING CREDITS. 

23 (a) IN GENERAL.—Section 25A of the Internal Rev24 enue Code of 1986 is amended— 

25 (1) in subsection (f)(1)— 


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1 (A) in subparagraph (A), by striking ‘‘tui2 tion and fees’’ inserting ‘‘tuition, fees, computer 

3 or peripheral equipment, child and dependent 

4 care expenses, and course materials’’, 

5 (B) by striking subparagraph (D), and 

6 (C) by adding at the end the following new 

7 subparagraphs: 

8 ‘‘(D) CHILD AND DEPENDENT CARE EX9 PENSES.—For purposes of this paragraph— 

10 ‘‘(i) IN GENERAL.—The term ‘child 

11 and dependent care expenses’ means 

12 amounts paid for the following expenses, 

13 but only if such expenses are incurred to 

14 enable the taxpayer to be enrolled in an el15 igible educational institution for any period 

16 for which there are 1 or more qualifying 

17 individuals with respect to the taxpayer: 

18 ‘‘(I) expenses for household serv19 ices, and 

20 ‘‘(II) expenses for the care of a 

21 qualifying individual. 

22 Such term shall not include any amount 

23 paid for services outside the taxpayer’s 

24 household at a camp where the qualifying 

25 individual stays overnight. 


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1 ‘‘(ii) QUALIFYING INDIVIDUAL.—The 

2 term ‘qualifying individual’ has the mean3 ing given such term in section 21(b)(1). 

4 ‘‘(iii) EXCEPTION, DEPENDENT CARE

5 CENTERS.—Rules similar to the rules of 

6 subparagraphs (B), (C), and (D) of section 

7 21(b)(2) shall apply, except the term ‘child 

8 and dependent care expenses’ shall be sub9 stituted for the term ‘employment-related 

10 expenses’ each place it appears in such 

11 subparagraphs. 

12 ‘‘(E) CHILD AND DEPENDENT CARE EX13 PENSES ONLY QUALIFIED EXPENSES WHEN

14 CLAIMED BY ELIGIBLE STUDENT.—Amounts 

15 paid for an expense described in subparagraph 

16 (E) may not be taken into account under this 

17 paragraph for a taxable year unless required for 

18 the enrollment or attendance of an individual 

19 described in subparagraph (A)(i) or subpara20 graph (A)(ii). 

21 ‘‘(F) COMPUTER OR PERIPHERAL EQUIP22 MENT.— 

23 ‘‘(i) DEFINED.—For purposes of this 

24 paragraph, the term ‘computer or periph25 eral equipment’ means expenses for the 


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1 purchase of computer or peripheral equip2 ment (as defined in section 168(i)(2)(B), 

3 computer software (as defined in section 

4 197(e)(3)(B))), or internet access and re5 lated services, if such equipment, software, 

6 or services are to be used primarily by the 

7 individual during any of the years the indi8 vidual is enrolled at an eligible educational 

9 institution. 

10 ‘‘(ii) DOLLAR LIMIT ON AMOUNT

11 CREDITABLE.—The aggregate of the 

12 amounts paid or expenses incurred for 

13 computer or peripheral equipment which 

14 may be taken into account under this para15 graph for a taxable year by the taxpayer 

16 shall not exceed $1,000.’’, and 

17 (2) in subsection (g)(5)— 

18 (A) in the heading, by adding ‘‘OR CRED19 IT’’ at the end, and 

20 (B) by inserting ‘‘or credit’’ after ‘‘a de21 duction’’. 

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

23 this section shall apply to taxable years beginning after 

24 December 31, 2020. 

Æ 


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