The ACE Act expands 529 education savings plan eligible expenses to include homeschool tuition, curriculum, books, tutoring, and educational therapy for K-12 students. It raises the annual limit to 20,000 dollars for these expenses and increases the gift tax exclusion for 529 contributions. States must meet school choice requirements to maintain tax-exempt bond status.
Latest Action
Referred to the House Committee on Ways and Means.
AI Summary
Plain-English explanation of this bill
The ACE Act expands 529 education savings plan eligible expenses to include homeschool tuition, curriculum, books, tutoring, and educational therapy for K-12 students. It raises the annual limit to 20,000 dollars for these expenses and increases the gift tax exclusion for 529 contributions. States must meet school choice requirements to maintain tax-exempt bond status.
Last updated: 1/6/2026
Official Summary
Congressional Research Service summary
<p><strong>Achieving Choice in Education Act or the ACE Act</strong></p><p>This bill expands the expenses that may be paid for with tax-free distributions from a qualified tuition program (known as a 529 plan) to include certain elementary, secondary, and homeschool education expenses and makes other changes related to 529 plans. The bill also limits the tax exclusion for interest on state or local bonds.</p><p>Under current law, 529 plan distributions are excluded from gross income if they are used to pay for qualified higher education expenses, which includes up to $10,000 (per year and per beneficiary) for tuition at an elementary or secondary public, private, or religious school.</p><p>The bill expands the expenses that may be paid for with tax-free 529 plan distributions to include homeschooling tuition and the following expenses related to elementary, secondary, and homeschool education:</p><ul><li>curriculum,</li><li>books,</li><li>instructional and online educational materials,</li><li>tutoring or educational classes outside the home,</li><li>testing fees,</li><li>fees for dual enrollment in a higher education institution, and</li><li>educational therapies for disabled students.</li></ul><p>The bill also increases the amount of tax-free 529 plan distributions that may be used to pay for elementary, secondary, and homeschool education expenses to $20,000.</p><p>The bill increases the annual gift tax exclusion by $20,000 for contributions made to a 529 plan. (Under current law, up to $19,000 may be excluded from taxable gifts in 2025.)</p><p>Finally, the bill limits the tax exclusion for interest on state or local bonds to bonds issued by states that meet minimum school choice requirements or political subdivisions of such states.</p>
Key Points
Main provisions of the bill
Expands 529 plans to cover homeschool and K-12 expenses
Includes curriculum, books, tutoring, and testing fees
Raises annual K-12 expense limit to 20,000 dollars
Increases gift tax exclusion by 20,000 dollars for 529 contributions
Ties state bond tax exemption to school choice requirements
How This Impacts Americans
Potential effects on citizens and communities
Families could use 529 plans for broader K-12 and homeschool expenses including curriculum and tutoring. Contributions to 529 plans would receive larger gift tax benefits. States without school choice programs could lose tax-exempt bond status.
Policy Areas
Primary Policy Area
Taxation
Scope & Jurisdiction
Jurisdiction Level
federal
Congressional Session
119th Congress
Citation Reference
750, 119th Congress (2025). "ACE Act". Source: Voter's Right Platform. https://votersright.org/bills/118-hr-750
