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To amend the Internal Revenue Code of 1986 to expand the exclusion of Pell Grants from gross income.
Summary
This bill would expand how Federal Pell Grants are treated for tax purposes. Currently, scholarships and fellowship grants can be excluded from taxable income only if used for qualified education expenses. This bill would allow Pell Grants to be excluded from gross income without such restrictions. The bill would also prevent Pell Grants from reducing the value of other education tax credits, and would apply to tax years beginning after December 31, 2025.
AI-generated plain-language summary of the bill text — neutral, and may be imperfect. See the full text below for the exact wording.
Sponsor (1)
3 cosponsors
- Sen. Grassley, Chuck [R-IA] (R-IA)
- Sen. Tillis, Thomas [R-NC] (R-NC)
- Sen. Wyden, Ron [D-OR] (D-OR)
Actions (2)
- May 6, 2025 Read twice and referred to the Committee on Finance. · senate
- May 6, 2025 Introduced in Senate
Similar bills (6)
Bills with similar text or summary — includes reintroductions across Congresses. Ranked by semantic similarity of the bill text (computed locally); a neutral discovery aid, not a claim the bills are duplicates.
Full text
IN THE SENATE OF THE UNITED STATES
May 6, 2025
Mr. Whitehouse (for himself, Mr. Grassley, Mr. Tillis, and Mr. Wyden) 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.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the “Tax-Free Pell Grant Act”.
SEC. 2. EXPANSION OF PELL GRANT EXCLUSION FROM GROSS INCOME.
(a) In General.—Section 117(b)(1) of the Internal Revenue Code of 1986 is amended by striking “received by an individual” and all that follows and inserting “received by an individual—
“(A) as a scholarship or fellowship grant to the extent the individual establishes that, in accordance with the conditions of the grant, such amount was used for qualified tuition and related expenses, or
“(B) as a Federal Pell Grant under section 401 of the Higher Education Act of 1965 (as in effect on the date of the enactment of the Tax-Free Pell Grant Act).”.
(b) No Adjustment Under American Opportunity and Lifetime Learning Credits.—Section 25A(g)(2)(A) of such Code is amended by inserting “(other than a Federal Pell Grant under section 401 of the Higher Education Act of 1965 (as in effect on the date of the enactment of the Tax-Free Pell Grant Act))” after “section 117”.
(c) Effective Date.—The amendments made by this section shall apply to taxable years beginning after December 31, 2025. <all>
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