The Tax-Free Pell Grant Act expands tax benefits for students pursuing higher education. The bill makes federal Pell Grants completely tax-free income for recipients, regardless of how the money is spent, and broadens education tax credits to cover new expenses like computers, software, internet access (up to $1,000 per year), child and dependent care costs needed to attend school, and course materials. These changes apply to tax years beginning after December 31, 2024, and primarily benefit low- and middle-income students who receive Pell Grants and families claiming education tax credits. The legislation does not appear to require new federal funding, as it works through the tax code to reduce tax liability for qualifying students.
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