[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 464 Introduced in House (IH)]
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119th CONGRESS
1st Session
H. R. 464
To amend the Internal Revenue Code of 1986 to provide for lifelong
learning accounts, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
January 15, 2025
Mr. Thompson of Pennsylvania (for himself, Ms. Bonamici, Mr.
Fitzpatrick, and Mr. Schneider) introduced the following bill; which
was referred to the Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to provide for lifelong
learning accounts, and for other purposes.
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 ``Skills Investment Act of 2025''.
SEC. 2. COVERDELL LIFELONG LEARNING ACCOUNTS.
(a) In General.--
(1) Renaming of coverdell education savings accounts.--
Section 530 of the Internal Revenue Code of 1986 is amended--
(A) by striking ``Coverdell education savings
account'' each place it appears and inserting
``Coverdell lifelong learning account''; and
(B) by striking ``coverdell education savings
accounts'' in the heading and inserting ``coverdell
lifelong learning accounts''.
(2) Conforming amendments.--
(A) Section 26(b)(2)(E) of the Internal Revenue
Code of 1986 is amended by striking ``Coverdell
education savings accounts'' and inserting ``Coverdell
lifelong learning accounts''.
(B) Section 72(e)(9) of such Code is amended--
(i) by striking ``Coverdell education
savings account'' and inserting ``Coverdell
lifelong learning account''; and
(ii) by striking ``Coverdell education
savings accounts'' in the heading and inserting
``Coverdell lifelong learning accounts''.
(C) Section 135(c)(2)(C) of such Code is amended--
(i) by striking ``Coverdell education
savings account'' and inserting ``Coverdell
lifelong learning account''; and
(ii) by striking ``Coverdell education
savings accounts'' in the heading and inserting
``Coverdell lifelong learning accounts''.
(D) Section 408A(e)(2)(A)(ii) of such Code is
amended by striking ``Coverdell education savings
account'' and inserting ``Coverdell lifelong learning
account''.
(E) Section 529(c) of such Code is amended--
(i) by striking ``Coverdell education
savings accounts'' in the heading of paragraph
(3)(B)(vi) and inserting ``Coverdell lifelong
learning account''; and
(ii) by striking ``Coverdell education
savings account'' in paragraph (6) and
inserting ``Coverdell lifelong learning
account''.
(F) Section 877A(e)(2) of such Code is amended by
striking ``Coverdell education savings account'' and
inserting ``Coverdell lifelong learning account''.
(G) Section 4973 of such Code is amended--
(i) by striking ``Coverdell education
savings account'' each place it appears in
subsections (a)(4) and (e)(2)(A) and inserting
``Coverdell lifelong learning account'';
(ii) by striking ``Coverdell education
savings accounts'' in subsection (e)(1) and
inserting ``Coverdell lifelong learning
accounts''; and
(iii) by striking ``Coverdell Education
Savings Accounts'' in the heading of subsection
(e) and inserting ``Coverdell Lifelong Learning
Account''.
(H) Section 4975 of such Code is amended--
(i) by striking ``Coverdell education
savings account'' each place it appears in
subsections (c)(5) and (e)(1)(F) and inserting
``Coverdell lifelong learning account''; and
(ii) by striking ``Coverdell education
savings accounts'' in the heading of subsection
(c)(5) and inserting ``Coverdell lifelong
learning accounts''.
(I) Section 6693(a)(2)(F) of such Code is amended
by striking ``Coverdell education savings accounts''
and inserting ``Coverdell lifelong learning accounts''.
(J) The table of sections for part VIII of
subchapter F of chapter 1 of such Code is amended by
striking ``Coverdell education savings accounts'' and
inserting ``Coverdell lifelong learning accounts''.
(3) Treatment of existing accounts.--For purposes of
section 530(b)(1) of the Internal Revenue Code of 1986, any
account established before January 1, 2024, and designated as a
Coverdell education savings account shall be deemed to have
been designated as a Coverdell lifelong learning account.
(b) Expanded Use of Accounts.--
(1) Eligible expenses.--
(A) In general.--Section 530(b)(2)(A) of the
Internal Revenue Code of 1986 is amended by striking
``and'' at the end of clause (i), by striking the
period at the end of clause (ii) and inserting ``,
and'', and by adding at the end the following new
clause:
``(iii) qualified educational or skill
development expenses (as defined in paragraph
(5)).''.
(B) Qualified educational or skill development
expenses.--Section 530(b) of such Code is amended by
adding at the end the following new paragraph:
``(5) Qualified educational or skill development
expenses.--The term `qualified educational or skill development
expenses' means--
``(A) expenses paid or incurred--
``(i) after the beneficiary attains age 16,
and
``(ii) for participation or enrollment of
the beneficiary in services or activities that
are--
``(I) training services described
in section 134(c)(3)(D) of the
Workforce Innovation and Opportunity
Act (29 U.S.C. 3174(c)(3)(D)) that are
offered by a provider included on the
list of eligible providers of training
services described in section 122 of
such Act (29 U.S.C. 3152),
``(II) career and technical
education activities defined in section
3 of the Carl D. Perkins Career and
Technical Education Act of 2006 (20
U.S.C. 2302) that are offered through
an eligible institution (as defined in
such section),
``(III) career services described
in clauses (iii), (iv), and (xi) of
section 134(c)(2)(A) of the Workforce
Innovation and Opportunity Act (29
U.S.C. 3174(c)(2)(A)) that are provided
by providers eligible under section
134(c)(2)(C) of such Act,
``(IV) youth activities described
in section 129(c)(2) of the Workforce
Innovation and Opportunity Act (29
U.S.C. 3164(c)(2)) that are provided by
eligible providers of youth workforce
investment activities under section 123
of such Act, or
``(V) adult education and literacy
activities, as defined in section 203
of the Adult Education and Family
Literacy Act (29 U.S.C. 3272), that are
provided by eligible providers of adult
education and literacy activities under
section 231 of such Act (29 U.S.C.
3321),
``(B) expenses for transportation required for or
provided by any of the services or activities described
in subparagraph (A),
``(C) expenses for testing necessary for enrollment
in, or certification in connection with, services or
activities described in subparagraph (A), or
``(D) expenses for the purchase of any computer
software (as defined by section 197(e)(3)(B)), computer
or peripheral equipment (as defined by section
168(i)(2)(B)), fiber optic cable related to computer
use, internet access and related services, if such
software, equipment, or services are to be used by the
beneficiary for services or activities described in
subparagraph (A) during any of the years the
beneficiary is participating in or enrolled in any of
the services or activities described in subparagraph
(A).''.
(c) Modification of Rules Relating to Age Restrictions and
Contributions.--
(1) $10,000 account limit after age 30.--
(A) In general.--Subparagraph (E) of section
530(b)(1) of the Internal Revenue Code of 1986 is
amended by inserting ``in excess of $10,000'' after
``any balance to the credit of the designated
beneficiary''.
(B) Contribution limit.--Subparagraph (A) of
section 530(b)(1) of such Code is amended by striking
``or'' at the end of clause (ii), by striking the
period at the end of clause (iii) and inserting ``,
or'', and by adding at the end the following new
clause:
``(iv) in the case of a beneficiary who is
over the age of 30, if such contribution would
result in the balance of the account exceeding
$10,000.''.
(2) Increased age limit for contributions.--Clause (ii) of
section 530(b)(1)(A) of the Internal Revenue Code of 1986 is
amended by striking ``age 18'' and inserting ``age 70''.
(3) Increased contribution limitation for individuals over
age 30.--
(A) In general.--Section 530(b)(1)(A)(iii) of the
Internal Revenue Code of 1986 is amended by inserting
``($4,000 in the case of an account the designated
beneficiary of which has attained age of 30 before the
end of the taxable year)'' after ``$2,000''.
(B) Conforming amendment.--Section 4973(e)(1)(A) of
such Code is amended by striking ``$2,000'' and
inserting ``the limitation applicable under section
530(b)(1)(A)(iii)''.
(4) No change in beneficiary after age 30.--Paragraph (6)
of section 530(d) of the Internal Revenue Code of 1986 is
amended by striking ``shall not be treated as a distribution
for purposes of paragraph (1) if the new beneficiary'' and
inserting ``shall not be treated as a distribution for purposes
of paragraph (1) if--
``(A) the old beneficiary has not attained age 30
before the date of the change in beneficiary, and
``(B) the new beneficiary''.
(d) Credit for Employer Contributions.--
(1) In general.--Subpart D of part IV of subchapter A of
chapter 1 of the Internal Revenue Code of 1986 is amended by
adding at the end the following new section:
``SEC. 45BB. EMPLOYEE EDUCATIONAL SKILLS AND DEVELOPMENT EXPENSES.
``(a) General Rule.--For purposes of section 38, the employee
educational skills and development contribution credit determined under
this section for any taxable year is 25 percent of the nonelective
contributions made by the taxpayer during the taxable year to a
Coverdell lifelong learning account (as defined in section 530(b)) the
designated beneficiary of which is an employee of the taxpayer.
``(b) Special Rules and Definitions.--For purposes of this
section--
``(1) Employee.--
``(A) Certain employees excluded.--The term
`employee' shall not include--
``(i) an employee within the meaning of
section 401(c)(1),
``(ii) any 2-percent shareholder (as
defined in section 1372(b)) of an S
corporation,
``(iii) any 5-percent owner (as defined in
section 416(i)(1)(B)(i)) of taxpayer, or
``(iv) any individual who bears any of the
relationships described in subparagraphs (A)
through (G) of section 152(d)(2) to, or is a
dependent described in section 152(d)(2)(H) of,
an individual described in clause (i), (ii), or
(iii).
``(B) Leased employees.--The term `employee' shall
include a leased employee within the meaning of section
414(n).
``(2) Nonelective contribution.--The term `nonelective
contribution' means an employer contribution other than an
employer contribution pursuant to a salary reduction
arrangement.
``(3) Aggregation and other rules made applicable.--
``(A) Aggregation rules.--All employers treated as
a single employer under subsection (b), (c), (m), or
(o) of section 414 shall be treated as a single
employer for purposes of this section.
``(B) Other rules.--Rules similar to the rules of
subsections (c), (d), and (e) of section 52 shall
apply.''.
(2) Credit treated as part of general business credit.--
Section 38(b) of such Code is amended by striking ``plus'' at
the end of paragraph (40), by striking the period at the end of
paragraph (41) and inserting ``, plus'', and by adding at the
end the following new paragraph:
``(42) the employee educational skills and development
contribution credit determined under section 45BB(a).''.
(3) Clerical amendment.--The table of sections for subpart
D of part IV of subchapter A of chapter 1 of such Code is
amended by adding at the end the following new item:
``Sec. 45BB. Employee educational skills and development expenses.''.
(e) Allowance of Deduction for Beneficiary.--
(1) In general.--Part VIII of subchapter B of chapter 1 of
the Internal Revenue Code of 1986 is amended by redesignating
section 224 as section 225 and by inserting after section 223
the following new section:
``SEC. 224. COVERDELL LIFELONG LEARNING ACCOUNT CONTRIBUTIONS.
``(a) In General.--In the case of an individual who--
``(1) is the designated beneficiary of a Coverdell lifelong
learning account (as defined in section 530(b)(1)), and
``(2) has attained the age of 18 before the close of the
taxable year,
there shall be allowed as a deduction an amount equal to the
contributions for the taxable year by or on behalf of such individual
to the account described in paragraph (1).
``(b) Recontributed Amounts.--No deduction shall be allowed under
this section with respect to a rollover contribution described in
section 530(d)(5).''.
(2) Increase in additional tax.--
(A) Increase.--
(i) In general.--Section 530(d)(4)(A) of
the Internal Revenue Code of 1986 is amended by
striking ``10 percent'' and inserting ``20
percent''.
(ii) Conforming amendment.--Section
529(c)(6) of such Code is amended by inserting
``, except that `10 percent' shall be
substituted for `20 percent' in subparagraph
(A) thereof'' before the period at the end of
the first sentence.
(B) Modification of tax treatment of deductible
contributions.--Paragraph (1) of section 530(d) of such
Code is amended to read as follows:
``(1) Inclusion in gross income.--
``(A) In general.--Any distribution shall be
includible in the gross income of the distributee as
follows:
``(i) So much of the distribution as is
equal to or less than the deductible amount
shall be fully included in gross income.
``(ii) So much of the distribution which
exceeds the deductible amount shall be included
in gross income in the manner as provided in
section 72 (determined by applying such section
without regard to any amounts to which clause
(i) applies).
``(B) Deductible amount.--For purposes of this
paragraph, the term `deductible amount' means the
excess of--
``(i) the sum of contributions to the
account for which a deduction was allowed under
section 224 in such year and any preceding
taxable year, over
``(ii) the amount of distributions to which
subparagraph (A)(i) applied to in any preceding
taxable year.''.
(3) Clerical amendment.--The table of sections for part
VIII of subchapter B of chapter 1 of such Code is amended by
redesignating the item relating to section 224 as relating to
section 225 and by inserting after the item relating to section
223 the following new item:
``Sec. 224. Coverdell lifelong learning account contributions.''.
(f) Effective Date.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall take
effect on January 1, 2026.
(2) Eligible expenses.--The amendments made by subsection
(b) shall apply to distributions made after December 31, 2025.
(3) Contributions.--The amendments made by paragraphs
(1)(B) and (2) of subsection (c) shall apply to contributions
made after December 31, 2025.
(4) Employer contribution credit and beneficiary
deductions.--The amendments made by subsections (d) and (e)
shall apply to taxable years beginning after December 31, 2025.
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