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.