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S 3081 117th Congress Senate Taxation

Tax Free Education Act of 2021

Introduced: October 27, 2021 Introduced by: Paul, Rand Republican · Kentucky See on congress.gov
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 Everywhere this bill has been 2 steps
Introduced
In committee
Reported out
Passed House
Passed Senate
To President
Became law
Oct 27, 2021
Read twice and referred to the Committee on Finance.
Oct 27, 2021
Introduced in Senate
 Plain-English summary Congressional Research Service

Tax Free Education Act of 2021

This bill permits tax-free distributions of up to $5,250 from 401(k) plans for qualified higher and elementary and secondary education expenses and penalty-free withdrawals from individual retirement accounts (IRAs) for student loan expenses.

The bill also excludes from gross income, for income tax purposes, distributions up to $5,250 from employer-sponsored student loan and tuition payment plans. It repeals the limitation on the deduction of interest on student loans and increases from $15,000 to $25,000 (adjusted for inflation) the maximum contribution amounts for certain tax-preferred retirement plans.

The bill allows employees an election to treat contributions to a 401(k) plan as Roth contributions (thus exempting withdrawals from such plans from tax at retirement).

Finally, the bill allows individual taxpayers a new tax deduction for their qualified higher and elementary and secondary education expenses.

What's happening now October 27, 2021

Read twice and referred to the Committee on Finance.

 Committees of jurisdiction 1