A bill to amend the Internal Revenue Code of 1954 to provide for the establishment of, and the deduction of contributions to, education savings accounts.

Amends the Internal Revenue Code to allow an individual taxpayer an income tax deduction for contributions to a savings account established to pay the educational expenses (tuition, supplies, meals, and lodging) of the taxpayer's dependent child at an institution of higher education or a vocational school. Limits the amount of such deduction to $1,000 (adjusted for inflation) for each account per calendar year. Disallows any deduction for contributions to an account for individuals who have attained age 19. Provides that no account may have more than one beneficiary and that no individual may be a beneficiary of more than one account.

Permits the deferral of income tax on income accumulated in such education savings accounts as long as such amounts are used exclusively for educational expenses. Specifies penalties for the use of account funds for other than educational purposes.

Requires that the trustee of an education savings account file reports with the Secretary of the Treasury on the maintenance of the account. Imposes penalties for not filing required reports.

Extends the deduction for contributions to an education savings account to taxpayers who do not otherwise itemize deductions.

Excludes from the gross income of account beneficiaries any distributions from the account made on their behalf which are used for educational expenses.