,,ii  #aagth ,,congress  #ast ,session  
,s4 #bdee  ,,in ,,the ,,senate ,,of     
,,the ,,united ,,states  ,july #bb1     
#bjba,mr4 ,whitehouse 7for himself1 ,mr4
 ,wyden1 ,mr4 ,bennet1 ,ms4 ,stabenow1  
,mrs4 ,murray1 ,mr4 ,brown1 and ,ms4    
,smith7 introduced the following bill2  
which was read twice and referred to the
 ,committee on ,finance  ,a ,,bill  ,to 
amend the ,internal ,revenue ,code of   
#aihf to expand the exclusion of ,pell  
,grants from gross income1 and for other
 purposes4  #a4 ,short title ,this ,act 
may be cited as the ,tax-,free ,pell    
,grant ,act4  #b4 ,expansion of ,pell   
,grant exclusion from gross income  7a7 
,in general ,paragraph section          
#aag7;b77#a7 of the ,internal ,revenue  
,code of #aihf is amended by striking   
received by an individual and all that  
follows and inserting received by an    
individual-- 7,a7 as a scholarship or   
fellowship grant to the extent the      
individual establishes that1 in         
accordance with the conditions of the   

grant1 such amount was used for         
qualified tuition and related expenses1 
or  7,b7 as a ,federal ,pell ,grant     
under section #dja of the ,higher       
,education ,act of #aife 7as in effect  
on the date of the enactment of the     
,tax-,free ,pell ,grant ,act74  4  7b7  
,no adjustment under ,american          
,opportunity and ,lifetime ,learning    
,credits ,section #be;,a7g77#b77;,a7 of 
such ,code is amended by striking a     
qualified scholarship which and         
inserting a qualified scholarship which 
is described in section                 
#aag7;b77#a77;,a7 and which4  7c7       
,effective date ,the amendments made by 
this section shall apply to taxable     
years beginning after ,december #ca1    
#bjbj4  #c4 ,expansion of ,american     
,opportunity and ,lifetime ,learning    
,credits  7a7 ,in general ,section      
#be;,a of the ,internal ,revenue ,code  
of #aihf is amended-- 7#a7 in subsection
 7f77#a7-- 7,a7 in subparagraph 7,a71 by
 striking tuition and fees inserting    

tuition1 fees1 computer or peripheral   
equipment1 child and dependent care     
expenses1 and course materials1  7,b7 by
 striking subparagraph 7,d71 and  7,c7  
by adding at the end the following new  
subparagraphs3  7,d7 ,child and         
dependent care expenses ,for purposes of
 this paragraph-- 7i7 ,in general ,the  
term child and dependent care expenses  
means amounts paid for the following    
expenses1 but only if such expenses are 
incurred to enable the taxpayer to be   
enrolled in an eligible educational     
institution for any period for which    
there are #a or more qualifying         
individuals with respect to the         
taxpayer3 7,i7 expenses for household   
services1 and  7,,ii7 expenses for the  
care of a qualifying individual4  ,such 
term shall not include any amount paid  
for services outside the taxpayer's     
household at a camp where the qualifying
 individual stays overnight4  7ii7      
,qualifying individual ,the term        
qualifying individual has the meaning   

given such term in section #ba7;b77#a74 
7iii7 ,exception1 dependent care centers
 ,rules similar to the rules of         
subparagraphs 7,b71 7,c71 and 7,d7 of   
section #ba7;b77#b7 shall apply1 except 
the term child and dependent care       
expenses shall be substituted for the   
term employment-related expenses each   
place it appears in such subparagraphs4 
7,e7 ,child and dependent care expenses 
only qualified expenses when claimed by 
eligible student ,amounts paid for an   
expense described in subparagraph 7,e7  
may not be taken into account under this
 paragraph for a taxable year unless    
required for the enrollment or          
attendance of an individual described in
 subparagraph 7,a77i7 or subparagraph   
7,a77ii74  7,f7 ,computer or peripheral 
equipment  7i7 ,defined ,for purposes of
 this paragraph1 the term computer or   
peripheral equipment means expenses for 
the purchase of computer or peripheral  
equipment 7as defined in section        
#afh7;i77#b77;,b71 computer software 7as

 defined in section #aig7;e77#c77;,b7771
 or internet access and related         
services1 if such equipment1 software1  
or services are to be used primarily by 
the individual during any of the years  
the individual is enrolled at an        
eligible educational institution4  7ii7 
,dollar limit on amount creditable ,the 
aggregate of the amounts paid or        
expenses incurred for computer or       
peripheral equipment which may be taken 
into account under this paragraph for a 
taxable year by the taxpayer shall not  
exceed #a1jjj4  1 and  7#b7 in          
subsection 7g77#e7-- 7,a7 in the        
heading1 by adding or credit at the end1
 and  7,b7 by inserting or credit after 
a deduction4  7b7 ,effective date ,the  
amendments made by this section shall   
apply to taxable years beginning after  
,december #ca1 #bjbj4