Sen. Mike Lee Introduces ACE Act to Promote School Choice

Later today, Sen. Mike Lee will introduce in the Senate the Achieving Choice in Education (ACE) Act, legislation that will bolster parental rights.

The ACE Act increases tax exemptions for families to make private school or homeschooling more affordable for parents and encourages states to adopt school choice programs. The move comes as more states adopt school choice, and the number of students accessing their education through a K-12 education savings account, school voucher, or tax credit scholarship is now about 1.2 million (double what it was in 2020). That number is set to continue to increase radically as Texas, which has about 11% of all K-12 students in the United States, is poised to pass universal school choice this year. 

“The overwhelming majority of American families agree that more freedom and more options are better for their children’s education. That’s why I wrote the ACE Act: to make it easier than ever for parents to save and pay for schooling that is right for their kids,” Lee, R-Utah, said in a press statement.

Lee’s bill is in alignment with the 2024 platform of the Republican Party, which stated that “families should be empowered to choose the best Education for their children” and endorsed universal school choice in every state. The ACE Act was also endorsed by Heritage Action for America, Concerned Women for America, and the Home School Legal Defense Association, among other groups. 

Specifically, the bill doubles federal tax exemptions from $10,000 to $20,000 per taxable year under section 529 of the IRS code. This means parents would be able to withdraw up to $20,000 per year from their 529 plan to pay for their child’s elementary or secondary education. The bill also increases the tax exclusions for gifts to a 529 plan to $20,000. This also reflects the 2024 Republican Party platform which promised to “expand 529 Education Savings Accounts and support Homeschooling Families equally.”

The bill also uses federal tax exemptions on municipal bonds as a carrot and stick to incentivize states to adopt school choice laws. Municipal bonds are utilized by local governments in states as a way to complete infrastructure projects including public schools. States that have no school choice laws would have the federal tax-exempt status of the interest on their municipal bonds revoked. Those states with partial some school choice would have 50% of the interest tax exempt whereas those states with complete school choice would have a 100% exemption. 

A state would be a eligible for the 100% tax exemption if, “at least 65 percent of the specified school age children are eligible for one or more of such State’s school choice programs, and the average amount spent by such State on the education of each specified school age child eligible for one or more of such State’s school choice programs is at least 75 percent of the average amount spent by such State on the education of each specified school age child not eligible for one or more of such programs.”

An August poll found that seven out of ten voters like school choice. According to an August Real Clear Opinion Research poll, 71% of voters support “the right to use the tax dollars designated for their child’s education to send their child to the public or private school which best serves their child’s needs.”

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