Skills Investment Act of 2025
Summary
The Skills Investment Act of 2025 aims to amend the Internal Revenue Code of 1986 by renaming Coverdell education savings accounts to Coverdell lifelong learning accounts. It expands the use of these accounts to include qualified educational or skill development expenses for beneficiaries over the age of 16. The act also modifies rules related to age restrictions and contributions, and introduces a credit for employer contributions to these accounts.
Expected Effects
This act will broaden the scope of Coverdell accounts to support lifelong learning and skills development, rather than just traditional education. It incentivizes both individual and employer contributions to these accounts. The changes aim to encourage continuous education and workforce readiness.
Potential Benefits
- Expands the use of Coverdell accounts to cover a wider range of skill development activities.
- Allows individuals over 30 to contribute to and benefit from these accounts, promoting lifelong learning.
- Provides a tax credit for employers who contribute to employee Coverdell accounts, incentivizing workforce development.
- Increases the age limit for contributions, allowing older individuals to save for skills development.
- Offers a deduction for beneficiaries who contribute to their own accounts after age 18.
Potential Disadvantages
- The $10,000 account limit after age 30 may be restrictive for some individuals.
- Increased complexity in tax calculations due to the introduction of deductible contributions and their subsequent treatment upon distribution.
- The new rules regarding beneficiary changes after age 30 could create confusion.
- The effectiveness of the employer credit will depend on employer participation rates.
- Potential for misuse of funds if the definition of 'qualified educational or skill development expenses' is not carefully monitored.
Constitutional Alignment
The Skills Investment Act appears to align with the general welfare clause of the US Constitution (Preamble). By promoting education and skill development, the act seeks to improve the workforce and contribute to economic prosperity. The act does not appear to infringe upon any specific constitutional rights or limitations.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).