Application FEES Act

Bill Number

H.R. 7205

Origin Chamber

House

Congress

119th Congress, Session 2

Policy Area

Taxation

Status

Introduced

Latest Action

2026-01-22: Referred to the House Committee on Ways and Means.

Last Updated

2026-02-13T18:13:40Z

AI-Generated Summary

Purpose

The legislation, titled the "Application Fees as Eligible Expenses Act" or "Application FEES Act," aims to expand the use of tax-advantaged 529 savings plans (accounts designed to help families save for education expenses on a tax-free basis) by allowing withdrawals to cover fees for applying to colleges and universities.

Key Provisions

• Amends Section 529(e)(3)(A) of the Internal Revenue Code of 1986 to include a new category of qualified higher education expenses.
• Specifically adds "fees required of the beneficiary to apply for admission to any eligible educational institution" as an allowable use of 529 plan distributions.
• The change applies to distributions made after the date the Act is enacted into law.

Significant Changes to Existing Law

• Under current law, 529 plans can only cover specific education costs like tuition, books, and room and board, but not application fees for college admissions.
• This bill explicitly adds application fees to the list of qualified expenses, broadening the scope of tax-free withdrawals without altering other eligibility rules for 529 plans.

Potential Impacts

• On citizens: Families and students using 529 plans can now use these savings tax-free for application fees, potentially reducing out-of-pocket costs for applying to multiple colleges (fees often range from $50 to $100 per application). This may encourage more applications and improve access to higher education for middle- and lower-income families.
• On government agencies: The Internal Revenue Service (IRS) will need to update guidance and forms to reflect the new qualified expense, but the fiscal impact is likely minimal as it expands an existing tax incentive without creating new spending.
• On international relations: No direct impacts, as the bill focuses solely on domestic U.S. tax policy for education savings.

Main Stakeholders Affected

• Families and students: Primary beneficiaries, as account holders (often parents) can now use 529 funds for application fees on behalf of their children (the beneficiaries).
• Higher education institutions: May indirectly benefit from increased applications due to lower financial barriers for prospective students.
• Taxpayers and financial institutions: Broader use of 529 plans could boost participation in these savings vehicles, managed by states and financial providers.

Notable Legal, Constitutional, or Political Implications

• Legal: This is a narrow amendment to the tax code, requiring no major regulatory overhaul beyond IRS implementation. It aligns with existing 529 plan frameworks and avoids conflicts with federal education laws.
• Constitutional: No apparent issues, as it involves congressional authority over taxation and does not infringe on state rights or individual liberties.
• Political: Represents a bipartisan-friendly tweak to education affordability, potentially appealing to lawmakers focused on reducing student debt and promoting college access, though it does not address larger issues like tuition costs.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Rep. Bynum, Janelle S. [D-OR-5]

Recent Actions

• 2026-01-22: Referred to the House Committee on Ways and Means.
• 2026-01-22: Introduced in House
• 2026-01-22: Introduced in House

Bill Versions

• Application Fees as Eligible Expenses Act — issued 2026-01-22 — PDF (2 pages)