A bill to amend the Internal Revenue Code of 1954 to provide for the establishment of the deduction of contributions to parents and students savings accounts for educational purposes.

Amends the Internal Revenue Code to allow a deduction for contributions to a parents and students' savings (PASS) account created or organized exclusively for the purpose of paying the expenses at an institution of higher education or vocational school of the taxpayer, the child, parent or sibling of the taxpayer, or any person who meets specified qualifications. Limits the amount of such deduction to $1,500 per year, adjusted for inflation. Limits the duration of eligibility for such deduction to calendar years prior to the account beneficiary's 21st birthday, with specified exceptions. Excludes distributions from such an account from the gross income of the payee so long as such distributions are used to defray the beneficiary's tuition, fees, books and supplies, and reasonable living expenses. Specifies sanctions for the use of account funds for other than such educational purposes. Treats qualified distributions as income to the beneficiary for the taxable year in which the beneficiary accepts no payment from the fund and is not a student, and for each of the following four years, in successive apportionments equal to 20 percent of the total amount of such distributions.

Specifies recordkeeping requirements.