A bill to amend the Internal Revenue Code of 1954 to provide for the establishment of and the deduction of contributions to, education savings accounts.

Amends the Internal Revenue Code to allow an income tax deduction from gross income for contributions of cash, stocks, bonds, or other securities to a savings account for the purpose of paying the educational expenses of the taxpayer's children or grandchildren who have not attained the age of 21 before the close of the calendar year for which the contribution is made. Limits such deduction to $1,000 per calendar year adjusted for inflation. Prohibits the establishment of an account for the benefit of more than one individual. Prohibits an individual from being a beneficiary of more than one account.

Excludes distributions from such an account from the gross income of the taxpayer so long as such distributions are used to pay the beneficiary's tuition, fees, books, supplies, and reasonable living expenses at an institution of higher education or a vocational school. Specifies sanctions for the use of account funds for other than such educational purposes. Provides that distributions used for the educational expenses of the beneficiary shall not be included in the gross income of the beneficiary.