; and (B) satisfies the requirement of paragraph (1)(C). . (B) Effective date The amendment made by subparagraph (A) shall take effect as if included in section 702(n)(1)(A) of the FAFSA Simplification Act (title VII of division FF of Public Law 116–260 ) and subject to the effective date of section 701(b) of such Act. (e) Full exclusion from gross income for Pell Grants (1) In general Section 117(b) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph: (3) Special rule for Pell Grants Amounts received under a Federal Pell Grant under subpart 1 of part A of title IV of the Higher Education Act of 1965 ( 20 U.S.C. 1070a et seq. ) shall be treated as an amount received as a qualified scholarship notwithstanding whether such amount was used for qualified tuition and related expenses. . (2) Effective date The amendment made by this subsection shall apply to amounts received in taxable years beginning after the date of the enactment of this Act. IV Inclusive student success grants 401. Inclusive student success grants Part F of title VII of the Higher Education Act of 1965, as added by section 101 and amended by sections 201 and 202, is further amended by adding at the end the following: 4 Inclusive student success grants 800. Definitions In this subpart: (1) Eligible State The term eligible State means a State that is a recipient of a grant under subpart 1. (2) Evidence tiers (A) Evidence tier 1 The term evidence tier 1 , when used with respect to a reform or practice, means a reform or practice that meets the criteria for receiving an expansion grant from the education innovation and research program under section 4611(a)(2) of the Elementary and Secondary Education Act of 1965, as determined by the Secretary in accordance with such section. (B) Evidence tier 2 The term evidence tier 2 , when used with respect to a reform or practice, means a reform or practice that meets the criteria for receiving a mid-phase grant from the education innovation and research program under