Two-State Solution Act This bill addresses U.S. policy and related activities to preserve conditions for a two-state solution to resolve territorial disputes between Israel and Palestine. The bill prohibits the United States from providing support for projects in geographic regions that came under Israeli control after June 5, 1967. It also prohibits the use of any U.S. security assistance, defense articles, or defense services provided to Israel for efforts to annex or exercise permanent control over any part of the West Bank or Gaza. Current law designates the Palestine Liberation Organization (PLO) as a terrorist organization and restricts its activities (e.g., prohibiting it from maintaining an office in the United States). The President may waive for up to six months some of these restrictions to serve U.S. national security or diplomatic interests. If the President certifies that the PLO has ceased supporting terrorist actions and met other conditions, the bill automatically terminates the terrorist organization designation. Goods produced in the West Bank or Gaza that are imported into the United States must indicate those areas as the country of origin on their labels. The bill expands the scope of certain foreign and development assistance to foster initiatives, including shared educational opportunities and youth activities, that connect Israelis and Palestinians. Additionally, the Department of State and the U.S. Agency for International Development may jointly award grants to private, nonprofit organizations to promote human rights and democracy, strengthen civil society, and otherwise address the needs of the Palestinian people.