HR 463
Lower Your Taxes Act
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Bill overview
The Lower Your Taxes Act proposes significant changes to the tax code, primarily aimed at increasing tax credits for families. It expands the Earned Income Tax Credit (EITC), replaces the Child Tax Credit with a monthly allowance, establishes a new dependent tax credit, and modifies capital gains tax rates. The bill also includes provisions for payments to taxpayers based on state EITC credits and a notification program for EITC eligibility. Furthermore, it increases the corporate income tax rate and introduces a corporate alternative minimum tax.
Key provisions
- Increases the Earned Income Tax Credit (EITC) amount and eligibility.
- Replaces the Child Tax Credit with a monthly allowance of up to $350 per child.
- Establishes a new $500 tax credit for each qualified dependent.
- Increases the corporate income tax rate to 28% and imposes a 4% excise tax on corporate stock buybacks.
- Creates a 25% corporate alternative minimum tax bracket.
- Precludes high-income taxpayers from applying capital gains tax rates to net capital gains.
- Establishes a program to notify individuals of their EITC eligibility.
- Creates a program to make annual payments to eligible individuals based on state refundable EITC credit equivalency amounts.
Who is affected
- Taxpayers with low to moderate incomes
- Families with children
- Corporations
- Individuals with high incomes
- State governments
Notable changes
Sponsors
Official sponsors from legislative records.
Primary sponsor
Cosponsors
Sylvester Turner
Arguments in favor
Reasons to support this legislation.
No arguments in favor have been submitted.
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119th CONGRESS — 1st Session
H. R. 463
IN THE HOUSE OF REPRESENTATIVES
A BILL
To amend the Internal Revenue Code of 1986 to expand the earned income and child tax credits, and for other purposes.
.Lower Your Taxes Act
The table of contents of this Act is as follows:
It is the sense of Congress that the net revenue derived from this Act should be used to reduce the national deficit, to the extent thereof, and thereafter to reduce the national debt.
by striking 34
and inserting 68
,
by striking 40
and inserting 80
,
by striking 45
and inserting 90
, and
by striking 7.65
in the column with the heading The credit percentage is:
and inserting 35
.
The table contained in section 32(b)(1) of such Code is amended—
by striking 15.98
and inserting 7
,
by striking 21.06
both places it appears and inserting 10
, and
by striking 7.65
in the column with the heading The phaseout percentage is:
and inserting 7
.
The table contained in section 32(b)(2)(A) of such Code is amended—
by striking $6,330
and inserting $19,000
,
by striking $8,890
and inserting $27,000
, and
by striking $4,220
and inserting $15,000
.
The table contained in section 32(b)(2)(A) of such Code is amended—
by striking $11,610
both places it appears and inserting $30,000
, and
by striking $5,280
and inserting $15,000
.
Section 32(b)(2)(B) of such Code is amended by striking determined under subparagraph (A) shall be increased by $5,000
and inserting twice the amount determined under subparagraph (A)
.
Section 32(j) of such Code is amended to read as follows:
such dollar amount, multiplied by
the GDP adjustment determined under subparagraph (B) for the calendar year in which the taxable year begins.
For purposes of this paragraph, the term GDP adjustment
for any calendar year is the percentage (if any) by which—
the per capita nominal gross domestic product for the preceding calendar year (as determined by the Secretary), exceeds
the per capita nominal gross domestic product for calendar year 2025 (as determined by the Secretary).
If any dollar amount in subsection (b)(2)(A), after any increase under subparagraph (A), is not a multiple of $10, such dollar amount shall be rounded to the nearest multiple of $10.
In the case of any taxable year beginning after 2021, the dollar amount in subsection (i)(1) shall be increased by an amount equal to—
such dollar amount, multiplied by
the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting calendar year 2020
for calendar year 2016
in subparagraph (A)(ii) thereof.
If the dollar amount in subsection (i)(1), after any increase under subparagraph (A), is not a multiple of $50, such dollar amount shall be rounded to the next lowest multiple of $50.
Section 32(c)(1)(A)(ii)(II) of such Code is amended by striking has attained age 25 but not attained age 65
and inserting has attained age 18
.
With respect to taxable years beginning in calendar years after 2025, the Secretary shall establish a program to notify (whether by electronic means or otherwise) specified individuals that such individuals may be eligible for the earned income tax credit.
For purposes of this subsection, the term specified individual
means any individual who—
based on information available to the Secretary related to the taxable year or the preceding taxable year, the Secretary determines is likely to be eligible for the earned income tax credit, and
either—
filed a return of tax for such taxable year and did not claim the earned income tax credit, or
did not (as of such determination) file a return of tax for such taxable year.
For purposes of this subsection, the term Secretary
means the Secretary of the Treasury or the Secretary’s delegate.
The amendments made by this section shall apply to taxable years beginning after December 31, 2025.
The term eligible individual
means any individual who is eligible for, and claims, a non-refundable earned income tax credit for a taxable year beginning after December 31, 2025, under the income tax laws of an eligible State.
The term eligible State
means any State if—
the Secretary determines that such States has in effect, as of the date of the enactment of this Act, a non-refundable earned income tax credit, and
such State enters into an agreement with the Secretary to provide the Secretary such information as the Secretary may require to administer this section.
non-refundable earned income tax creditmeans, with respect to any State, a credit against the income tax imposed by such State which the Secretary has determined is based on the earned income of the taxpayer and which is limited to the tax liability of such taxpayer.
A credit shall not be treated as a non-refundable earned income tax credit for any taxable year if the Secretary determines that such credit as in effect for such taxable year has been modified (relative to such credit as in effect on the date of the enactment of this Act) in a manner which suggests that a significant purpose of such modification was to increase the amount of payments made under this section.
A credit shall not be treated as non-refundable earned income tax credit for any taxable year if such credit was not scheduled to be in effect for such taxable year under the income tax laws of the State as in effect on the date of the enactment of this Act.
State refundable earned income tax credit equivalency amountmeans, with respect to any individual for any taxable year, the amount determined by the Secretary as being the excess (if any) of—
the amount of the non-refundable earned income tax credit which would have been allowed to such individual for such taxable year if such credit were not limited based on the tax liability of the taxpayer, over
the amount by which such individual’s State income tax liability would increase if such credit were not allowed (determined after taking into account all other income tax credits other than income tax credits which constitute credits for the payment of tax).
Secretarymeans the Secretary of the Treasury or the Secretary’s delegate.
For purposes of this section, the term monthly specified child allowance
means, with respect to any taxpayer for any calendar month, the sum of—
$300, with respect to each specified child of such taxpayer who will (as of the close of such month) have attained age 6, plus
In the case of any calendar month beginning before January 1, 2026, the amount of the reduction under subparagraph (A) shall not exceed the lesser of—
the excess (if any) of—
1/12 of 5 percent of the excess of the secondary threshold amount over the initial threshold amount.
For purposes of this paragraph—
The term initial threshold amount
means—
1/2 the dollar amount in effect under subclause (I), in the case of a married individual filing a separate return, and
$112,500, in any other case.
The term secondary threshold amount
means—
$300,000, in the case of a head of household (as defined in section 2(b)), and
$200,000, in any other case.
The term applicable taxable year
means, with respect to any taxable year for which the credit under this section is determined—
such taxable year, or
if the taxpayer elects the application of this subclause (at such time and in such form and manner as the Secretary may provide), the preceding taxable year or the second preceding taxable year (as specified in such election).
The term modified adjusted gross income
means adjusted gross income increased by any amount excluded from gross income under section 911, 931, or 933.
such dollar amount, multiplied by—
the percentage (if any) by which—
the CPI (as defined in section 1(f)(4)) for the calendar year preceding the calendar year in which such month begins, exceeds
the CPI (as so defined) for calendar year 2020.
such dollar amount, multiplied by
the percentage (if any) which would be determined under subparagraph (A)(ii) if subclause (II) thereof were applied by substituting 2022
for 2020
.
Any increase under subparagraph (B) which is not a multiple of $5,000 shall be rounded to the nearest multiple of $5,000.
For purposes of this section—
The term specified child
means, with respect to any taxpayer for any calendar month, an individual—
who has the same principal place of abode as the taxpayer for more than one-half of such month,
who is younger than the taxpayer and will not, as of the close of such month, have attained age 18,
who receives care from the taxpayer during such month that is not compensated,
who is not the spouse of the taxpayer at any time during such month, and
who either—
is a citizen, national, or resident of the United States, or
if the taxpayer is a citizen or national of the United States, such individual is described in section 152(f)(1)(B) with respect to such taxpayer.
The maintenance by the taxpayer of a secure environment at which the individual resides.
The provision or arrangement by the taxpayer of, and transportation by the taxpayer to, medical care at regular intervals and as required for the individual.
The involvement by the taxpayer in, and financial and other support by the taxpayer for, educational or similar activities of the individual.
Any other factor that the Secretary determines to be appropriate to determine whether the individual receives care from the taxpayer.
For purposes of determining if care is compensated within the meaning of paragraph (1)(C), compensation from the Federal Government, a State or local government, a Tribal government, or any possession of the United States shall not be taken into account.
Except as provided in subparagraph (D), if any individual would (but for this paragraph) be a specified child of 2 or more taxpayers for any month, such individual shall be treated as the specified child only of the taxpayer who is—
the parent of the individual (or, if such individual would (but for this paragraph) be a specified child of 2 or more parents of the individual for such month, the parent of the individual determined under subparagraph (B)),
if the individual is not a specified child of any parent of the individual (determined without regard to this paragraph), the specified relative of the individual with the highest adjusted gross income for the taxable year which includes such month, or
if the individual is neither a specified child of any parent of the individual nor a specified child of any specified relative of the individual (in both cases determined without regard to this paragraph), the taxpayer with the highest adjusted gross income for the taxable year which includes such month.
If any individual would (but for this paragraph) be the specified child of 2 or more parents of the individual for any month, such child shall be treated only as the specified child of—
the parent with whom the child resided for the longest period of time during such month, or
if the child resides with both parents for the same amount of time during such month, the parent with the highest adjusted gross income for the taxable year which includes such month.
For purposes of this paragraph, the term specified relative
means an individual who is—
an ancestor of a parent of the specified child,
a brother or sister of a parent of the specified child, or
a brother, sister, stepbrother, or stepsister of the specified child.
This paragraph shall be applied without regard to any parent or specified relative of an individual for any month if—
such parent or specified relative elects to have such individual not be treated as a specified child of such parent or specified relative for such month,
in the case of a parent of such individual, the adjusted gross income of the taxpayer (with respect to whom such individual would be treated as a specified child after application of this subparagraph) for the taxable year which includes such month is higher than the highest adjusted gross income of any parent of the individual for any taxable year which includes such month (determined without regard to any parent with respect to whom such individual is not a specified child, determined without regard to subparagraphs (A) and (B) and after application of this subparagraph), and
Except as otherwise provided by the Secretary, the term parent
shall have the same meaning as when used in section 152(c)(4).
In the case of any individual’s temporary absence from such individual’s principal place of abode, each day composing the temporary absence shall—
be treated as a day at such individual’s principal place of abode,
not be treated as a day at any other location.
For purposes of subparagraph (A), an absence shall be treated as temporary if—
the individual would have resided at the place of abode but for the absence, and
under the facts and circumstances, it is reasonable to assume that the individual will return to reside at the place of abode.
Rules similar to the rules section 152(e) shall apply for purposes of this subsection.
If a period of presumptive eligibility is established under section 7527B(c) for any individual with respect to any taxpayer—
such individual shall be treated as the specified child of such taxpayer for any month in such period of presumptive eligibility, and
Nothing in section 7527B(c) shall be interpreted to preclude a taxpayer from establishing a period of presumptive eligibility (including any such period described in section 7527B(c)(2)(D)) with respect to any specified child for purposes of this section solely because such taxpayer affirmatively elects not to receive monthly advance child payments under section 7527B.
If the taxpayer (in the case of a joint return, either spouse) has a principal place of abode (determined as provided in section 32) in the United States or Puerto Rico for more than one-half of any calendar month during the taxable year, so much of the credit otherwise allowed under subsection (a) as is attributable to monthly specified child allowances with respect to any such calendar month shall be allowed under subpart C (and not allowed under this subpart).
No credit shall be allowed under this section if the taxpayer identification number of the taxpayer was issued after the due date for filing the return for the taxable year.
No credit shall be allowed under this section for any taxable year (and no payment shall be made under section 7527B for any month) in the disallowance period.
For purposes of subparagraph (A), the disallowance period is—
the period of 10 taxable years after the most recent taxable year for which there was a final determination that the taxpayer’s claim of credit under this section or section 24 (or payment received under section 7527A or 7527B) was due to fraud,
the period of 2 taxable years after the most recent taxable year for which there was a final determination that the taxpayer’s claim of credit under this section or section 24 (or payment received under section 7527A or 7527B) was due to reckless or intentional disregard of rules and regulations (but not due to fraud), and
in addition to any period determined under clause (i) or (ii) (as the case may be), the period beginning on the date of the final determination described in such clause and ending with the beginning of the period described in such clause.
In the case of a taxpayer who is denied credit under this section or section 24 for any taxable year as a result of the deficiency procedures under subchapter B of chapter 63, no credit shall be allowed under this section for any subsequent taxable year (and no payment shall be made under section 7527B for any subsequent month) unless the taxpayer provides such information as the Secretary may require to demonstrate eligibility for such credit.
the amount determined under subsection (a) with respect to the taxpayer for such taxable year (without regard to paragraph (1) of this subsection).
such taxpayer shall be treated as described in this paragraph, and
the increase determined under paragraph (2) by reason of this subparagraph shall not exceed the excess of—
the amount described in paragraph (2)(A), over
the amount which would be so described if the payments described therein had been determined on the basis of the taxpayer’s modified adjusted gross income for the applicable taxable year (as defined in subsection (b)).
A rule similar to the rule of the preceding sentence shall apply if the amount described in paragraph (2)(A) with respect to the taxpayer for the taxable year was determined on the basis of a filing status of the taxpayer which differs from the taxpayer’s filing status for the applicable taxable year (as so defined).
such taxpayer shall be treated as described in this paragraph, and
the increase determined under paragraph (2) by reason of this subparagraph shall not exceed the portion of such payment so made.
If the Secretary notifies a taxpayer under section 7527B(j)(2) that such taxpayer is subject to recapture with respect to any payments—
such taxpayer shall be treated as described in this paragraph, and
the increase determined under paragraph (2) by reason of this subparagraph shall not exceed the aggregate amount of such payments.
To minimize the amount of advance payments made under section 7527B to ineligible individuals, the Secretary shall issue regulations or other guidance for purposes of this paragraph which apply with respect to taxpayers who are described in section 7527B(b)(4) with respect to the reference month but are not so described with respect to one or more months during the taxable year for which advance payments under section 7527B are made.
A taxpayer is described in this paragraph with respect to any taxable year pursuant to regulations or other guidance of the Secretary describing other recapture circumstances to facilitate the administration and enforcement by the Secretary of section 7527B to minimize the amount of advance payments made under section 7527B to ineligible individuals and to prevent abuse.
The Secretary shall pay to each possession of the United States with a mirror code tax system amounts equal to the loss (if any) to that possession by reason of the application of this section (determined without regard to this subsection) with respect to taxable years beginning in calendar years after 2025. Such amounts shall be determined by the Secretary based on information provided by the government of the respective possession.
For purposes of this paragraph, the term mirror code tax system means, with respect to any possession of the United States, the income tax system of such possession if the income tax liability of the residents of such possession under such system is determined by reference to the income tax laws of the United States as if such possession were the United States.
For application of refundable credit to residents of Puerto Rico, see subsection (d).
For application of advance payment to residents of Puerto Rico, see section 7527B(b)(4).
In the case of a taxable year with respect to which a plan is not approved under subparagraph (B), subsection (d) shall be applied by substituting , Puerto Rico, or American Samoa
for or Puerto Rico
.
The Secretary shall issue such regulations or other guidance as the Secretary determines necessary or appropriate to carry out the purposes of this section, including regulations or other guidance—
for determining whether an individual receives care from a taxpayer for purposes of subsection (c)(1), and
to coordinate or modify the application of this section and sections 24, 7527A, and 7527B in the case of any taxpayer—
whose taxable year is other than a calendar year,
whose filing status for a taxable year is different from the status used for determining one or more monthly payments under section 7527B during such taxable year, or
whose principal place of abode for any month is different from the principal place of abode used for determining the monthly payment under section 7527B for such month.
There shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to $500 with respect to each specified dependent of such taxpayer for such taxable year.
The amount of the credit allowable under subsection (a) shall be reduced (but not below zero) by $50 for each $1,000 (or fraction thereof) by which the taxpayer’s modified adjusted gross income exceeds the threshold amount.
For purposes of this subsection, the term threshold amount
means—
$300,000, in the case of a head of household (as defined in section 2(b)), and
$200,000, in any other case.
For purposes of this subsection, the term modified adjusted gross income
means adjusted gross income increased by any amount excluded from gross income under section 911, 931, or 933.
For purposes of this section, the term specified dependent
means, with respect to any taxpayer for any taxable year, any dependent of such taxpayer for such taxable year unless such dependent—
is a specified child of the taxpayer, or any other taxpayer, for any month during such taxable year, or
would not be a dependent if subparagraph (A) of section 152(b)(3) were applied without regard to all that follows resident of the United States
.
Except in the case of a taxable year closed by reason of the death of the taxpayer, no credit shall be allowable under this section in the case of a taxable year covering a period of less than 12 months.
The Secretary shall issue such regulations or other guidance as the Secretary determines necessary or appropriate to carry out the purposes of this section.
Chapter 77 of such Code is amended by inserting after section 7527A the following new section:
For purposes of this section and except as otherwise provided in this section, the term monthly advance child payment
means, with respect to any taxpayer for any calendar month, the amount (if any) which is estimated by the Secretary as being equal to the monthly specified child allowance which would be determined under section 24A(b) with respect to such taxpayer for such calendar month if—
unless determined by the Secretary based on any information known to the Secretary, the only specified children of such taxpayer for such calendar month are the specified children of such taxpayer for the reference month,
unless determined by the Secretary based on any information known to the Secretary, the ages of such children (and the status of such children as specified children) are determined for such calendar month by taking into account the passage of time since such reference month,
the limitations of section 24A(b)(2) were applied with respect to the reference taxable year rather than with respect to the applicable taxable year, and
An individual shall be treated as a specified child of a taxpayer for purposes of determining any monthly advance child payment under this section only if such month is part of the period of presumptive eligibility determined by the Secretary under this subsection with respect to such specified child and such taxpayer (determined by treating the month described in subclause (I) of paragraph (2)(A)(ii) as being the first month beginning after the determination described in such subclause).
Except as otherwise provided by the Secretary, the term period of presumptive eligibility
means the period—
beginning with the month for which presumptive eligibility is established, and
ending with the earliest of—
the beginning of the month described in clause (i) if the Secretary determines that the taxpayer committed fraud or intentionally disregarded rules or regulations in establishing or maintaining presumptive eligibility,
in the case of any notification from the Secretary that the period of presumptive eligibility has been terminated or suspended by reason of any question regarding eligibility of the taxpayer for monthly advance child payments with respect to such child, the month specified in such notice as the month on which such termination or suspension begins, and
the month following any failure of the taxpayer to make the required annual renewal of presumptive eligibility by such date as the Secretary may provide.
A taxpayer shall establish presumptive eligibility with respect to any specified child for any month at such time and in such manner as the Secretary may provide. Except as otherwise provided by the Secretary, in order to establish a period of presumptive eligibility the taxpayer must express a reasonable expectation and intent that the taxpayer will continue to be eligible with respect to such specified child for at least the two months following the month for which presumptive eligibility is to be established.
The Secretary shall ensure information to establish presumptive eligibility under this paragraph may be provided on the return of tax for the taxable year ending before the calendar year which includes the month for which such eligibility is to be established, through the on-line portal described in subsection (e), or in such other manner as the Secretary may provide.
The period of presumptive eligibility shall include any period to which paragraph (1) or (2) of subsection (g) applies.
a parent of a child born during a calendar month shall be treated as automatically establishing presumptive eligibility with respect to such child,
the period of such automatic presumptive eligibility is determined, and
based on information provided to the Secretary by one or more government entities, a parent or specified relative of a child is treated as automatically establishing presumptive eligibility with respect to such child, and
the period for which such automatic presumptive eligibility is determined (including any additional circumstances under which such period will terminate).
For purposes of determining the status of any individual as a specified child for purposes of determining presumptive eligibility with respect to any period, section 24A(c) shall be applied without regard to paragraph (7) thereof.
If a taxpayer’s period of presumptive eligibility with respect to any specified child terminates by reason of paragraph (2)(A)(ii)(III), the Secretary shall provide the taxpayer a written notice of such termination.
For purposes of this section—
The term reference month
means, with respect to any taxpayer for any calendar month, the most recent of—
in the case of a taxpayer who filed a return of tax for the taxable year preceding the taxable year described in subparagraph (A), the last month of such preceding taxable year, and
in the case of a taxpayer who provides, through a specified alternative mechanism, information which is sufficient to estimate the taxpayer’s monthly advance child payment for such month.
The term reference taxable year
means, with respect to any taxpayer for any calendar month, the most recent of—
the taxable year described in subparagraph (A) or (B) of paragraph (1), or
in the case of a taxpayer who provides, through a specified alternative mechanism, information which is sufficient to estimate the taxpayer’s modified adjusted gross income for the taxable year which includes such month, such taxable year.
Any month or year referred to in subparagraph (A), (B), or (C) of paragraph (1) or subparagraph (A) or (B) of paragraph (2) shall not be taken into account in determining the reference month or reference taxable year with respect to any calendar month unless all relevant information with respect to such month or year is available to the Secretary and the Secretary has adequate time to make estimates under this section on the basis of such information before the beginning of such calendar month.
if a taxpayer is not described in subparagraph (A), (B), or (C) of paragraph (1) with respect to any calendar month, the monthly advance child payment with respect to such taxpayer for such calendar month shall be treated as zero unless the Secretary determines that the Secretary can make the estimate described in subsection (b) on the basis of information known to the Secretary which the Secretary determines is reasonably reliable, and
the qualifying children of such taxpayer for the taxable year which includes the reference monthfor
the specified children of such taxpayer for the reference month.
The Secretary shall establish an on-line portal which allows taxpayers to—
subject to such restrictions as the Secretary may provide, elect to begin or cease receiving payments under this section, and
provide information to the Secretary which is relevant in determining the monthly advance child payment and the taxpayer’s eligibility for such payment, including information regarding—
the number of the taxpayer’s specified children, including by reason of the birth of a child,
the taxpayer’s marital status,
the taxpayer’s modified adjusted gross income,
any other factor which the Secretary may provide.
For purposes of this section, the term specified alternative mechanism
means the on-line portal established under paragraph (1), the on-line portal established under section 7527A, and any other mechanism or method established by the Secretary to allow taxpayers to provide the information described in paragraph (1) (including in connection with the filing of any return of tax).
The Secretary shall ensure that the on-line portal described in paragraph (1) is available in multiple languages.
In the event that (without regard to this paragraph) a period of presumptive eligibility with respect to the same specified child would exist for more than 1 taxpayer at the same time—
except as otherwise provided in this section or by the Secretary, a period of presumptive eligibility shall exist only respect to the taxpayer with the most recent reference month,
the Secretary shall establish procedures under which the Secretary expeditiously adjudicates taxpayers’ competing claims of presumptive eligibility with respect to the same child, and
the Secretary shall notify any taxpayer of the termination of a period of presumptive eligibility pursuant to this subsection.
an expedited process for taxpayers who meet such requirements as the Secretary may establish for such expedited process, and
procedures for adjudicating an appeal of an adverse decision.
Federal agencies (including the Social Security Administration and the Department of Agriculture),
any State, local government, Tribal government, or possession of the United States, and
any other individual or entity that the Secretary determines to be appropriate for purposes of adjudicating a competing claim described in paragraph (1).
The inspection of a taxpayer’s books of account in connection with any adjudication under the procedures established under paragraph (1)(B) (including the adjudication of any appeal) shall not be treated as an examination or inspection of a taxpayer’s books of account for purposes of section 7605(b).
If, pursuant to the procedures established under paragraph (1)(B), the Secretary determines that a child is a specified child of a taxpayer and the Secretary did not make payments to such taxpayer with respect to such child for any portion of the period during which the determination was made, the Secretary may make a one-time payment to the taxpayer with respect to which such child is the specified child in an amount equal to the aggregate amount by which the monthly advance child payments to such taxpayer would have increased during such period if such determination had been made immediately.
If, pursuant to the procedures established under paragraph (1)(B), the Secretary makes payments with respect to the child during the period during which the determination is made—
the Secretary shall provide each taxpayer which receives such payments notice that such payments may be subject to recapture, and
upon making such determination, the Secretary shall determine on the basis of the facts and circumstances of each such taxpayer whether any such payments should be subject to recapture and shall so notify each such taxpayer.
Notwithstanding subsection (f), in the case of any failure or delay in establishing a period of presumptive eligibility with respect to which the taxpayer elects the application of this subparagraph, credit under section 24A or retroactive payment under this section (similar to the payment described in subsection (f)(3)) shall be allowed or made with respect to so much of the period of such failure or delay as does not exceed 3 months. The preceding sentence shall not apply if the Secretary determines that such failure or delay was due to fraud or reckless or intentional disregard of rules and regulations.
Subparagraph (A) shall not apply with respect to any taxpayer more than once during any 36-month period.
Notwithstanding subsection (f), if the Secretary determines that a failure or delay in establishing a period of presumptive eligibility with respect to any specified child was due to domestic violence, serious illness, natural disaster, or any other hardship, credit under section 24A or retroactive payment under this section (similar to the payment described in subsection (f)(3)) shall be allowed or made with respect to so much of the period of such failure or delay as does not exceed 6 months.
The payments made by the Secretary under subsection (a) shall be made by electronic funds transfer to the same extent and in the same manner as if such payments were Federal payments not made under this title.
any account to which the payee authorized, on or after January 1, 2025, the delivery of a refund of taxes under this title or of a Federal payment (as defined in section 3332 of title 31, United States Code),
any account belonging to a payee from which that individual, on or after January 1, 2025, made a payment of taxes under this title, or
any Treasury-sponsored account (as defined in section 208.2 of title 31, Code of Federal Regulations).
Notwithstanding section 3325 of title 31, United States Code, or any other provision of law, with respect to any payment of a refund under this section, a disbursing official in the executive branch of the United States Government may modify payment information received from an officer or employee described in section 3325(a)(1)(B) of such title for the purpose of facilitating the accurate and efficient delivery of such payment. Except in cases of fraud or reckless neglect, no liability under section 3325, 3527, 3528, or 3529 of title 31, United States Code, shall be imposed with respect to payments made under this paragraph.
subject to reduction or offset pursuant to section 3716 or 3720A of title 31, United States Code,
subject to reduction or offset pursuant to subsection (c), (d), (e), or (f) of section 6402, or
reduced or offset by other assessed Federal taxes that would otherwise be subject to levy or collection.
The right of any person to any applicable payment shall not be transferable or assignable, at law or in equity, and no applicable payment shall be subject to, execution, levy, attachment, garnishment, or other legal process, or the operation of any bankruptcy or insolvency law.
In the case of an applicable payment described in subparagraph (E)(iii)(I) that is paid electronically by direct deposit through the Automated Clearing House (ACH) network, the Secretary of the Treasury (or the Secretary's delegate) shall—
issue the payment using a unique identifier that is reasonably sufficient to allow a financial institution to identify the payment as an applicable payment, and
further encode the payment pursuant to the same specifications as required for a benefit payment defined in section 212.3 of title 31, Code of Federal Regulations.
In the case of a garnishment order that applies to an account that has received an applicable payment that is encoded as provided in subparagraph (B), a financial institution shall follow the requirements and procedures set forth in part 212 of title 31, Code of Federal Regulations, except—
a financial institution shall not, with regard to any applicable payment, be required to provide the notice referenced in sections 212.6 and 212.7 of title 31, Code of Federal Regulations.
In the case of a garnishment order (other than an order that has been served by the United States) that has been received by a financial institution and that applies to an account into which an applicable payment that has not been encoded as provided in subparagraph (B) has been deposited electronically on any date during the lookback period or into which an applicable payment that has been deposited by check on any date in the lookback period, the financial institution, upon the request of the account holder, shall treat the amount of the funds in the account at the time of the request, up to the amount of the applicable payment (in addition to any amounts otherwise protected under part 212 of title 31, Code of Federal Regulations), as exempt from a garnishment order without requiring the consent of the party serving the garnishment order or the judgment creditor.
A financial institution that acts in good faith in reliance on clauses (i) or (ii) shall not be subject to liability or regulatory action under any Federal or State law, regulation, court or other order, or regulatory interpretation for actions concerning any applicable payments.
This paragraph shall not alter the status of applicable payments as tax refunds or other nonbenefit payments for purpose of any reclamation rights of the Department of the Treasury or the Internal Revenue Service as per part 210 of title 31, Code of Federal Regulations.
For purposes of this paragraph—
The term account holder means a natural person whose name appears in a financial institution’s records as the direct or beneficial owner of an account.
The term account review means the process of examining deposits in an account to determine if an applicable payment has been deposited into the account during the lookback period. The financial institution shall perform the account review following the procedures outlined in section 212.5 of title 31, Code of Federal Regulations and in accordance with the requirements of section 212.6 of title 31, Code of Federal Regulations.
The term applicable payment means—
any payment made to an individual under this section (other than any payment made pursuant to paragraph (6)),
any advance payment made by a possession of the United States with a mirror code tax system (as defined in section 24(h)) pursuant to an election under paragraph (6)(B) which corresponds to a payment described in subclause (I), and
any advance payment made by American Samoa pursuant to a program for making such payments which is described in paragraph (6)(C)(ii).
The term garnishment means execution, levy, attachment, garnishment, or other legal process.
The term garnishment order means a writ, order, notice, summons, judgment, levy, or similar written instruction issued by a court, a State or State agency, a municipality or municipal corporation, or a State child support enforcement agency, including a lien arising by operation of law for overdue child support or an order to freeze the assets in an account, to effect a garnishment against a debtor.
The term lookback period means the two-month period that begins on the date preceding the date of account review and ends on the corresponding date of the month two months earlier, or on the last date of the month two months earlier if the corresponding date does not exist.
For application of monthly advance child payments to residents of Puerto Rico, see subsection (b)(4).
In the case of any possession of the United States with a mirror code tax system (as defined in section 24A(h)(1)(C)), this section shall not be treated as part of the income tax laws of the United States for purposes of determining the income tax law of such possession unless such possession elects to have this section be so treated.
In the case of any possession described in subparagraph (B) which makes the election described in such subparagraph, the amount otherwise paid by the Secretary to such possession under section 24A(h)(1)(A) with respect to taxable years beginning in 2026, 2027, and 2028 shall each be increased by $300,000 if such possession has a plan, which has been approved by the Secretary, for making monthly advance child payments consistent with such election.
The amount otherwise paid by the Secretary to American Samoa under subparagraph (A) of section 24A(h)(3) with respect to taxable years beginning in 2026, 2027, and 2028 shall each be increased by $300,000 if the plan described in subparagraph (B) of such section includes a program, which has been approved by the Secretary, for making monthly advance child payments under rules similar to the rules of this section.
The Secretary may pay, upon the request of the possession of the United States to which the payment is to be made, the amount of the increase determined under clause (i) or (ii), respectively, immediately upon approval of the plan with respect to which such payment relates.
Except as otherwise provided in this section, terms used in this section which are also used in section 24A shall have the same respective meanings as when used in section 24A.
A child shall not be taken into account in determining the monthly advance child payment for any calendar month if the death of such child before the end of such month is known to the Secretary as of date on which the Secretary estimates such payment.
Rules similar to the rules which apply under section 24A(e) shall apply for purposes of this section except that such rules shall apply with respect to the return of tax for the reference taxable year or, in the case of information provided through a specified alternative mechanism, with respect to the information provided through such mechanism.
Not later than January 31 of the calendar year following any calendar year during which the Secretary makes one or more payments to any taxpayer under this section, the Secretary shall provide such taxpayer with a written notice which includes—
the taxpayer’s taxpayer identity (as defined in section 6103(b)(6)),
the aggregate amount of such payments made to such taxpayer during such calendar year, and
such other information as the Secretary determines appropriate.
In the case of any payments made to a taxpayer which the Secretary has determined are subject to recapture, the notice provided under paragraph (1) to such taxpayer shall include the amount of such payments.
Any month with respect to which such monthly advance child payment will increase (relative to the preceding month) by reason of an inflation adjustment under section 24A(b)(3)(A).
Any month with respect to which such monthly advance child payment will be reduced (relative to the preceding month) by reason of such child ceasing to be a specified child by reason of attaining age 18.
In the case of a taxpayer with a specified child described in section 24A(b)(1)(A), any month with respect to which such monthly advance child payment will be reduced by reason of such child attaining age 6.
The Secretary shall issue such regulations or other guidance as the Secretary determines necessary or appropriate to carry out the purposes of this section.
Section 6103(e) of such Code is amended by adding at the end the following new paragraph:
The number of specified children, including by reason of the birth of a child.
The name and TIN of specified children.
Marital status.
Modified adjusted gross income.
Principal place of abode.
Any other factor which the Secretary may provide pursuant to section 7527A(c) or 7527B(e).
any State, local government, Tribal government, or possession of the United States, or
any other individual or entity that the Secretary determines to be appropriate for purposes of adjudicating a competing claim.
Information considered by the Secretary about where and with whom the specified child resided.
Information considered by the Secretary about expenditures made by the claimants to the extent such payments relate to the competing claim.
Section 26(b)(2) of such Code is amended by striking and
at the end of subparagraph (Y), by striking the period at the end of subparagraph (Z) and inserting , and
, and by adding at the end the following new subparagraph:
Section 3402(f)(1)(C) of such Code is amended by inserting or section 24A (determined after application of subsection (g) thereof)
after section 24 (determined after application of subsection (j) thereof)
.
or section 24A, as the case may beafter
section 24.
24A by reason of subsection (d) thereof,after
24 by reason of subsections (d) and (i)(1) thereof,.
or section 24A(e) (relating to monthly child tax credit)after
section 24(e) (relating to child tax credit).
24A,after
24,.
by inserting or 24A(f)(2)
after section 24(g)(2)
,
by inserting or 24A
after under section 24
, and
by striking subsection (g)(1) thereof
and inserting section 24(g)(1) or section 24A(f)(1), respectively
.
24A,after
24,.
by inserting 24A,
after 24,
, and
by inserting 7527B,
after 7527A,
.
The amendments made by subsection (b) shall apply to calendar months beginning after December 31, 2025.
The amendment made by subsection (d) shall take effect on the date of the enactment of this Act.
and the taxable income of such taxpayer for such taxable year does not exceed $1,000,000 (half such amount in the case of a married individual filing a separate return)after
If a taxpayer has a net capital gain for any taxable year.
Section 1(h) of such Code is amended by adding at the end the following new paragraph:
In the case of any taxable year beginning after 2026, the $1,000,000 amount in paragraph (1) shall be increased by an amount equal to—
such dollar amount, multiplied by
the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting calendar year 2025
for calendar year 2016
in subparagraph (A)(ii) thereof.
If any increase under subparagraph (A) is not a multiple of $50, such dollar amount shall be rounded to the next lowest multiple of $50.
The amendments made by this section shall apply to taxable years beginning after December 31, 2025.
21 percentand inserting
28 percent.
Section 4501(a) of such Code is amended by striking 1 percent
and inserting 4 percent
.
Section 55(b)(2)(A)(i) of such Code is amended to read as follows:
15 percent of so much of the adjusted financial statement income (as defined in section 56A) as does not exceed $5,000,000,000, plus
25 percent of so much of such adjusted financial statement income as exceeds $5,000,000,000,