[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 463 Introduced in House (IH)]
<DOC>
119th CONGRESS
1st Session
H. R. 463
To amend the Internal Revenue Code of 1986 to expand the earned income
and child tax credits, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
January 15, 2025
Mrs. Sykes introduced the following bill; which was referred to the
Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to expand the earned income
and child tax credits, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Lower Your Taxes
Act''.
(b) Table of Contents.--The table of contents of this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Sense of Congress.
Sec. 3. Expansion of earned income tax credit.
Sec. 4. Payments to taxpayers determined by treating State non-
refundable earned income tax credits as
refundable.
Sec. 5. Establishment of refundable child tax credit with monthly
advance payment.
Sec. 6. Capital gains rates not applicable to certain high income
taxpayers.
Sec. 7. Increase in rates of certain corporate taxes.
SEC. 2. SENSE OF CONGRESS.
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.
SEC. 3. EXPANSION OF EARNED INCOME TAX CREDIT.
(a) Credit Percentage.--The table contained in section 32(b)(1) of
the Internal Revenue Code of 1986 is amended--
(1) by striking ``34'' and inserting ``68'',
(2) by striking ``40'' and inserting ``80'',
(3) by striking ``45'' and inserting ``90'', and
(4) by striking ``7.65'' in the column with the heading
``The credit percentage is:'' and inserting ``35''.
(b) Phaseout Percentage.--The table contained in section 32(b)(1)
of such Code is amended--
(1) by striking ``15.98'' and inserting ``7'',
(2) by striking ``21.06'' both places it appears and
inserting ``10'', and
(3) by striking ``7.65'' in the column with the heading
``The phaseout percentage is:'' and inserting ``7''.
(c) Earned Income Amount.--The table contained in section
32(b)(2)(A) of such Code is amended--
(1) by striking ``$6,330'' and inserting ``$19,000'',
(2) by striking ``$8,890'' and inserting ``$27,000'', and
(3) by striking ``$4,220'' and inserting ``$15,000''.
(d) Phaseout Amount.--
(1) In general.--The table contained in section 32(b)(2)(A)
of such Code is amended--
(A) by striking ``$11,610'' both places it appears
and inserting ``$30,000'', and
(B) by striking ``$5,280'' and inserting
``$15,000''.
(2) Joint returns.--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)''.
(3) Inflation adjustment.--Section 32(j) of such Code is
amended to read as follows:
``(j) Inflation Adjustments.--
``(1) Earned income and phaseout amounts.--
``(A) In general.--In the case of any taxable year
beginning after 2026, each of the dollar amounts in
subsection (b)(2)(A) shall be increased by an amount
equal to--
``(i) such dollar amount, multiplied by
``(ii) the GDP adjustment determined under
subparagraph (B) for the calendar year in which
the taxable year begins.
``(B) GDP adjustment.--For purposes of this
paragraph, the term `GDP adjustment' for any calendar
year is the percentage (if any) by which--
``(i) the per capita nominal gross domestic
product for the preceding calendar year (as
determined by the Secretary), exceeds
``(ii) the per capita nominal gross
domestic product for calendar year 2025 (as
determined by the Secretary).
``(C) Rounding.--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.
``(2) Excessive investment income.--
``(A) In general.--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--
``(i) such dollar amount, multiplied by
``(ii) 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.
``(B) Rounding.--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.''.
(e) Age Limitations.--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''.
(f) Notification of Taxpayers by Treasury of Potential Eligibility
for the Earned Income Tax Credit.--
(1) In general.--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.
(2) Specified individual.--For purposes of this subsection,
the term ``specified individual'' means any individual who--
(A) 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
(B) either--
(i) filed a return of tax for such taxable
year and did not claim the earned income tax
credit, or
(ii) did not (as of such determination)
file a return of tax for such taxable year.
(3) Secretary.--For purposes of this subsection, the term
``Secretary'' means the Secretary of the Treasury or the
Secretary's delegate.
(g) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2025.
SEC. 4. PAYMENTS TO TAXPAYERS DETERMINED BY TREATING STATE NON-
REFUNDABLE EARNED INCOME TAX CREDITS AS REFUNDABLE.
(a) In General.--The Secretary shall establish a program for making
annual payments to eligible individuals equal to the State refundable
earned income tax credit equivalency amount with respect to taxable
years beginning in calendar years after 2025.
(b) Eligible Individual.--For purposes of this section--
(1) In general.--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.
(2) Eligible state.--The term ``eligible State'' means any
State if--
(A) 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
(B) such State enters into an agreement with the
Secretary to provide the Secretary such information as
the Secretary may require to administer this section.
(3) Non-refundable earned income tax credit.--
(A) In general.--The term ``non-refundable earned
income tax credit'' means, 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.
(B) Treatment of certain credit modifications.--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.
(C) Treatment of credits scheduled to terminate.--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.
(c) State Refundable Earned Income Tax Credit Equivalency Amount.--
For purposes of this section, the term ``State refundable earned income
tax credit equivalency amount'' means, with respect to any individual
for any taxable year, the amount determined by the Secretary as being
the excess (if any) of--
(1) 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
(2) 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).
(d) Payments Treated in Same Manner as Refundable Income Tax
Credits.--Except as otherwise provided by the Secretary, the program
established under subsection (a) shall effectuate the payments
described therein by deeming the amount of such payment as a payment of
Federal income tax for purposes of the Internal Revenue Code of 1986.
Any overpayment of tax attributable to such deemed payment shall be
refunded by the Secretary as soon as practicable. For purposes of
section 1324 of title 31, United States Code, any such refund shall be
treated in the same manner as a refund due from a credit provision
referred to in subsection (b)(2) of such section.
(e) Secretary.--For purposes of this section, the term
``Secretary'' means the Secretary of the Treasury or the Secretary's
delegate.
SEC. 5. ESTABLISHMENT OF REFUNDABLE CHILD TAX CREDIT WITH MONTHLY
ADVANCE PAYMENT.
(a) In General.--Subpart A of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 is amended by inserting after
section 24 the following new sections:
``SEC. 24A. MONTHLY CHILD TAX CREDIT.
``(a) Allowance of Credit.--There shall be allowed as a credit
against the tax imposed by this chapter for the taxable year the sum of
the monthly specified child allowances determined with respect to the
taxpayer under subsection (b) for each calendar month during such
taxable year.
``(b) Monthly Specified Child Allowance.--
``(1) In general.--For purposes of this section, the term
`monthly specified child allowance' means, with respect to any
taxpayer for any calendar month, the sum of--
``(A) $300, with respect to each specified child of
such taxpayer who will (as of the close of such month)
have attained age 6, plus
``(B) $350, with respect to each specified child of
such taxpayer who will not (as of the close of such
month) have attained age 6.
``(2) Limitations based on modified adjusted gross
income.--
``(A) Initial reduction.--The monthly specified
child allowance otherwise determined under paragraph
(1) with respect to any taxpayer for any calendar month
shall be reduced (but not below zero) by \1/12\ of 5
percent of the excess (if any) of the taxpayer's
modified adjusted gross income for the applicable
taxable year over the initial threshold amount in
effect for such applicable taxable year.
``(B) Limitation on initial reduction.--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--
``(i) the excess (if any) of--
``(I) the monthly specified child
allowance with respect to the taxpayer
for such calendar month (determined
without regard to this paragraph), over
``(II) the amount which would be
determined under subclause (I) if the
dollar amounts in effect under
subparagraphs (A) and (B) of paragraph
(1) were each equal to $166.67, or
``(ii) \1/12\ of 5 percent of the excess of
the secondary threshold amount over the initial
threshold amount.
``(C) Secondary reduction.--In the case of any
calendar month beginning before January 1, 2026, the
monthly specified child allowance otherwise determined
under paragraph (1) with respect to any taxpayer for
such calendar month (determined after the application
of subparagraphs (A) and (B)) shall be reduced (but not
below zero) by \1/12\ of 5 percent of the excess (if
any) of the taxpayer's modified adjusted gross income
for the applicable taxable year over the secondary
threshold amount.
``(D) Definitions related to limitations based on
modified adjusted gross income.--For purposes of this
paragraph--
``(i) Initial threshold amount.--The term
`initial threshold amount' means--
``(I) $150,000, in the case of a
joint return or surviving spouse (as
defined in section 2(a)),
``(II) \1/2\ the dollar amount in
effect under subclause (I), in the case
of a married individual filing a
separate return, and
``(III) $112,500, in any other
case.
``(ii) Secondary threshold amount.--The
term `secondary threshold amount' means--
``(I) $400,000, in the case of a
joint return or surviving spouse (as
defined in section 2(a)),
``(II) $300,000, in the case of a
head of household (as defined in
section 2(b)), and
``(III) $200,000, in any other
case.
``(iii) Applicable taxable year.--The term
`applicable taxable year' means, with respect
to any taxable year for which the credit under
this section is determined--
``(I) such taxable year, or
``(II) 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).
``(iv) Modified adjusted gross income.--The
term `modified adjusted gross income' means
adjusted gross income increased by any amount
excluded from gross income under section 911,
931, or 933.
``(3) Inflation adjustments.--
``(A) Monthly specified child allowance.--In the
case of any month beginning after December 31, 2025,
each dollar amount in paragraph (1) shall be increased
by an amount equal to--
``(i) such dollar amount, multiplied by--
``(ii) the percentage (if any) by which--
``(I) the CPI (as defined in
section 1(f)(4)) for the calendar year
preceding the calendar year in which
such month begins, exceeds
``(II) the CPI (as so defined) for
calendar year 2020.
``(B) Initial threshold amount.--In the case of any
taxable year beginning after December 31, 2025, the
dollar amounts in subclauses (I) and (III) of paragraph
(2)(D)(i) shall each be increased by an amount equal
to--
``(i) such dollar amount, multiplied by
``(ii) the percentage (if any) which would
be determined under subparagraph (A)(ii) if
subclause (II) thereof were applied by
substituting `2022' for `2020'.
``(C) Rounding.--
``(i) Monthly specified child allowance.--
Any increase under subparagraph (A) which is
not a multiple of $10 shall be rounded to the
nearest multiple of $10.
``(ii) Initial threshold amount.--Any
increase under subparagraph (B) which is not a
multiple of $5,000 shall be rounded to the
nearest multiple of $5,000.
``(c) Specified Child.--For purposes of this section--
``(1) In general.--The term `specified child' means, with
respect to any taxpayer for any calendar month, an individual--
``(A) who has the same principal place of abode as
the taxpayer for more than one-half of such month,
``(B) who is younger than the taxpayer and will
not, as of the close of such month, have attained age
18,
``(C) who receives care from the taxpayer during
such month that is not compensated,
``(D) who is not the spouse of the taxpayer at any
time during such month, and
``(E) who either--
``(i) is a citizen, national, or resident
of the United States, or
``(ii) 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.
``(2) Certain individuals ineligible.--In the case of an
individual who is a specified child with respect to another
taxpayer for any calendar month, such individual shall be
treated for such calendar month as having no specified
children.
``(3) Care from the taxpayer.--
``(A) In general.--Except as otherwise provided by
the Secretary, whether any individual receives care
from the taxpayer (within the meaning of paragraph
(1)(C)) shall be determined on the basis of facts and
circumstances with respect to the following factors:
``(i) The supervision provided by the
taxpayer regarding the daily activities and
needs of the individual.
``(ii) The maintenance by the taxpayer of a
secure environment at which the individual
resides.
``(iii) 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.
``(iv) The involvement by the taxpayer in,
and financial and other support by the taxpayer
for, educational or similar activities of the
individual.
``(v) Any other factor that the Secretary
determines to be appropriate to determine
whether the individual receives care from the
taxpayer.
``(B) Determination of whether care is
compensated.--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.
``(4) Application of tie-breaker rules.--
``(A) In general.--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--
``(i) 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)),
``(ii) 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
``(iii) 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.
``(B) Tie-breaker among parents.--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--
``(i) the parent with whom the child
resided for the longest period of time during
such month, or
``(ii) 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.
``(C) Specified relative.--For purposes of this
paragraph, the term `specified relative' means an
individual who is--
``(i) an ancestor of a parent of the
specified child,
``(ii) a brother or sister of a parent of
the specified child, or
``(iii) a brother, sister, stepbrother, or
stepsister of the specified child.
``(D) Certain parents or specified relatives not
taken into account.--This paragraph shall be applied
without regard to any parent or specified relative of
an individual for any month if--
``(i) 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,
``(ii) 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
``(iii) in the case of a specified relative
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 and any specified relative
of the individual for any taxable year which
includes such month (determined without regard
to any parent and any specified relative 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).
``(E) Treatment of joint returns.--For purposes of
this paragraph, with respect to any month, the adjusted
gross income of each person who files a joint return
for the taxable year which includes such month is the
total adjusted gross income shown on the joint return
for the taxable year.
``(F) Parent.--Except as otherwise provided by the
Secretary, the term `parent' shall have the same
meaning as when used in section 152(c)(4).
``(5) Treatment of temporary absences.--Except as provided
in regulations or other guidance issued by the Secretary, for
purposes of this subsection--
``(A) In general.--In the case of any individual's
temporary absence from such individual's principal
place of abode, each day composing the temporary
absence shall--
``(i) be treated as a day at such
individual's principal place of abode,
``(ii) be treated as satisfying the care
requirement described in paragraph (1)(C) for
each day described in clause (i), and
``(iii) not be treated as a day at any
other location.
``(B) Temporary absence.--For purposes of
subparagraph (A), an absence shall be treated as
temporary if--
``(i) the individual would have resided at
the place of abode but for the absence, and
``(ii) under the facts and circumstances,
it is reasonable to assume that the individual
will return to reside at the place of abode.
``(6) Special rule for divorced parents, etc.--Rules
similar to the rules section 152(e) shall apply for purposes of
this subsection.
``(7) Eligibility determined on basis of presumptive
eligibility.--
``(A) In general.--If a period of presumptive
eligibility is established under section 7527B(c) for
any individual with respect to any taxpayer--
``(i) such individual shall be treated as
the specified child of such taxpayer for any
month in such period of presumptive
eligibility, and
``(ii) such individual shall not be treated
as the specified child of any other taxpayer
with respect to whom a period of presumptive
eligibility has not been established for any
such month.
``(B) Ability of credit claimants to establish
presumptive eligibility.--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.
``(d) Credit Refundable.--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).
``(e) Identification Requirements.--
``(1) Qualifying child identification requirement.--No
credit shall be allowed under this section to a taxpayer with
respect to any qualifying child unless the taxpayer includes
the name and taxpayer identification number of such qualifying
child on the return of tax for the taxable year and such
taxpayer identification number was issued on or before the due
date for filing such return.
``(2) Taxpayer identification requirement.--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.
``(f) Restrictions on Taxpayers Who Improperly Claimed Credit or
Improperly Received Monthly Advance Child Payment.--
``(1) Taxpayers making prior fraudulent or reckless
claims.--
``(A) In general.--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.
``(B) Disallowance period.--For purposes of
subparagraph (A), the disallowance period is--
``(i) 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,
``(ii) 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
``(iii) 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.
``(2) Taxpayers making improper prior claims.--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.
``(3) Coordination with possessions of the united states.--
For purposes of this subsection, a taxpayer's claim of credit
under this section or section 24 (or payment received under
section 7527A or section 7527B) includes a claim of credit
under this section or section 24 of the income tax law of any
jurisdiction other than the United States (or similar payment
received under section 7527A or section 7527B of such income
tax law), and a claim made or a payment received from American
Samoa pursuant to a plan described in subsection (i)(3)(B) or
section 24(k)(3)(B).
``(g) Reconciliation of Credit and Monthly Advance Child
Payments.--
``(1) In general.--The amount otherwise determined under
subsection (a) with respect to any taxpayer for any taxable
year shall be reduced (but not below zero) by the aggregate
amount of payments made under section 7527B to such taxpayer
for one or more calendar months in such taxable year. Any
failure to so reduce the credit shall be treated as arising out
of a mathematical or clerical error and assessed according to
section 6213(b)(1).
``(2) Recapture of excess advance payments in certain
circumstances.--In the case of a taxpayer described in
paragraph (3) for any taxable year, the tax imposed by this
chapter for such taxable year shall be increased by the excess
(if any) of--
``(A) the aggregate amount of payments made to the
taxpayer under section 7527B for one or more calendar
months in such taxable year, over
``(B) the amount determined under subsection (a)
with respect to the taxpayer for such taxable year
(without regard to paragraph (1) of this subsection).
``(3) Taxpayers subject to recapture.--
``(A) Fraud or reckless or intentional disregard of
rules and regulations.--A taxpayer is described in this
paragraph with respect to any taxable year if the
Secretary determines that the amount described in
paragraph (2)(A) with respect to the taxpayer for such
taxable year was determined on the basis of fraud or a
reckless or intentional disregard of rules and
regulations.
``(B) Understatement of income; changes in filing
status.--If the amount described in paragraph (2)(A)
with respect to the taxpayer for the taxable year was
determined on the basis of an amount of the taxpayer's
modified adjusted gross income which was less than the
taxpayer's modified adjusted gross income for the
applicable taxable year (as defined in subsection
(b))--
``(i) such taxpayer shall be treated as
described in this paragraph, and
``(ii) the increase determined under
paragraph (2) by reason of this subparagraph
shall not exceed the excess of--
``(I) the amount described in
paragraph (2)(A), over
``(II) 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).
``(C) Payments made outside of period of
presumptive eligibility.--If any payment described in
paragraph (2)(A) with respect to the taxpayer for the
taxable year was made with respect to a child for a
month which was not part of a period of presumptive
eligibility established under section 7527B(c) for such
child with respect to such taxpayer--
``(i) such taxpayer shall be treated as
described in this paragraph, and
``(ii) the increase determined under
paragraph (2) by reason of this subparagraph
shall not exceed the portion of such payment so
made.
``(D) Certain payments made after notice from
secretary.--If the Secretary notifies a taxpayer under
section 7527B(j)(2) that such taxpayer is subject to
recapture with respect to any payments--
``(i) such taxpayer shall be treated as
described in this paragraph, and
``(ii) the increase determined under
paragraph (2) by reason of this subparagraph
shall not exceed the aggregate amount of such
payments.
``(E) Taxpayers moving to another jurisdiction.--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.
``(F) Other circumstances to prevent abuse.--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.
``(4) Joint returns.--Except as otherwise provided by the
Secretary, in the case of an advance payment made under section
7527B with respect to a joint return, half of such payment
shall be treated as having been made to each individual filing
such return.
``(5) Coordination with possessions of the united states.--
For purposes of this subsection, payments made under section
7527B include payments made by any jurisdiction other than the
United States under section 7527B of the income tax law of such
jurisdiction, and advance payments made by American Samoa
pursuant to a plan described in subsection (h)(3)(B). Any
increase in tax imposed on a taxpayer by reason of paragraph
(2) of the income tax law of a jurisdiction other than the
United States shall be considered to reduce the aggregate
amount of payments made to such taxpayer by such jurisdiction.
In carrying out this section, the Secretary shall coordinate
with each possession of the United States to prevent any
application of this paragraph that is inconsistent with the
purposes of this subsection.
``(h) Application of Credit in Possessions.--
``(1) Mirror code possessions.--
``(A) In general.--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.
``(B) Coordination with credit allowed against
united states income taxes.--No credit shall be allowed
under this section for any taxable year to any
individual to whom a credit is allowable against taxes
imposed by a possession of the United States with a
mirror code tax system by reason of the application of
this section in such possession for such taxable year.
``(C) Mirror code tax system.--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.
``(2) Cross references related to application of credit to
residents of puerto rico.--
``(A) For application of refundable credit to
residents of Puerto Rico, see subsection (d).
``(B) For application of advance payment to
residents of Puerto Rico, see section 7527B(b)(4).
``(3) American samoa.--
``(A) In general.--The Secretary shall pay to
American Samoa amounts estimated by the Secretary as
being equal to the aggregate benefits that would have
been provided to residents of American Samoa by reason
of the application of this section for taxable years
beginning in calendar years after 2025 if the
provisions of this section had been in effect in
American Samoa (applied as if American Samoa were the
United States and without regard to the application of
this section to residents of Puerto Rico under
subsection (d)).
``(B) Distribution requirement.--Subparagraph (A)
shall not apply unless American Samoa has a plan, which
has been approved by the Secretary, under which
American Samoa will promptly distribute such payments
to its residents.
``(C) Coordination with credit allowed against
united states income taxes.--
``(i) In general.--In the case of a taxable
year with respect to which a plan is approved
under subparagraph (B), this section (other
than this subsection) shall not apply to any
individual eligible for a distribution under
such plan.
``(ii) Application of section in event of
absence of approved plan.--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'.
``(4) Treatment of payments.--For purposes of section 1324
of title 31, United States Code, the payments under this
subsection shall be treated in the same manner as a refund due
from a credit provision referred to in subsection (b)(2) of
such section.
``(i) Regulations.--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--
``(1) for determining whether an individual receives care
from a taxpayer for purposes of subsection (c)(1), and
``(2) to coordinate or modify the application of this
section and sections 24, 7527A, and 7527B in the case of any
taxpayer--
``(A) whose taxable year is other than a calendar
year,
``(B) 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
``(C) 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.
``SEC. 24B. CREDIT FOR CERTAIN OTHER DEPENDENTS.
``(a) In General.--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.
``(b) Limitation Based on Modified Adjusted Gross Income.--
``(1) In general.--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.
``(2) Threshold amount.--For purposes of this subsection,
the term `threshold amount' means--
``(A) $400,000, in the case of a joint return or
surviving spouse (as defined in section 2(a)),
``(B) $300,000, in the case of a head of household
(as defined in section 2(b)), and
``(C) $200,000, in any other case.
``(3) Modified adjusted gross income.--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.
``(c) Specified Dependent.--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--
``(1) is a specified child of the taxpayer, or any other
taxpayer, for any month during such taxable year, or
``(2) 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'.
``(d) Identification Requirements.--Rules similar to the rules of
section 24A(e) shall apply for purposes of this section.
``(e) Taxable Year Must Be Full Taxable Year.--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.
``(f) Regulations.--The Secretary shall issue such regulations or
other guidance as the Secretary determines necessary or appropriate to
carry out the purposes of this section.''.
(b) Monthly Payment of Child Tax Credit.--Chapter 77 of such Code
is amended by inserting after section 7527A the following new section:
``SEC. 7527B. MONTHLY PAYMENTS OF CHILD TAX CREDIT.
``(a) In General.--The Secretary shall establish a program for
making payments to taxpayers with respect to each calendar month equal
to the monthly advance child payment determined with respect to such
taxpayer for such month.
``(b) Monthly Advance Child Payment.--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--
``(1) 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,
``(2) 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,
``(3) 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
``(4) unless determined by the Secretary based on any
information known to the Secretary, no monthly specified child
allowance were determined with respect to such taxpayer for
such calendar month unless 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 the reference month.
``(c) Presumptive Eligibility.--
``(1) In general.--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).
``(2) Period of presumptive eligibility.--For purposes of
this section--
``(A) In general.--Except as otherwise provided by
the Secretary, the term `period of presumptive
eligibility' means the period--
``(i) beginning with the month for which
presumptive eligibility is established, and
``(ii) ending with the earliest of--
``(I) 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,
``(II) 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
``(III) 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.
``(B) Establishing presumptive eligibility.--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.
``(C) Method of establishing presumptive
eligibility.--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.
``(D) Inclusion of automatic grace periods and
periods of hardship.--The period of presumptive
eligibility shall include any period to which paragraph
(1) or (2) of subsection (g) applies.
``(E) Automatic eligibility for birth of child.--
The Secretary shall issue regulations or other guidance
to establish procedures pursuant to which, to the
maximum extent administratively practicable--
``(i) a parent of a child born during a
calendar month shall be treated as
automatically establishing presumptive
eligibility with respect to such child,
``(ii) the period of such automatic
presumptive eligibility is determined, and
``(iii) the first monthly advance child
payment with respect to such child is increased
to properly take into account the months in the
period of such automatic presumptive
eligibility which precede such payment.
``(F) Presumptive eligibility based on certain
government programs.--The Secretary shall issue
regulations or other guidance to establish procedures
under which--
``(i) 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
``(ii) the period for which such automatic
presumptive eligibility is determined
(including any additional circumstances under
which such period will terminate).
``(G) Coordination with presumption.--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.
``(3) Notice of termination of presumptive eligibility by
reason of failure to make annual renewal.--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.
``(d) Determination of Reference Month and Reference Taxable
Year.--For purposes of this section--
``(1) Reference month.--The term `reference month' means,
with respect to any taxpayer for any calendar month, the most
recent of--
``(A) in the case of a taxpayer who filed a return
of tax for the last taxable year ending before such
calendar month, the last month of such taxable year,
``(B) 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
``(C) 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.
``(2) Reference taxable year.--The term `reference taxable
year' means, with respect to any taxpayer for any calendar
month, the most recent of--
``(A) the taxable year described in subparagraph
(A) or (B) of paragraph (1), or
``(B) 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.
``(3) Availability of information.--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.
``(4) Treatment of insufficient information.--Except as
otherwise provided by the Secretary--
``(A) 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
``(B) if the taxpayer is not described in paragraph
(1)(C) and the information on the return of tax
referred to in subparagraph (A) or (B) of paragraph (1)
does not establish the status of the taxpayer (in the
case of a joint return, either spouse) as having a
principal place of abode (determined as provided in
section 32) in the United States or Puerto Rico for
more than one-half of the reference month, the
Secretary shall determine such status based on
information known to the Secretary.
``(5) Transition rule.--In any case with respect to which
section 24A was not in effect for the taxable year described in
subparagraph (A), (B), or (C) of paragraph (1) (whichever is
applicable), subsection (b)(1) shall be applied by substituting
`the qualifying children of such taxpayer for the taxable year
which includes the reference month' for `the specified children
of such taxpayer for the reference month'.
``(e) On-Line Information Portal; Specified Alternative
Mechanisms.--
``(1) On-line information portal.--The Secretary shall
establish an on-line portal which allows taxpayers to--
``(A) subject to such restrictions as the Secretary
may provide, elect to begin or cease receiving payments
under this section, and
``(B) 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--
``(i) the number of the taxpayer's
specified children, including by reason of the
birth of a child,
``(ii) the taxpayer's marital status,
``(iii) the taxpayer's modified adjusted
gross income,
``(iv) the taxpayer's principal place of
abode, and
``(v) any other factor which the Secretary
may provide.
``(2) Specified alternative mechanism.--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).
``(3) Availability in multiple languages.--The Secretary
shall ensure that the on-line portal described in paragraph (1)
is available in multiple languages.
``(f) Specified Child of More Than 1 Taxpayer.--
``(1) In general.--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--
``(A) 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,
``(B) the Secretary shall establish procedures
under which the Secretary expeditiously adjudicates
taxpayers' competing claims of presumptive eligibility
with respect to the same child, and
``(C) the Secretary shall notify any taxpayer of
the termination of a period of presumptive eligibility
pursuant to this subsection.
``(2) Provisions related to adjudication.--
``(A) Expedited process; appeals.--The procedures
established under paragraph (1)(B) shall include--
``(i) an expedited process for taxpayers
who meet such requirements as the Secretary may
establish for such expedited process, and
``(ii) procedures for adjudicating an
appeal of an adverse decision.
``(B) Information receipt and coordination.--The
Secretary may enter into agreements to receive
information from, and otherwise coordinate with--
``(i) Federal agencies (including the
Social Security Administration and the
Department of Agriculture),
``(ii) any State, local government, Tribal
government, or possession of the United States,
and
``(iii) any other individual or entity that
the Secretary determines to be appropriate for
purposes of adjudicating a competing claim
described in paragraph (1).
``(C) Adjudication not treated as assessment.--An
adjudication under the procedures established under
paragraph (1)(B) (including the adjudication of any
appeal) shall not be treated as an assessment described
in section 6201.
``(D) Adjudication not treated as inspection of
taxpayer's books of account.--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).
``(3) Retroactive payments.--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.
``(4) Recapture of payments.--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--
``(A) the Secretary shall provide each taxpayer
which receives such payments notice that such payments
may be subject to recapture, and
``(B) 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.
``(g) Rules Related to Grace Periods and Hardships.--
``(1) Automatic grace period.--
``(A) In general.--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.
``(B) Limitation.--Subparagraph (A) shall not apply
with respect to any taxpayer more than once during any
36-month period.
``(2) Hardship.--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.
``(h) Provisions Related to Form, Manner, and Treatment of
Payments.--
``(1) Application of electronic funds payment
requirement.--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.
``(2) Delivery of payments.--Notwithstanding any other
provision of law, the Secretary may certify and disburse
refunds payable under this section electronically to--
``(A) 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),
``(B) 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
``(C) any Treasury-sponsored account (as defined in
section 208.2 of title 31, Code of Federal
Regulations).
``(3) Waiver of certain rules.--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.
``(4) Exception from reduction or offset.--Any applicable
payment (as defined in paragraph (5)(E)(iii)) shall not be--
``(A) subject to reduction or offset pursuant to
section 3716 or 3720A of title 31, United States Code,
``(B) subject to reduction or offset pursuant to
subsection (c), (d), (e), or (f) of section 6402, or
``(C) reduced or offset by other assessed Federal
taxes that would otherwise be subject to levy or
collection.
``(5) Assignment of benefits.--
``(A) In general.--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.
``(B) Encoding of payments.--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--
``(i) 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
``(ii) 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.
``(C) Garnishment.--
``(i) Encoded payments.--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--
``(I) notwithstanding section 212.4
of title 31, Code of Federal
Regulations (and except as provided in
subclause (II)), a financial
institution shall not fail to follow
the procedures of sections 212.5 and
212.6 of such title with respect to a
garnishment order merely because such
order has attached, or includes, a
notice of right to garnish federal
benefits issued by a State child
support enforcement agency, and
``(II) 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.
``(ii) Other payments.--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.
``(iii) Liability.--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.
``(D) No reclamation rights.--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.
``(E) Definitions.--For purposes of this
paragraph--
``(i) Account holder.--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.
``(ii) Account review.--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.
``(iii) Applicable payment.--The term
`applicable payment' means--
``(I) any payment made to an
individual under this section (other
than any payment made pursuant to
paragraph (6)),
``(II) 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
``(III) any advance payment made by
American Samoa pursuant to a program
for making such payments which is
described in paragraph (6)(C)(ii).
``(iv) Garnishment.--The term `garnishment'
means execution, levy, attachment, garnishment,
or other legal process.
``(v) Garnishment order.--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.
``(vi) Lookback period.--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.
``(6) Application of advance payments in the possessions of
the united states.--
``(A) Puerto rico.--
``(i) For application of child tax credit
to residents of Puerto Rico, see section
24A(d).
``(ii) For application of monthly advance
child payments to residents of Puerto Rico, see
subsection (b)(4).
``(B) Mirror code possessions.--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.
``(C) Administrative expenses of advance
payments.--
``(i) Mirror code possessions.--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.
``(ii) American samoa.--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.
``(iii) Timing of payment.--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.
``(i) Application of Certain Definitions and Rules Applicable to
Child Tax Credit.--
``(1) Definitions.--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.
``(2) Treatment of certain deaths.--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.
``(3) Identification requirements.--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.
``(4) Restrictions on taxpayers who improperly claimed
credit or received monthly advance child payments.--For
restrictions on taxpayers who improperly claimed credit or
received monthly advance child payments, see section 24A(f).
``(j) Notice of Payments.--
``(1) In general.--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--
``(A) the taxpayer's taxpayer identity (as defined
in section 6103(b)(6)),
``(B) the aggregate amount of such payments made to
such taxpayer during such calendar year, and
``(C) such other information as the Secretary
determines appropriate.
``(2) Certain payments subject to recapture.--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.
``(k) Notification of Certain Events.--With respect to any taxpayer
receiving monthly advance child payments under this section with
respect to any specified child, the Secretary shall, to the maximum
extent practicable, provide reasonable advance notice of each of the
following:
``(1) 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).
``(2) 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.
``(3) 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.
``(l) Regulations.--The Secretary shall issue such regulations or
other guidance as the Secretary determines necessary or appropriate to
carry out the purposes of this section.''.
(c) Termination of Annual Child Tax Credit.--Section 24 of such
Code is amended by adding at the end the following new subsection:
``(l) Termination.--This section shall not apply to (and no payment
shall be made under subsection (k) with respect to) any taxable year
beginning after December 31, 2025.''.
(d) Disclosure of Information Relating to Advance Payment of Child
Tax Credit.--Section 6103(e) of such Code is amended by adding at the
end the following new paragraph:
``(12) Disclosure of information relating to advance
payment of child tax credit.--
``(A) Joint filers.--In the case of an individual
to whom the Secretary makes payments under section
7527A or who is eligible for monthly advance child
payments under section 7527B, if the reference taxable
year (as defined in section 7527A(b)(2) or 7527B(d)(2),
as the case may be) that the Secretary uses to
calculate such payments is a year for which the
individual filed an income tax return jointly with
another individual, the Secretary may disclose to such
individual any information which is relevant in
determining the payment under section 7527A, or the
monthly advance child payment under section 7527B, and
the individual's eligibility for such payment,
including information regarding any of the following:
``(i) The number of specified children,
including by reason of the birth of a child.
``(ii) The name and TIN of specified
children.
``(iii) Marital status.
``(iv) Modified adjusted gross income.
``(v) Principal place of abode.
``(vi) Any other factor which the Secretary
may provide pursuant to section 7527A(c) or
7527B(e).
``(B) Competing claimants.--In the case of an
individual who has a competing claim of presumptive
eligibility with respect to a specified child under
section 7527B(f)(1), the Secretary may disclose to such
individual return information provided by another
individual who has a competing claim of presumptive
eligibility with respect to the same specified child in
the course of the Secretary's adjudication of that
competing claim, as well as any other information
considered by the Secretary with respect to that
competing claim. Such information shall be limited to
the items specified in subparagraph (A) and the
following:
``(i) Information received under any
agreements or coordination the Secretary
entered into with--
``(I) any State, local government,
Tribal government, or possession of the
United States, or
``(II) any other individual or
entity that the Secretary determines to
be appropriate for purposes of
adjudicating a competing claim.
``(ii) Information considered by the
Secretary about where and with whom the
specified child resided.
``(iii) Information considered by the
Secretary about expenditures made by the
claimants to the extent such payments relate to
the competing claim.''.
(e) Conforming Amendments.--
(1) 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:
``(AA) section 24A(g)(2) (relating to recapture of
certain monthly advance child payments).''.
(2) Section 152(f)(6)(B)(ii) of such Code is amended to
read as follows:
``(ii) the credits under sections 24, 24A,
and 24B and the payments under sections 7527A
and 7527B,''.
(3) 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)''.
(4) Section 6103(l)(13)(A)(v) of such Code is amended by
insert ``or section 24A, as the case may be'' after ``section
24''.
(5) Section 6211(b)(4)(A) of such Code is amended by
inserting ``24A by reason of subsection (d) thereof,'' after
``24 by reason of subsections (d) and (i)(1) thereof,''.
(6) Section 6213(g)(2)(I) of such Code is amended by
inserting ``or section 24A(e) (relating to monthly child tax
credit)'' after ``section 24(e) (relating to child tax
credit)''.
(7) Section 6213(g)(2)(L) of such Code is amended by
inserting ``24A,'' after ``24,''.
(8) Section 6213(g)(2)(P) of such Code is amended--
(A) by inserting ``or 24A(f)(2)'' after ``section
24(g)(2)'',
(B) by inserting ``or 24A'' after ``under section
24'', and
(C) by striking ``subsection (g)(1) thereof'' and
inserting ``section 24(g)(1) or section 24A(f)(1),
respectively''.
(9) Section 6695(g)(2) of such Code is amended by inserting
``24A,'' after ``24,''.
(10) Paragraph (2) of section 1324(b) of title 31, United
States Code, as amended by the preceding provisions of this
Act, is amended--
(A) by inserting ``24A,'' after ``24,'', and
(B) by inserting ``7527B,'' after ``7527A,''.
(11) The table of sections for subpart A of part IV of
subchapter A of chapter 1 of the Internal Revenue Code of 1986
is amended by inserting after the item relating to section 24
the following new items:
``Sec. 24A. Monthly child tax credit.
``Sec. 24B. Credit for certain other dependents.''.
(12) The table of sections for chapter 77 of such Code is
amended by inserting after the item relating to section 7527A
the following new item:
``Sec. 7527B. Monthly payments of child tax credit.''.
(f) Effective Dates.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall apply to
taxable years beginning after December 31, 2025.
(2) Monthly advance child payments.--The amendments made by
subsection (b) shall apply to calendar months beginning after
December 31, 2025.
(3) Information disclosure.--The amendment made by
subsection (d) shall take effect on the date of the enactment
of this Act.
SEC. 6. CAPITAL GAINS RATES NOT APPLICABLE TO CERTAIN HIGH INCOME
TAXPAYERS.
(a) In General.--Section 1(h)(1) of the Internal Revenue Code of
1986 is amended by inserting ``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''.
(b) Inflation Adjustment.--Section 1(h) of such Code is amended by
adding at the end the following new paragraph:
``(12) Inflation adjustment.--
``(A) In general.--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--
``(i) such dollar amount, multiplied by
``(ii) 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.
``(B) Rounding.--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.''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2025.
SEC. 7. INCREASE IN RATES OF CERTAIN CORPORATE TAXES.
(a) Corporate Income Tax Rate.--Section 11(b) of the Internal
Revenue Code of 1986 is amended by striking ``21 percent'' and
inserting ``28 percent''.
(b) Rate of Tax on Repurchase of Corporate Stock.--Section 4501(a)
of such Code is amended by striking ``1 percent'' and inserting ``4
percent''.
(c) Corporate Alternative Minimum Tax Rate.--Section 55(b)(2)(A)(i)
of such Code is amended to read as follows:
``(i) the sum of--
``(I) 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
``(II) 25 percent of so much of
such adjusted financial statement
income as exceeds $5,000,000,000,''.
(d) Effective Dates.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2025.
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