Bill > S4083

This bill, titled the Working Americans’ Tax Cut Act, proposes significant changes to the Internal Revenue Code of 1986, primarily affecting how individuals are taxed. It introduces an "Alternative Maximum Tax for Low- and Middle-Income Individuals," which caps the tax rate for "qualified individuals" at 25.5% of their income exceeding a "cost-of-living exemption." A "qualified individual" is defined as someone whose "modified adjusted gross income" (adjusted gross income with certain foreign income and social security benefits added back) is less than 175% of this cost-of-living exemption, which is tied to an "annualized cost-of-living wage" of $46,000, adjusted for inflation using the Consumer Price Index for all urban consumers (CPI-U). This new tax structure is set to take effect for taxable years beginning after December 31, 2025. Conversely, the bill also implements a "Surcharge on High Income Individuals," imposing additional taxes on individuals with high incomes, starting at 5% on income between $1 million and $2 million, increasing to 10% between $2 million and $5 million, and reaching 12% on income exceeding $5 million, with these thresholds also adjusted for inflation. This surcharge applies to "modified adjusted gross income," which in this context is adjusted gross income reduced by investment interest deductions, and also takes effect for taxable years beginning after December 31, 2025.

Budget and Finance

https://www.congress.gov/bill/119th-congress/senate-bill/4083/all-info