What This Bill Does
The Assuring Medicare's Promise Act of 2023 changes how certain taxes get collected for Medicare's hospital insurance fund. It adds a net investment income tax (a tax on earnings from investments like stocks and bonds) to the money that goes into the hospital insurance trust fund. The bill also expands who has to pay this tax and how much they pay.
Who It Affects
High-income individuals who earn money from investments and business activities. The Secretary of the Treasury (the federal official who manages government money). Medicare's hospital insurance trust fund.
Key Provisions
- Net investment income taxes reported on tax returns will be sent to the hospital insurance trust fund instead of just going to general income tax collections (Sec. 2)
- High-income individuals whose total modified adjusted gross income (a calculation of income used for tax purposes) exceeds certain thresholds must pay the net investment income tax on business income as well as investment income (Sec. 3)
- The income thresholds that trigger this expanded tax are $400,000 for single filers, $500,000 for married couples filing jointly, and $250,000 for married people filing separately (Sec. 3)
- Self-employment income, wages from employment, and wages earned overseas for a foreign employer are excluded from this tax (Sec. 3)
- The Secretary of the Treasury must issue regulations explaining how to treat certain previously taxed income distributions (Sec. 3)
What Changes
Starting in tax years after December 31, 2023, net investment income taxes will go to the hospital insurance trust fund. High-income individuals will owe taxes on business income under the net investment income tax rules if their income exceeds the thresholds, not just on investment income.
Important Definitions
The bill does not provide explicit definitions of "net investment income," "modified adjusted gross income" or "specified net income" within the text itself. The bill refers to definitions found elsewhere in tax law but does not restate them.
Effective Date
The amendments take effect for tax years beginning after December 31, 2023 (Sec. 2 and Sec. 3).
I
118TH CONGRESS
1ST SESSION
H. R. 34
To amend the Social Security Act and the Internal Revenue Code of 1986
to include net investment income tax imposed in the Federal Hospital
Insurance Trust Fund and to modify the net investment income tax.
IN THE HOUSE OF REPRESENTATIVES
JANUARY 9, 2023
Mr. DOGGETT (for himself, Ms. BARRAGA´N, Mr. BLUMENAUER, Mr. BOYLE
of Pennsylvania, Mr. COHEN, Mr. GRIJALVA, Ms. JAYAPAL, Mr. LARSON
of Connecticut, Ms. MOORE of Wisconsin, Mr. POCAN, Ms. SA´NCHEZ, Ms.
SCHAKOWSKY, Mr. SCHIFF, Ms. TITUS, Ms. WILLIAMS of Georgia, and
Mr. CASAR) introduced the following bill; which was referred to the Com-
mittee on Ways and Means
A BILL
To amend the Social Security Act and the Internal Revenue
Code of 1986 to include net investment income tax im-
posed in the Federal Hospital Insurance Trust Fund
and to modify the net investment income tax.
Be it enacted by the Senate and House of Representa-
1
tives of the United States of America in Congress assembled,
2
SECTION 1. SHORT TITLE.
3
This Act may be cited as the ‘‘Assuring Medicare’s
4
Promise Act of 2023’’.
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•HR 34 IH
SEC. 2. INCLUSION OF NET INVESTMENT INCOME TAX IN
1
HOSPITAL INSURANCE TRUST FUND.
2
(a) IN GENERAL.—Section 1817(a) of the Social Se-
3
curity Act (42 U.S.C. 1395i(a)) is amended—
4
(1) by striking ‘‘and’’ at the end of paragraph
5
(1);
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(2) by striking the period at the end of para-
7
graph (2) and inserting ‘‘; and’’; and
8
(3) by inserting after paragraph (2) the fol-
9
lowing new paragraph:
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‘‘(3) the taxes imposed by section 1411 of the Inter-
11
nal Revenue Code of 1986 reported to the Secretary of
12
the Treasury or the Secretary’s delegate on tax returns
13
under subtitle F of such Code.’’.
14
(b) EFFECTIVE DATE.—The amendments made by
15
this section shall apply with respect to taxes imposed for
16
taxable years beginning after December 31, 2023.
17
SEC. 3. APPLICATION OF NET INVESTMENT INCOME TAX TO
18
TRADE OR BUSINESS INCOME OF CERTAIN
19
HIGH INCOME INDIVIDUALS.
20
(a) IN GENERAL.—Section 1411 of the Internal Rev-
21
enue Code of 1986 is amended by adding at the end the
22
following new subsection:
23
‘‘(f) APPLICATION TO CERTAIN HIGH INCOME INDI-
24
VIDUALS.—
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•HR 34 IH
‘‘(1) IN GENERAL.—In the case of any indi-
1
vidual whose modified adjusted gross income for the
2
taxable year exceeds the high income threshold
3
amount, subsection (a)(1) shall be applied by sub-
4
stituting ‘the greater of specified net income or net
5
investment income’ for ‘net investment income’ in
6
subparagraph (A) thereof.
7
‘‘(2) PHASE-IN OF INCREASE.—The increase in
8
the tax imposed under subsection (a)(1) by reason of
9
the application of paragraph (1) of this subsection
10
shall not exceed the amount which bears the same
11
ratio to the amount of such increase (determined
12
without regard to this paragraph) as—
13
‘‘(A) the excess described in paragraph (1),
14
bears to
15
‘‘(B) $100,000 (1⁄2 such amount in the
16
case of a married taxpayer (as defined in sec-
17
tion 7703) filing a separate return).
18
‘‘(3) HIGH INCOME THRESHOLD AMOUNT.—For
19
purposes of this subsection, the term ‘high income
20
threshold amount’ means—
21
‘‘(A) except as provided in subparagraph
22
(B) or (C), $400,000,
23
‘‘(B) in the case of a taxpayer making a
24
joint return under section 6013 or a surviving
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•HR 34 IH
spouse (as defined in section 2(a)), $500,000,
1
and
2
‘‘(C) in the case of a married taxpayer (as
3
defined in section 7703) filing a separate re-
4
turn, 1⁄2 of the dollar amount determined under
5
subparagraph (B).
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‘‘(4) SPECIFIED NET INCOME.—For purposes of
7
this section, the term ‘specified net income’ means
8
net investment income determined—
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‘‘(A) without regard to the phrase ‘other
10
than such income which is derived in the ordi-
11
nary course of a trade or business not described
12
in paragraph (2),’ in subsection (c)(1)(A)(i),
13
‘‘(B) without regard to the phrase ‘de-
14
scribed
in
paragraph
(2)’
in
subsection
15
(c)(1)(A)(ii),
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‘‘(C) without regard to the phrase ‘other
17
than property held in a trade or business not
18
described in paragraph (2)’ in subsection
19
(c)(1)(A)(iii),
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‘‘(D) without regard to paragraphs (2),
21
(3), and (4) of subsection (c), and
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‘‘(E) by treating paragraphs (5) and (6) of
23
section 469(c) (determined without regard to
24
the phrase ‘To the extent provided in regula-
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•HR 34 IH
tions,’ in such paragraph (6)) as applying for
1
purposes of subsection (c) of this section.’’.
2
(b) APPLICATION TO TRUSTS AND ESTATES.—Sec-
3
tion 1411(a)(2)(A) of such Code is amended by striking
4
‘‘undistributed net investment income’’ and inserting ‘‘the
5
greater of undistributed specified net income or undistrib-
6
uted net investment income’’.
7
(c) CLARIFICATIONS WITH RESPECT
TO DETER-
8
MINATION OF NET INVESTMENT INCOME.—
9
(1) CERTAIN EXCEPTIONS.—Section 1411(c)(6)
10
of such Code is amended to read as follows:
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‘‘(6) SPECIAL RULES.—Net investment income
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shall not include—
13
‘‘(A) any item taken into account in deter-
14
mining self-employment income for such taxable
15
year on which a tax is imposed by section
16
1401(b),
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‘‘(B) wages received with respect to em-
18
ployment on which a tax is imposed under sec-
19
tion 3101(b) or 3201(a) (including amounts
20
taken into account under section 3121(v)(2)),
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and
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‘‘(C) wages received from the performance
23
of services earned outside the United States for
24
a foreign employer.’’.
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•HR 34 IH
(2) NET OPERATING LOSSES NOT TAKEN INTO
1
ACCOUNT.—Section 1411(c)(1)(B) of such Code is
2
amended by inserting ‘‘(other than section 172)’’
3
after ‘‘this subtitle’’.
4
(3) INCLUSION
OF
CERTAIN
FOREIGN
IN-
5
COME.—
6
(A) IN GENERAL.—Section 1411(c)(1)(A)
7
of such Code is amended by striking ‘‘and’’ at
8
the end of clause (ii), by striking ‘‘over’’ at the
9
end of clause (iii) and inserting ‘‘and’’, and by
10
adding at the end the following new clause:
11
‘‘(iv) any amount includible in gross
12
income under section 951, 951A, 1293, or
13
1296, over’’.
14
(B) PROPER
TREATMENT
OF
CERTAIN
15
PREVIOUSLY TAXED INCOME.—Section 1411(c)
16
of such Code is amended by adding at the end
17
the following new paragraph:
18
‘‘(7) CERTAIN PREVIOUSLY TAXED INCOME.—
19
The Secretary shall issue regulations or other guid-
20
ance providing for the treatment of—
21
‘‘(A) distributions of amounts previously
22
included in gross income for purposes of chap-
23
ter 1 but not previously subject to tax under
24
this section, and
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•HR 34 IH
‘‘(B) distributions described in section
1
962(d).’’.
2
(d) EFFECTIVE DATE.—The amendments made by
3
this section shall apply to taxable years beginning after
4
December 31, 2023.
5
(e) TRANSITION RULE.—The regulations or other
6
guidance issued by the Secretary under section 1411(c)(7)
7
of the Internal Revenue Code of 1986 (as added by this
8
section) shall include provisions which provide for the
9
proper coordination and application of clauses (i) and (iv)
10
of section 1411(c)(1)(A) with respect to—
11
(1) taxable years beginning on or before De-
12
cember 31, 2023, and
13
(2) taxable years beginning after such date.
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Æ
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