Federal

TCJA Permanency Act

Source: Congress.gov · 13,844 words in original text

What This Bill Does

This bill makes permanent several tax provisions from the 2017 Tax Cuts and Jobs Act that were set to expire. It keeps tax rates lower for individuals and families, maintains increased child tax credits and charitable contribution limits, and expands education savings account benefits. The bill also eliminates personal exemption deductions and makes other permanent changes to tax deductions. ##

Who It Affects

- Individual taxpayers and families - Small business owners - People with children and dependents - Students and parents using education savings accounts - Homeowners with mortgages - Military members and their families - Charitable organizations and donors - People receiving student loan forgiveness ##

Key Provisions

- Keeps income tax rates at current levels for all filing categories without scheduled increases (Sec. 101) - Raises the child tax credit to $2,000 per qualifying child and $500 per other dependent (Sec. 122) - Increases standard deductions with inflation adjustments (Sec. 121) - Allows families to use education savings accounts for homeschool expenses including curriculum, books, tutoring, and educational therapies (Sec. 132) - Limits deductions for state and local taxes to $10,000 per year ($5,000 for married filing separately) (Sec. 142) - Eliminates personal exemption deductions that previously reduced taxable income (Sec. 141) - Limits deduction for mortgage interest to homes with up to $750,000 in qualifying debt (Sec. 143) ##

What Changes

If enacted, taxpayers will continue paying taxes under the rate tables that were introduced in 2017 rather than reverting to previous, higher rates. The child tax credit amount stays at $2,000 per child permanently. Standard deductions increase automatically with inflation each year. Education savings account holders gain new options to pay for homeschool expenses and tutoring. Personal exemption deductions disappear for all taxpayers going forward. State and local tax deductions face a permanent $10,000 annual cap. Mortgage interest deductions become limited to loans of $750,000 or less on homes purchased after the law's enactment. ##

Important Definitions

- **Standard deduction** (a fixed amount subtracted from income before calculating taxes): Increases to $18,000 for married filing jointly, $12,000 for heads of household, and other amounts for other filing categories - **Qualifying child** (for tax credit purposes): A dependent under age 17 with a valid Social Security number whose information appears on the tax return - **Acquisition indebtedness** (mortgage debt used to buy or improve a home): Limited to $750,000 for calculating interest deductions - **Qualified education expenses** (for education savings): Now include homeschool tuition, curriculum, books, online materials, tutoring by licensed educators, test fees, and educational therapies for disabled students ##

Effective Date

The amendments apply to taxable years beginning after the date the bill is enacted into law, except student loan discharge provisions apply to discharges after December 31, 2024.

I 118TH CONGRESS 1ST SESSION H. R. 976 To amend the Internal Revenue Code of 1986 to make permanent certain provisions of the Tax Cuts and Jobs Act affecting individuals, families, and small businesses, and for other purposes. IN THE HOUSE OF REPRESENTATIVES FEBRUARY 10, 2023 Mr. BUCHANAN (for himself, Mr. PERRY, Mr. JOYCE of Ohio, Mr. HERN, Mr. KELLY of Pennsylvania, Ms. VAN DUYNE, Mrs. MILLER of West Virginia, Mr. ARRINGTON, Mr. SMITH of Nebraska, Mr. FERGUSON, Mr. FEENSTRA, Ms. TENNEY, Mr. KUSTOFF, Mr. AMODEI, Mr. MEUSER, Mr. CRAWFORD, Mrs. MILLER-MEEKS, Mr. RESCHENTHALER, Mr. GAETZ, Mrs. CAMMACK, Mr. STEIL, Mr. HIGGINS of Louisiana, Mr. MCCAUL, Mr. BALDERSON, Mr. MOOLENAAR, Mrs. WAGNER, Mr. GRAVES of Lou- isiana, Mr. TIMMONS, Mr. LATURNER, Mr. JOHNSON of Louisiana, Ms. SALAZAR, Mr. KELLY of Mississippi, Mr. WALTZ, Mr. MOONEY, Mr. BISHOP of North Carolina, Mr. WILLIAMS of New York, Mr. JOHNSON of Ohio, Mrs. LUNA, Mr. FITZGERALD, Mr. OWENS, Mr. MOORE of Ala- bama, Mr. FINSTAD, Mr. CAREY, Mr. ALLEN, Mr. EMMER, Mr. MILLER of Ohio, Mr. DONALDS, Mr. JACKSON of Texas, Mr. VAN DREW, Mr. MOYLAN, Mr. GIMENEZ, Mr. MORAN, Mr. BOST, Mr. AUSTIN SCOTT of Georgia, Mr. MANN, Mr. MOORE of Utah, Mr. MAST, Mrs. FISCHBACH, Mr. NUNN of Iowa, Mr. RUTHERFORD, Mr. EZELL, Mr. DUARTE, Mr. GOODEN of Texas, Mr. BUCSHON, Mr. OGLES, Ms. LEE of Florida, Mr. POSEY, Mr. ELLZEY, Mr. GUEST, Mr. ESTES, Mr. CARTER of Georgia, Mr. WILLIAMS of Texas, and Mrs. MILLER of Illinois) introduced the fol- lowing bill; which was referred to the Committee on Ways and Means A BILL To amend the Internal Revenue Code of 1986 to make permanent certain provisions of the Tax Cuts and Jobs VerDate Sep 11 2014 05:50 Mar 07, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6652 E:\BILLS\H976.IH H976 kjohnson on DSK79L0C42PROD with BILLS 2 •HR 976 IH Act affecting individuals, families, and small businesses, and for other purposes. 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, ETC. 3 (a) SHORT TITLE.—This Act may be cited as the 4 ‘‘TCJA Permanency Act’’. 5 (b) AMENDMENT OF 1986 CODE.—Except as other- 6 wise expressly provided, whenever in this Act an amend- 7 ment or repeal is expressed in terms of an amendment 8 to, or repeal of, a section or other provision, the reference 9 shall be considered to be made to a section or other provi- 10 sion of the Internal Revenue Code of 1986. 11 (c) REFERENCES TO THE TAX CUTS AND JOBS 12 ACT.—Title I of Public Law 115–97 may be cited as the 13 ‘‘Tax Cuts and Jobs Act’’. 14 (d) TABLE OF CONTENTS.—The table of contents of 15 this Act is as follows: 16 Sec. 1. Short title, etc. TITLE I—INDIVIDUAL REFORM MADE PERMANENT Subtitle A—Rate Reform Sec. 101. Modification of rates. Subtitle B—Deduction for Qualified Business Income of Pass-Thru Entities Sec. 111. Deduction for qualified business income. Sec. 112. Limitation on losses for taxpayers other than corporations. Subtitle C—Tax Benefits for Families and Individuals Sec. 121. Increase in standard deduction. Sec. 122. Increase in and modification of child tax credit. Sec. 123. Increased limitation for certain charitable contributions. VerDate Sep 11 2014 05:50 Mar 07, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6211 E:\BILLS\H976.IH H976 kjohnson on DSK79L0C42PROD with BILLS 3 •HR 976 IH Sec. 124. Increased contributions to ABLE accounts. Sec. 125. Rollovers to ABLE programs from 529 programs. Sec. 126. Treatment of certain individuals performing services in the Sinai Pe- ninsula of Egypt. Subtitle D—Education Sec. 131. Treatment of student loan discharges. Sec. 132. 529 account funding for homeschool and additional elementary and secondary expenses. Subtitle E—Deductions and Exclusions Sec. 141. Repeal of deduction for personal exemptions. Sec. 142. Limitation on deduction for State and local, etc., taxes. Sec. 143. Limitation on deduction for qualified residence interest. Sec. 144. Modification of deduction for personal casualty losses. Sec. 145. Termination of miscellaneous itemized deductions. Sec. 146. Repeal of overall limitation on itemized deductions. Sec. 147. Termination of exclusion for qualified bicycle commuting reimburse- ment. Sec. 148. Qualified moving expense reimbursement exclusion limited to mem- bers of Armed Forces. Sec. 149. Deduction for moving expenses limited to members of Armed Forces. Sec. 150. Limitation on wagering losses. Subtitle F—Increase in Estate and Gift Tax Exemption Sec. 151. Increase in estate and gift tax exemption. TITLE II—INCREASED EXEMPTION FOR ALTERNATIVE MINIMUM TAX MADE PERMANENT Sec. 201. Increased exemption for individuals. TITLE I—INDIVIDUAL REFORM 1 MADE PERMANENT 2 Subtitle A—Rate Reform 3 SEC. 101. MODIFICATION OF RATES. 4 (a) MARRIED INDIVIDUALS FILING JOINT RETURNS 5 AND SURVIVING SPOUSES.—Section 1(a) is amended by 6 striking the table contained therein and inserting the fol- 7 lowing: 8 ‘‘If taxable income is: The tax is: Not over $19,050 ...................................... 10% of taxable income. VerDate Sep 11 2014 05:50 Mar 07, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H976.IH H976 kjohnson on DSK79L0C42PROD with BILLS 4 •HR 976 IH ‘‘If taxable income is: The tax is: Over $19,050 but not over $77,400 .......... $1,905, plus 12% of the excess over $19,050. Over $77,400 but not over $165,000 ........ $8,907, plus 22% of the excess over $77,400. Over $165,000 but not over $315,000 ...... $28,179, plus 24% of the excess over $165,000. Over $315,000 but not over $400,000 ...... $64,179, plus 32% of the excess over $315,000. Over $400,000 but not over $600,000 ...... $91,379, plus 35% of the excess over $400,000. Over $600,000 ........................................... $161,379, plus 37% of the excess over $600,000.’’. (b) HEADS OF HOUSEHOLDS.—Section 1(b) is 1 amended by striking the table contained therein and in- 2 serting the following: 3 ‘‘If taxable income is: The tax is: Not over $13,600 ...................................... 10% of taxable income. Over $13,600 but not over $51,800 .......... $1,360, plus 12% of the excess over $13,600. Over $51,800 but not over $82,500 .......... $5,944, plus 22% of the excess over $51,800. Over $82,500 but not over $157,500 ........ $12,698, plus 24% of the excess over $82,500. Over $157,500 but not over $200,000 ...... $30,698, plus 32% of the excess over $157,500. Over $200,000 but not over $500,000 ...... $44,298, plus 35% of the excess over $200,000. Over $500,000 ........................................... $149,298, plus 37% of the excess over $500,000.’’. (c) UNMARRIED INDIVIDUALS OTHER THAN SUR- 4 VIVING SPOUSES AND HEADS OF HOUSEHOLDS.—Section 5 1(c) is amended by striking the table contained therein 6 and inserting the following: 7 ‘‘If taxable income is: The tax is: Not over $9,525 ........................................ 10% of taxable income. Over $9,525 but not over $38,700 ............ $952.50, plus 12% of the excess over $9,525. Over $38,700 but not over $82,500 .......... $4,453.50, plus 22% of the excess over $38,700. VerDate Sep 11 2014 05:50 Mar 07, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H976.IH H976 kjohnson on DSK79L0C42PROD with BILLS 5 •HR 976 IH ‘‘If taxable income is: The tax is: Over $82,500 but not over $157,500 ........ $14,089.50, plus 24% of the excess over $82,500. Over $157,500 but not over $200,000 ...... $32,089.50, plus 32% of the excess over $157,500. Over $200,000 but not over $500,000 ...... $45,689.50, plus 35% of the excess over $200,000. Over $500,000 ........................................... $150,689.50, plus 37% of the ex- cess over $500,000.’’. (d) MARRIED INDIVIDUALS FILING SEPARATE RE- 1 TURNS.—Section 1(d) is amended by striking the table 2 contained therein and inserting the following: 3 ‘‘If taxable income is: The tax is: Not over $9,525 ........................................ 10% of taxable income. Over $9,525 but not over $38,700 ............ $952.50, plus 12% of the excess over $9,525. Over $38,700 but not over $82,500 .......... $4,453.50, plus 22% of the excess over $38,700. Over $82,500 but not over $157,500 ........ $14,089.50, plus 24% of the excess over $82,500. Over $157,500 but not over $200,000 ...... $32,089.50, plus 32% of the excess over $157,500. Over $200,000 but not over $300,000 ...... $45,689.50, plus 35% of the excess over $200,000. Over $300,000 ........................................... $80,689.50, plus 37% of the excess over $300,000.’’. (e) ESTATES AND TRUSTS.—Section 1(e) is amended 4 by striking the table contained therein and inserting the 5 following: 6 ‘‘If taxable income is: The tax is: Not over $2,550 ........................................ 10% of taxable income. Over $2,550 but not over $9,150 .............. $255, plus 24% of the excess over $2,550. Over $9,150 but not over $12,500 ............ $1,839, plus 35% of the excess over $9,150. Over $12,500 ............................................. $3,011.50, plus 37% of the excess over $12,500.’’. VerDate Sep 11 2014 05:50 Mar 07, 2023 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H976.IH H976 kjohnson on DSK79L0C42PROD with BILLS 6 •HR 976 IH (f) INFLATION ADJUSTMENTS.—Section 1(f) is 1 amended— 2 (1) by amending paragraph (2)(A) to read as 3 follows: 4 ‘‘(A) by increasing the minimum and max- 5 imum dollar amounts for each bracket for 6 which a tax is imposed under such table by the 7 cost-of-living adjustment for such calendar year, 8 determined under this subsection for such cal- 9 endar year by substituting ‘2017’ for ‘2016’ in 10 paragraph (3)(A)(ii),’’, 11 (2) by amending paragraph (7) to read as fol- 12 lows: 13 ‘‘(7) ROUNDING.— 14 ‘‘(A) IN GENERAL.—Except as provided in 15 subparagraph (B), if any increase determined 16 under paragraph (2)(A) is not a multiple of 17 $25, such increase shall be rounded to the next 18 lowest multiple of $25. 19 ‘‘(B) JOINT RETURNS, ETC.—In the case 20 of a table prescribed under subsection (a), sub- 21 paragraph (A) shall be applied by substituting 22 ‘$50’ for ‘$25’ both places it appears.’’, 23 (3) by striking paragraph (8), and 24 VerDate Sep 11 2014 05:50 Mar 07, 2023 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H976.IH H976 kjohnson on DSK79L0C42PROD with BILLS 7 •HR 976 IH (4) in the heading, by striking ‘‘PHASEOUT OF 1 MARRIAGE PENALTY IN 15-PERCENT BRACKET; AD- 2 JUSTMENTS’’ and inserting ‘‘ADJUSTMENTS’’. 3 (g) APPLICATION OF INCOME TAX BRACKETS TO 4 CAPITAL GAINS BRACKETS.—Section 1(h) is amended— 5 (1) in paragraph (1)(B)(i), by striking ‘‘25 per- 6 cent’’ and inserting ‘‘22 percent’’, 7 (2) in paragraph (1)(C)(ii)(I), by striking 8 ‘‘which would (without regard to this paragraph) be 9 taxed at a rate below 39.6 percent’’ and inserting 10 ‘‘below the maximum 15-percent rate amount’’, and 11 (3) by adding at the end the following new 12 paragraphs: 13 ‘‘(12) MAXIMUM 15-PERCENT RATE AMOUNT 14 DEFINED.—For purposes of this subsection, the 15 maximum 15-percent rate amount shall be— 16 ‘‘(A) in the case of a joint return or sur- 17 viving spouse (as defined in section 2(a)), 18 $479,000 (1⁄2 such amount in the case of a 19 married individual filing a separate return), 20 ‘‘(B) in the case of an individual who is a 21 head of household (as defined in section 2(b)), 22 $452,400, 23 ‘‘(C) in the case of any other individual 24 (other than an estate or trust), $425,800, and 25 VerDate Sep 11 2014 05:50 Mar 07, 2023 Jkt 039200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H976.IH H976 kjohnson on DSK79L0C42PROD with BILLS 8 •HR 976 IH ‘‘(D) in the case of an estate or trust, 1 $12,700. 2 ‘‘(13) DETERMINATION OF 0 PERCENT RATE 3 BRACKET FOR ESTATES AND TRUSTS.—In the case 4 of any estate or trust, paragraph (1)(B) shall be ap- 5 plied by treating the amount determined in clause (i) 6 thereof as being equal to $2,600. 7 ‘‘(14) INFLATION ADJUSTMENT.— 8 ‘‘(A) IN GENERAL.—Each of the dollar 9 amounts in paragraphs (12) and (13) shall be 10 increased by an amount equal to— 11 ‘‘(i) such dollar amount, multiplied by 12 ‘‘(ii) the cost-of-living adjustment de- 13 termined under subsection (f)(3) for the 14 calendar year in which the taxable year be- 15 gins, determined by substituting ‘calendar 16 year 2017’ for ‘calendar year 2016’ in sub- 17 paragraph (A)(ii) thereof. 18 ‘‘(B) ROUNDING.—If any increase under 19 subparagraph (A) is not a multiple of $50, such 20 increase shall be rounded to the next lowest 21 multiple of $50.’’. 22 (h) CONFORMING AMENDMENTS.— 23 (1) Section 1 is amended by striking sub- 24 sections (i) and (j). 25 VerDate Sep 11 2014 05:50 Mar 07, 2023 Jkt 039200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H976.IH H976 kjohnson on DSK79L0C42PROD with BILLS 9 •HR 976 IH (2) Section 3402(q)(1) is amended by striking 1 ‘‘third lowest’’ and inserting ‘‘fourth lowest’’. 2 (i) APPLICATION OF SECTION 15.— 3 (1) IN GENERAL.—Subsection (a) of section 15 4 is amended by striking ‘‘If any rate of tax’’ and in- 5 serting ‘‘In the case of a corporation, if any rate of 6 tax’’. 7 (2) CONFORMING AMENDMENTS.— 8 (A) Section 15 is amended by striking sub- 9 sections (d) and (f). 10 (B) Section 6013(c) is amended by strik- 11 ing ‘‘sections 15, 443, and 7851(a)(1)(A)’’ and 12 inserting ‘‘section 443’’. 13 (C) The heading of section 15 is amended 14 by inserting ‘‘ON CORPORATIONS’’ after ‘‘EF- 15 FECT OF CHANGES’’. 16 (D) The table of sections for part III of 17 subchapter A of chapter 1 is amended by strik- 18 ing the item relating to section 15 and inserting 19 the following new item: 20 ‘‘Sec. 15. Effect of changes on corporations.’’. (j) EFFECTIVE DATE.— 21 (1) IN GENERAL.—The amendments made by 22 this section shall apply to taxable years beginning 23 after the date of the enactment of this Act. 24 VerDate Sep 11 2014 05:50 Mar 07, 2023 Jkt 039200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H976.IH H976 kjohnson on DSK79L0C42PROD with BILLS 10 •HR 976 IH (2) APPLICATION OF SECTION 15.—Section 15 1 of the Internal Revenue Code of 1986 shall not 2 apply to any change in a rate of tax by reason of— 3 (A) section 1(j) of such Code (as in effect 4 before its repeal by this section), or 5 (B) any amendment made by this Act. 6 Subtitle B—Deduction for Quali- 7 fied Business Income of Pass- 8 Thru Entities 9 SEC. 111. DEDUCTION FOR QUALIFIED BUSINESS INCOME. 10 (a) IN GENERAL.—Section 199A is amended by 11 striking subsection (i). 12 (b) EFFECTIVE DATE.—The amendments made by 13 this section shall apply to taxable years beginning after 14 the date of the enactment of this Act. 15 SEC. 112. LIMITATION ON LOSSES FOR TAXPAYERS OTHER 16 THAN CORPORATIONS. 17 (a) IN GENERAL.— [Text truncated for display. Full text available on Congress.gov.]

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