What This Bill Does
This bill changes the earned income tax credit, which is a tax reduction for working people with lower incomes. The bill expands who can receive this credit and changes how much money eligible people get back.
##
Who It Affects
- Working people with earned income (money from jobs)
- College and university students with low incomes
- Unmarried individuals with two or more children
- People caring for dependents who cannot care for themselves
- Relatives age 65 and older living with taxpayers
- The Internal Revenue Service (which administers the credit)
##
Key Provisions
- College students can now qualify for the credit if they meet income limits and either receive a Federal Pell Grant or have household income below 300 percent of the poverty line (Sec. 2(a))
- The age requirement for childless workers is lowered from 25-65 to just 18 and older (Sec. 2(b))
- Students and people with qualifying dependents are treated as having earned income for credit purposes even if their actual work earnings are low (Sec. 2(c))
- The credit now applies to more family members, including people who need care due to physical or mental disability and relatives over age 65 (Sec. 2(d))
- The credit percentage is set at 100 percent and the phaseout percentage is set at 20 percent, with an earned income amount of $4,000 (or $8,000 for joint returns) and phaseout amount of $30,000 (or $50,000 for joint returns) (Sec. 2(e))
- Unmarried individuals with two or more children get an additional increased credit with percentages of 12.5 percent for two children and 18.75 percent for three or more children (Sec. 2(f))
- The Treasury Department must establish a program allowing taxpayers to receive advance monthly payments of 75 percent of their estimated credit through direct payment or prepaid debit card, with an online system for changes and a requirement for monthly statements (Sec. 2(g))
- The Treasury Department must create an outreach program within one year that sends educational letters to likely eligible taxpayers, holds workshops at Internal Revenue Service district offices, and provides quarterly reminders to advance payment participants (Sec. 2(h))
##
What Changes
If this bill becomes law, more people will qualify for the earned income tax credit, including students, people age 18 and older without children, and people caring for relatives over 65 or those with disabilities. The credit amounts will increase for eligible people. Instead of waiting until tax filing time to claim the credit, eligible people can choose to receive monthly advance payments of up to 75 percent of their expected credit. The government must also educate people about these benefits through letters, workshops and quarterly reminders.
##
Important Definitions
- **Qualifying student**: A student enrolled in at least one academic period during the tax year who either qualifies for a Federal Pell Grant or meets income limits based on household income below 300 percent of the poverty line (Sec. 2(a))
- **Independent student**: A student who was not claimed as a dependent by another taxpayer in the three years before their first academic period (Sec. 2(a))
- **Qualifying dependent**: A child under age 12, a person unable to care for themselves due to physical or mental condition, or a relative age 65 or older (Sec. 2(d))
- **Household income**: Has the meaning given in the health insurance tax credit section of tax law (Sec. 2(a))
- **Poverty line**: Has the meaning given in the health insurance tax credit section of tax law (Sec. 2(a))
- **Earned income amount**: $4,000 for single filers and $8,000 for married couples filing jointly, adjusted yearly for inflation (Sec. 2(e))
- **Phaseout amount**: $30,000 for single filers and $50,000 for married couples filing jointly, adjusted yearly for inflation (Sec. 2(e))
##
Effective Date
The changes apply to tax years beginning after December 31, 2022 (Sec. 2(i)).
I
118TH CONGRESS
1ST SESSION H. R. 1468
To amend the Internal Revenue Code of 1986 to expand and improve the
earned income tax credit.
IN THE HOUSE OF REPRESENTATIVES
MARCH 8, 2023
Ms. MOORE of Wisconsin (for herself, Ms. CHU, Mr. EVANS, Mr. GRIJALVA,
Mrs. WATSON COLEMAN, Ms. JAYAPAL, Mr. KHANNA, Mr. TORRES of
New York, Ms. OMAR, Ms. GARCIA of Texas, Ms. PRESSLEY, Ms. NOR-
TON, Mr. POCAN, Ms. TOKUDA, and Ms. PINGREE) 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 expand
and improve the earned income tax credit.
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 ‘‘Worker Relief and
4
Credit Reform Act of 2023’’ or as the ‘‘WRCR Act of
5
2023’’.
6
SEC. 2. EXPANSION AND IMPROVEMENT OF EARNED IN-
7
COME TAX CREDIT.
8
(a) APPLICATION TO STUDENTS.—
9
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(1) IN GENERAL.—Section 32(c)(1)(A)(i) of the
1
Internal Revenue Code of 1986 is amended by in-
2
serting ‘‘who is a qualifying student or’’ after ‘‘any
3
individual’’.
4
(2) QUALIFYING
STUDENT.—Section 32(c) of
5
such Code is amended by redesignating paragraph
6
(4) as paragraph (5) and inserting after paragraph
7
(3) the following new paragraph:
8
‘‘(4) QUALIFYING STUDENT.—
9
‘‘(A) IN GENERAL.—The term ‘qualifying
10
student’ means, with respect to any taxable
11
year, any individual who—
12
‘‘(i) is an eligible student (as defined
13
in section 25A(b)(3)) with respect to at
14
least one academic period beginning during
15
such taxable year,
16
‘‘(ii) either—
17
‘‘(I) qualifies for a Federal Pell
18
Grant with respect to such academic
19
period, or
20
‘‘(II) meets the requirements of
21
subparagraph (B) or (C) for the tax-
22
able year, and
23
‘‘(iii) is not a dependent for whom a
24
deduction is allowable under section 151 to
25
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•HR 1468 IH
another taxpayer for any taxable year be-
1
ginning in the same calendar year as such
2
taxable year.
3
‘‘(B) INDEPENDENT
STUDENTS.—In the
4
case of any independent student, the require-
5
ments of this subparagraph are met for such
6
taxable year if the household income of the tax-
7
payer is less than 300 percent of the poverty
8
line for the size of the family involved for the
9
taxable year.
10
‘‘(C) OTHER STUDENTS.—
11
‘‘(i) IN GENERAL.—In the case of any
12
individual who is not an independent stu-
13
dent, the requirements of this subpara-
14
graph are met for such taxable year if the
15
aggregate household incomes of all the in-
16
dividual’s specified supporters (and the
17
taxpayer if not otherwise taken into ac-
18
count) for the taxable years of such sup-
19
porters which end in or with the calendar
20
year in which such individual’s taxable
21
year begins is less than 300 percent of the
22
poverty line for the size of the family in-
23
volved (determined on a single aggregate
24
basis) for the taxable year.
25
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‘‘(ii) SPECIFIED
SUPPORTER.—The
1
term ‘specified supporter’ means, with re-
2
spect to any individual described in clause
3
(i), any taxpayer with respect to whom
4
such individual was a dependent for any
5
taxable year ending in the 3-year period
6
described in subparagraph (D)(i).
7
‘‘(D) INDEPENDENT STUDENT DEFINED.—
8
‘‘(i) IN
GENERAL.—The term ‘inde-
9
pendent student’ means any individual if
10
such individual was not a dependent of an-
11
other taxpayer for any taxable year ending
12
in the 3-year period which ends on the
13
first day of the first academic period with
14
respect to which such individual is an eligi-
15
ble
student
(as
defined
in
section
16
25A(b)(3)).
17
‘‘(ii) CERTAIN
ACADEMIC
PERIODS
18
DISREGARDED.—An academic period shall
19
be disregarded under clause (i) if such aca-
20
demic period ends more than 2 years be-
21
fore the beginning of the next academic pe-
22
riod with respect to which the individual is
23
an eligible student (as defined in section
24
25A(b)(3)).
25
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‘‘(E) OTHER DEFINITIONS.—
1
‘‘(i) HOUSEHOLD INCOME.—The term
2
‘household income’ has the meaning given
3
such term in section 36B(d)(2).
4
‘‘(ii) POVERTY LINE.—The term ‘pov-
5
erty line’ has the meaning given such term
6
in section 36B(d)(3)(A).
7
‘‘(iii) FAMILY SIZE.—The family size
8
involved with respect to any taxpayer shall
9
be determined under rules similar to the
10
rules of section 36B(d)(1).’’.
11
(3)
CONFORMING
AMENDMENT.—Section
12
32(c)(1)(A)(ii) of such Code is amended by striking
13
‘‘any other individual who does not have a qualifying
14
child’’ and inserting ‘‘any individual not described in
15
clause (i)’’.
16
(b) MODIFICATION OF AGE REQUIREMENTS.—Sec-
17
tion 32(c)(1)(A)(ii)(II) of such Code is amended by strik-
18
ing ‘‘has attained age 25 but not attained age 65’’ and
19
inserting ‘‘has attained age 18’’.
20
(c) CARE-GIVING AND LEARNING TAKEN INTO AC-
21
COUNT AS COMPENSATED WORK.—Section 32(a) of such
22
Code is amended by adding at the end the following new
23
paragraph:
24
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•HR 1468 IH
‘‘(3) SPECIAL
RULE
FOR
QUALIFYING
STU-
1
DENTS AND CERTAIN INDIVIDUALS WITH ONE OR
2
MORE QUALIFYING DEPENDENTS.—For purposes of
3
paragraph (1), any individual—
4
‘‘(A) who is a qualifying student, or
5
‘‘(B) who has a qualifying dependent,
6
shall be treated as having earned income for the tax-
7
able year which is equal to the earned income
8
amount with respect to such individual for such tax-
9
able year.’’.
10
(d) TREATMENT
OF CERTAIN QUALIFYING REL-
11
ATIVES.—
12
(1) IN
GENERAL.—Section 32(c)(3) of such
13
Code is amended by striking all that precedes sub-
14
paragraph (B) and inserting the following:
15
‘‘(3) QUALIFYING DEPENDENT.—
16
‘‘(A) IN GENERAL.—The term ‘qualifying
17
dependent’ means—
18
‘‘(i) a qualifying child of the taxpayer,
19
as defined in section 152(c), determined—
20
‘‘(I) by substituting ‘12’ for ‘19’
21
in paragraph (3)(A)(i) thereof, and
22
‘‘(II) without regard to para-
23
graphs (1)(D) and (3)(A)(ii) thereof
24
and section 152(e),
25
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•HR 1468 IH
‘‘(ii) any individual who is physically
1
or mentally incapable of caring for himself
2
or herself (within the meaning of section
3
21(b)(1)) and who—
4
‘‘(I) is the taxpayer’s spouse, or
5
‘‘(II) is a qualifying relative of
6
the taxpayer, as defined in section
7
152(d), determined without regard to
8
paragraph (1)(B) thereof and by
9
treating an individual as a qualifying
10
child of the taxpayer for purposes of
11
paragraph (1)(D) thereof only if such
12
individual is a qualifying child of the
13
taxpayer as determined under clause
14
(i) of this subparagraph, or
15
‘‘(iii) any qualifying relative of the
16
taxpayer (as defined in section 152(d), de-
17
termined without regard to paragraph
18
(1)(B) thereof) who has attained age 65 as
19
of the close of the calendar year in which
20
the taxable year of the taxpayer begins.
21
For purposes of determining if any individual is
22
a qualifying relative of the taxpayer under
23
clause (ii)(II) or (iii), section 152(d)(1)(C) shall
24
be applied by not taking into account any bene-
25
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•HR 1468 IH
fits received by such individual pursuant to any
1
Federal program (or any State or local program
2
financed in whole or in part with Federal
3
funds) related to retirement (including social
4
security benefits), disability, health care, cash
5
aid, child care, food assistance, housing and de-
6
velopment, social services, employment and
7
training, or energy assistance.’’.
8
(2) CONFORMING AMENDMENTS.—
9
(A) Section 32(c)(1)(A)(i) of such Code is
10
amended by striking ‘‘qualifying child’’ and in-
11
serting ‘‘qualifying dependent’’.
12
(B) Section 32(c)(1)(B) of such Code is
13
amended—
14
(i) by striking ‘‘qualifying child’’ and
15
inserting ‘‘qualifying dependent’’, and
16
(ii) by striking ‘‘CHILD’’ in the head-
17
ing and inserting ‘‘DEPENDENT’’.
18
(C) Section 32(c)(1)(F) of such Code is
19
amended—
20
(i) by striking ‘‘qualifying children’’
21
and inserting ‘‘qualifying dependents’’,
22
(ii) by striking ‘‘qualifying child’’ and
23
inserting ‘‘qualifying dependent’’, and
24
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•HR 1468 IH
(iii) by striking ‘‘QUALIFYING CHILD’’
1
in the heading and inserting ‘‘QUALIFYING
2
DEPENDENT’’.
3
(D) Section 32(c)(3)(D)(i) of such Code is
4
amended by striking ‘‘qualifying child’’ both
5
places it appears and inserting ‘‘qualifying de-
6
pendent’’.
7
(e)
MODIFICATION
OF
PERCENTAGES
AND
8
AMOUNTS.—
9
(1) 100
PERCENT
CREDIT
PERCENTAGE.—
10
Paragraph (1) and paragraph (2)(A) of section
11
32(a) of such Code are each amended by striking
12
‘‘the credit percentage of’’.
13
(2) 20 PERCENT
PHASEOUT
PERCENTAGE.—
14
Section 32(a)(2)(B) of such Code is amended by
15
striking ‘‘the phaseout percentage’’ and inserting
16
‘‘20 percent’’.
17
(3) MODIFICATION
OF
EARNED
INCOME
AND
18
PHASEOUT AMOUNTS.—Section 32(b) of such Code
19
is amended to read as follows:
20
‘‘(b)
EARNED
INCOME
AMOUNT;
PHASEOUT
21
AMOUNT.—For purposes of this section—
22
‘‘(1) EARNED
INCOME
AMOUNT.—The term
23
‘earned income amount’ means $4,000 (twice such
24
amount in the case of a joint return).
25
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•HR 1468 IH
‘‘(2) PHASEOUT AMOUNT.—The term ‘phaseout
1
amount’ means $30,000 ($50,000 in the case of a
2
joint return).
3
‘‘(3) INFLATION ADJUSTMENT.—In the case of
4
any taxable year beginning after 2023, the $4,000
5
amount in paragraph (1) and each dollar amount in
6
paragraph (2) shall be increased by an amount equal
7
to—
8
‘‘(A) such dollar amount, multiplied by
9
‘‘(B) the cost-of-living adjustment deter-
10
mined under section 1(f)(3) for the calendar
11
year in which the taxable year begins, deter-
12
mined by substituting ‘2022’ for ‘2016’ in sub-
13
paragraph (A)(ii) thereof.
14
If any increase under the preceding sentence is not
15
a multiple of $50, such increase shall be rounded to
16
the next lowest multiple of $50.’’.
17
(4) CONFORMING AMENDMENTS.—
18
(A) Section 32(i) of such Code is amended
19
by adding at the end the following new para-
20
graph:
21
‘‘(3) INFLATION ADJUSTMENT.—
22
‘‘(A) IN
GENERAL.—In the case of any
23
taxable year beginning after 2021, the $10,000
24
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•HR 1468 IH
amount in subsection (i)(1) shall be increased
1
by an amount equal to—
2
‘‘(i) such dollar amount, multiplied by
3
‘‘(ii) the cost-of-living adjustment de-
4
termined under section 1(f)(3) for the cal-
5
endar year in which the taxable year be-
6
gins, determined by substituting ‘2020’ for
7
‘2016’ in subparagraph (A)(ii) thereof.
8
‘‘(B) ROUNDING.—If any increase under
9
subparagraph (A) is not a multiple of $50, such
10
increase shall be rounded to the next lowest
11
multiple of $50.’’.
12
(B) Section 32 of such Code is amended by
13
striking subsection (j).
14
(f) INCREASED CREDIT FOR CERTAIN UNMARRIED
15
INDIVIDUALS WITH 2 OR MORE QUALIFYING CHIL-
16
DREN.—
17
(1) IN GENERAL.—Section 32 of such Code is
18
amended by inserting after subsection (f) the fol-
19
lowing new subsection:
20
‘‘(g) INCREASED CREDIT FOR CERTAIN UNMARRIED
21
INDIVIDUALS WITH 2 OR MORE QUALIFYING CHIL-
22
DREN.—
23
‘‘(1) IN GENERAL.—In the case of a qualified
24
individual, the amount of the credit otherwise deter-
25
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•HR 1468 IH
mined under subsection (a) shall be increased by the
1
amount of the credit determined under this section
2
as such section was in effect for taxable years begin-
3
ning in 2018 but with the modifications described in
4
paragraph (2).
5
‘‘(2) MODIFICATIONS.—Solely for purposes of
6
determining the increase under paragraph (1)—
7
‘‘(A) CREDIT
PERCENTAGE.—The credit
8
percentage shall be equal to—
9
‘‘(i) in the case of a qualified indi-
10
vidual with 2 qualifying children, 12.5 per-
11
cent, and
12
‘‘(ii) in the case of a qualified indi-
13
vidual with 3 or more qualifying children,
14
18.75 percent.
15
‘‘(B)
PHASEOUT
PERCENTAGE.—The
16
phaseout percentage shall be equal to 5 percent.
17
‘‘(C) APPLICATION OF INFLATION ADJUST-
18
MENT.—Section 32(j) as in effect for taxable
19
years beginning in 2018 shall be applied by tak-
20
ing into account the taxable year for which the
21
increase under paragraph (1) is determined.
22
‘‘(3) QUALIFIED INDIVIDUAL.—For purposes of
23
this subsection, the term ‘qualified individual’ means
24
any individual who—
25
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•HR 1468 IH
‘‘(A) is not married (as determined under
1
section 7703), and
2
‘‘(B) has 2 or more qualifying children.
3
‘‘(4) QUALIFYING CHILD.—For purposes of this
4
subsection, the term ‘qualifying child’ means a child
5
described in subsection (c)(3)(A)(i) determined with-
6
out regard to subclause (I) thereof.’’.
7
(g) ADVANCE PAYMENT.—
8
(1) IN GENERAL.—Chapter 77 of such Code is
9
amended by adding at the end the following new sec-
10
tion:
11
‘‘SEC. 7531. ADVANCE PAYMENT OF EARNED INCOME CRED-
12
IT; EARNED INCOME SAVINGS ACCOUNTS.
13
‘‘(a) IN GENERAL.—Not later than the date that is
14
2 years after the date of the enactment of this section,
15
the Secretary shall establish a program for
[Text truncated for display. Full text available on Congress.gov.]