II 116TH CONGRESS 1ST SESSION S. 1162 To amend the Internal Revenue Code of 1986 to make permanent the individual tax provisions of the tax reform law, and for other purposes. IN THE SENATE OF THE UNITED STATES APRIL 11, 2019 Mr. CRUZ (for himself, Ms. ERNST, Mrs. BLACKBURN, Mr. CRAMER, and Mr. BRAUN) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend the Internal Revenue Code of 1986 to make permanent the individual tax provisions of the tax reform law, 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. PERMANENT MODIFICATION OF INDIVIDUAL 3 RATE BRACKETS. 4 (a) MARRIED INDIVIDUALS FILING JOINT RETURNS 5 AND SURVIVING SPOUSES.—The table contained in sub- 6 section (a) of section 1 of the Internal Revenue Code of 7 1986 is amended to read as follows: 8 VerDate Sep 11 2014 21:27 Apr 19, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S1162.IS S1162 pamtmann on DSKBFK8HB2PROD with BILLS 2 •S 1162 IS ‘‘If taxable income is: The tax is: Not over $19,050 ...................................... 10% of taxable income. 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.—The table contained 1 in subsection (b) of section 1 of the Internal Revenue Code 2 of 1986 is amended to read as follows: 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.—The 5 table contained in subsection (c) of section 1 of the Inter- 6 nal Revenue Code of 1986 is amended to read as follows: 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. VerDate Sep 11 2014 21:27 Apr 19, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1162.IS S1162 pamtmann on DSKBFK8HB2PROD with BILLS 3 •S 1162 IS ‘‘If taxable income is: The tax is: 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 $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.—The table contained in subsection (d) of section 2 1 of the Internal Revenue Code of 1986 is amended to 3 read as follows: 4 ‘‘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.—The table contained in 5 subsection (e) of section 1 of the Internal Revenue Code 6 of 1986 is amended to read as follows: 7 ‘‘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 21:27 Apr 19, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S1162.IS S1162 pamtmann on DSKBFK8HB2PROD with BILLS 4 •S 1162 IS (f) ADJUSTMENT FOR INFLATION.—Subsection (f) of 1 section 1 of the Internal Revenue Code of 1986 is amend- 2 ed— 3 (1) by striking ‘‘1993’’ in paragraph (1) and in- 4 serting ‘‘2018’’, 5 (2) by striking ‘‘determined—’’ and all that fol- 6 lows in paragraph (2)(A) and inserting ‘‘determined 7 by substituting ‘2017’ for ‘2016’ in paragraph 8 (3)(A)(ii),’’, 9 (3) by striking ‘‘a married individual filing a 10 separate return’’ in paragraph (7)(B) and inserting 11 ‘‘any unmarried individual other than a surviving 12 spouse or head of household’’, 13 (4) by striking ‘‘MARRIED INDIVIDUALS FILING 14 SEPARATELY’’ in the heading of subparagraph (B) of 15 paragraph (7) and inserting ‘‘CERTAIN UNMARRIED 16 INDIVIDUALS’’, and 17 (5) by striking paragraph (8). 18 (g) SPECIAL RULES FOR CERTAIN CHILDREN WITH 19 UNEARNED INCOME.—Subsection (g) of section 1 of the 20 Internal Revenue Code of 1986 is amended— 21 (1) by striking paragraphs (1), (3), and (5), 22 (2) by redesignating paragraphs (4), (6), and 23 (7) as paragraphs (5), (7), and (8), respectively, 24 VerDate Sep 11 2014 21:27 Apr 19, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S1162.IS S1162 pamtmann on DSKBFK8HB2PROD with BILLS 5 •S 1162 IS (3) by redesignating paragraph (2) as para- 1 graph (6) and by moving such paragraph to the po- 2 sition between paragraphs (5) and (7) (as so redes- 3 ignated), 4 (4) by inserting before paragraph (5) (as so re- 5 designated) the following new paragraphs: 6 ‘‘(1) IN GENERAL.—In the case of a child to 7 whom this subsection applies for the taxable year, 8 the amount of tax imposed by this section on such 9 child shall be determined as provided in paragraphs 10 (2) and (3). 11 ‘‘(2) MODIFICATIONS TO APPLICABLE RATE 12 BRACKETS.—The income tax table otherwise applica- 13 ble under this section to the child shall be applied 14 with the following modifications: 15 ‘‘(A) 24-PERCENT BRACKET.—The max- 16 imum taxable income which is taxed at a rate 17 below 24 percent shall not be more than the 18 sum of— 19 ‘‘(i) the earned taxable income of such 20 child, plus 21 ‘‘(ii) the minimum taxable income for 22 the 24-percent bracket in the table under 23 subsection (e) (as adjusted under sub- 24 section (f)) for the taxable year. 25 VerDate Sep 11 2014 21:27 Apr 19, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S1162.IS S1162 pamtmann on DSKBFK8HB2PROD with BILLS 6 •S 1162 IS ‘‘(B) 35-PERCENT BRACKET.—The max- 1 imum taxable income which is taxed at a rate 2 below 35 percent shall not be more than the 3 sum of— 4 ‘‘(i) the earned taxable income of such 5 child, plus 6 ‘‘(ii) the minimum taxable income for 7 the 35-percent bracket in the table under 8 subsection (e) (as adjusted under sub- 9 section (f)) for the taxable year. 10 ‘‘(C) 37-PERCENT BRACKET.—The max- 11 imum taxable income which is taxed at a rate 12 below 37 percent shall not be more than the 13 sum of— 14 ‘‘(i) the earned taxable income of such 15 child, plus 16 ‘‘(ii) the minimum taxable income for 17 the 37-percent bracket in the table under 18 subsection (e) (as adjusted under sub- 19 section (f)) for the taxable year. 20 ‘‘(3) COORDINATION WITH CAPITAL GAINS 21 RATES.—For purposes of applying subsection (h)— 22 ‘‘(A) the maximum zero rate amount shall 23 not be more than the sum of— 24 VerDate Sep 11 2014 21:27 Apr 19, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S1162.IS S1162 pamtmann on DSKBFK8HB2PROD with BILLS 7 •S 1162 IS ‘‘(i) the earned taxable income of such 1 child, plus 2 ‘‘(ii) the amount in effect under sub- 3 section (h)(12)(A)(iv) for the taxable year, 4 and 5 ‘‘(B) the maximum 15-percent rate 6 amount shall not be more than the sum of— 7 ‘‘(i) the earned taxable income of such 8 child, plus 9 ‘‘(ii) the amount in effect under sub- 10 section (h)(12)(B)(iv) for the taxable year. 11 ‘‘(4) EARNED TAXABLE INCOME.—For purposes 12 of this subsection, the term ‘earned taxable income’ 13 means, with respect to any child for any taxable 14 year, the taxable income of such child reduced (but 15 not below zero) by the net unearned income of such 16 child.’’, and 17 (5) by striking ‘‘paragraph (4)(A)(ii)(I)’’ each 18 place it appears in subparagraphs (A)(ii), (B)(i), 19 and (B)(ii)(II) of paragraph (8) (as so redesignated) 20 and inserting ‘‘paragraph (5)(A)(ii)(I)’’. 21 (h) CAPITAL GAINS BRACKETS.—Subsection (h) of 22 section 1 of the Internal Revenue Code of 1986 is amend- 23 ed— 24 VerDate Sep 11 2014 21:27 Apr 19, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S1162.IS S1162 pamtmann on DSKBFK8HB2PROD with BILLS 8 •S 1162 IS (1) by striking ‘‘which would (without regard to 1 this paragraph) be taxed at a rate below 25 percent’’ 2 in paragraph (1)(B)(i) and inserting ‘‘below the 3 maximum zero rate amount’’, 4 (2) by striking ‘‘which would (without regard to 5 this paragraph) be taxed at a rate below 39.6 per- 6 cent’’ in paragraph (1)(C)(ii)(I) and inserting 7 ‘‘below the maximum 15-percent rate amount’’, and 8 (3) by adding at the end the following new 9 paragraph: 10 ‘‘(12) MAXIMUM AMOUNTS DEFINED.—For pur- 11 poses of this subsection— 12 ‘‘(A) MAXIMUM ZERO RATE AMOUNT.—The 13 maximum zero rate amount shall be— 14 ‘‘(i) in the case of a joint return or 15 surviving spouse, $77,200, 16 ‘‘(ii) in the case of an individual who 17 is a head of household (as defined in sec- 18 tion 2(b)), $51,700, 19 ‘‘(iii) in the case of any other indi- 20 vidual (other than an estate or trust), an 21 amount equal to 1⁄2 of the amount in effect 22 for the taxable year under clause (i), and 23 ‘‘(iv) in the case of an estate or trust, 24 $2,600. 25 VerDate Sep 11 2014 21:27 Apr 19, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S1162.IS S1162 pamtmann on DSKBFK8HB2PROD with BILLS 9 •S 1162 IS ‘‘(B) MAXIMUM 15-PERCENT RATE 1 AMOUNT.—The maximum 15-percent rate 2 amount shall be— 3 ‘‘(i) in the case of a joint return or 4 surviving spouse, $479,000 (1⁄2 such 5 amount in the case of a married individual 6 filing a separate return), 7 ‘‘(ii) in the case of an individual who 8 is the head of a household (as defined in 9 section 2(b)), $452,400, 10 ‘‘(iii) in the case of any other indi- 11 vidual (other than an estate or trust), 12 $425,800, and 13 ‘‘(iv) in the case of an estate or trust, 14 $12,700. 15 ‘‘(C) INFLATION ADJUSTMENT.—In the 16 case of any taxable year beginning after 2018, 17 each of the dollar amounts in subparagraphs 18 (A) and (B) shall be increased by an amount 19 equal to— 20 ‘‘(i) such dollar amount, multiplied by 21 ‘‘(ii) the cost-of-living adjustment de- 22 termined under subsection (f)(3) for the 23 calendar year in which the taxable year be- 24 gins, determined by substituting ‘calendar 25 VerDate Sep 11 2014 21:27 Apr 19, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S1162.IS S1162 pamtmann on DSKBFK8HB2PROD with BILLS 10 •S 1162 IS year 2017’ for ‘calendar year 2016’ in sub- 1 paragraph (A)(ii) thereof. 2 If any increase under this subparagraph is not 3 a multiple of $50, such increase shall be round- 4 ed to the next lowest multiple of $50.’’. 5 (i) CONFORMING AMENDMENTS.— 6 (1) Section 1 of the Internal Revenue Code of 7 1986 is amended by striking subsections (i) and (j). 8 (2) Section 3402(q)(1) of such Code is amend- 9 ed by striking ‘‘third lowest’’ and inserting ‘‘fourth 10 lowest’’. 11 (j) SECTION 15 NOT TO APPLY.—Section 15 of the 12 Internal Revenue Code of 1986 shall not apply to any 13 change in a rate of tax by reason of this section. 14 (k) EFFECTIVE DATE.—The amendments made by 15 this section shall apply to taxable years beginning after 16 December 31, 2018. 17 SEC. 2. PERMANENT EXTENSION OF DEDUCTION FOR 18 QUALIFIED BUSINESS INCOME OF PASS-THRU 19 ENTITIES. 20 (a) IN GENERAL.—Section 199A of the Internal Rev- 21 enue Code of 1986 is amended by striking subsection (i). 22 (b) EFFECTIVE DATE.—The amendment made by 23 this section shall apply to taxable years beginning after 24 December 31, 2017. 25 VerDate Sep 11 2014 21:27 Apr 19, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S1162.IS S1162 pamtmann on DSKBFK8HB2PROD with BILLS 11 •S 1162 IS SEC. 3. PERMANENT EXTENSION OF LIMITATION ON 1 LOSSES FOR TAXPAYERS OTHER THAN COR- 2 PORATIONS. 3 (a) IN GENERAL.—Paragraph (1) of section 461(l) 4 of the Internal Revenue Code of 1986 is amended to read 5 as follows: 6 ‘‘(1) LIMITATION.—In the case of taxable year 7 of a taxpayer other than a corporation, any excess 8 business loss of the taxpayer for the taxable year 9 shall not be allowed.’’. 10 (b) CONFORMING AMENDMENT.—Section 461 of the 11 Internal Revenue Code of 1986 is amended by striking 12 subsection (j) (relating to limitation on excess farm losses 13 of certain taxpayers). 14 (c) EFFECTIVE DATE.—The amendments made by 15 this section shall apply to taxable years beginning after 16 December 31, 2017. 17 SEC. 4. PERMANENT EXTENSION OF INCREASE IN STAND- 18 ARD DEDUCTION. 19 (a) IN GENERAL.—Section 63(c)(2) of the Internal 20 Revenue Code of 1986 is amended— 21 (1) by striking ‘‘$4,400’’ in subparagraph (B) 22 and inserting ‘‘$18,800’’, and 23 (2) by striking ‘‘$3,000’’ in subparagraph (C) 24 and inserting ‘‘$12,000’’. 25 VerDate Sep 11 2014 21:27 Apr 19, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S1162.IS S1162 pamtmann on DSKBFK8HB2PROD with BILLS 12 •S 1162 IS (b) INFLATION ADJUSTMENT.—Paragraph [Text truncated for display. Full text available on Congress.gov.]