II 118TH CONGRESS 1ST SESSION S. 1226 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 20, 2023 Mr. CRUZ (for himself 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 00:06 Apr 22, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S1226.IS S1226 kjohnson on DSK79L0C42PROD with BILLS 2 •S 1226 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 00:06 Apr 22, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1226.IS S1226 kjohnson on DSK79L0C42PROD with BILLS 3 •S 1226 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 00:06 Apr 22, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S1226.IS S1226 kjohnson on DSK79L0C42PROD with BILLS 4 •S 1226 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) CAPITAL GAINS BRACKETS.—Subsection (h) of 19 section 1 of the Internal Revenue Code of 1986 is amend- 20 ed— 21 (1) by striking ‘‘which would (without regard to 22 this paragraph) be taxed at a rate below 25 percent’’ 23 in paragraph (1)(B)(i) and inserting ‘‘below the 24 maximum zero rate amount’’, 25 VerDate Sep 11 2014 00:06 Apr 22, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S1226.IS S1226 kjohnson on DSK79L0C42PROD with BILLS 5 •S 1226 IS (2) by striking ‘‘which would (without regard to 1 this paragraph) be taxed at a rate below 39.6 per- 2 cent’’ in paragraph (1)(C)(ii)(I) and inserting 3 ‘‘below the maximum 15-percent rate amount’’, and 4 (3) by adding at the end the following new 5 paragraph: 6 ‘‘(12) MAXIMUM AMOUNTS DEFINED.—For pur- 7 poses of this subsection— 8 ‘‘(A) MAXIMUM ZERO RATE AMOUNT.—The 9 maximum zero rate amount shall be— 10 ‘‘(i) in the case of a joint return or 11 surviving spouse, $77,200, 12 ‘‘(ii) in the case of an individual who 13 is a head of household (as defined in sec- 14 tion 2(b)), $51,700, 15 ‘‘(iii) in the case of any other indi- 16 vidual (other than an estate or trust), an 17 amount equal to 1⁄2 of the amount in effect 18 for the taxable year under clause (i), and 19 ‘‘(iv) in the case of an estate or trust, 20 $2,600. 21 ‘‘(B) MAXIMUM 15-PERCENT RATE 22 AMOUNT.—The maximum 15-percent rate 23 amount shall be— 24 VerDate Sep 11 2014 00:06 Apr 22, 2023 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S1226.IS S1226 kjohnson on DSK79L0C42PROD with BILLS 6 •S 1226 IS ‘‘(i) in the case of a joint return or 1 surviving spouse, $479,000 (1⁄2 such 2 amount in the case of a married individual 3 filing a separate return), 4 ‘‘(ii) in the case of an individual who 5 is the head of a household (as defined in 6 section 2(b)), $452,400, 7 ‘‘(iii) in the case of any other indi- 8 vidual (other than an estate or trust), 9 $425,800, and 10 ‘‘(iv) in the case of an estate or trust, 11 $12,700. 12 ‘‘(C) INFLATION ADJUSTMENT.—In the 13 case of any taxable year beginning after 2018, 14 each of the dollar amounts in subparagraphs 15 (A) and (B) shall be increased by an amount 16 equal to— 17 ‘‘(i) such dollar amount, multiplied by 18 ‘‘(ii) the cost-of-living adjustment de- 19 termined under subsection (f)(3) for the 20 calendar year in which the taxable year be- 21 gins, determined by substituting ‘calendar 22 year 2017’ for ‘calendar year 2016’ in sub- 23 paragraph (A)(ii) thereof. 24 VerDate Sep 11 2014 00:06 Apr 22, 2023 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S1226.IS S1226 kjohnson on DSK79L0C42PROD with BILLS 7 •S 1226 IS If any increase under this subparagraph is not 1 a multiple of $50, such increase shall be round- 2 ed to the next lowest multiple of $50.’’. 3 (h) CONFORMING AMENDMENTS.— 4 (1) Section 1 of the Internal Revenue Code of 5 1986 is amended by striking subsections (i) and (j). 6 (2) Section 3402(q)(1) of such Code is amend- 7 ed by striking ‘‘third lowest’’ and inserting ‘‘fourth 8 lowest’’. 9 (i) SECTION 15 NOT TO APPLY.—Section 15 of the 10 Internal Revenue Code of 1986 shall not apply to any 11 change in a rate of tax by reason of this section. 12 (j) EFFECTIVE DATE.—The amendments made by 13 this section shall apply to taxable years beginning after 14 December 31, 2022. 15 SEC. 2. PERMANENT EXTENSION OF DEDUCTION FOR 16 QUALIFIED BUSINESS INCOME OF PASS-THRU 17 ENTITIES. 18 (a) IN GENERAL.—Section 199A of the Internal Rev- 19 enue Code of 1986 is amended by striking subsection (i). 20 (b) EFFECTIVE DATE.—The amendment made by 21 this section shall apply to taxable years beginning after 22 December 31, 2022. 23 VerDate Sep 11 2014 00:06 Apr 22, 2023 Jkt 039200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S1226.IS S1226 kjohnson on DSK79L0C42PROD with BILLS 8 •S 1226 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, 2022. 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 00:06 Apr 22, 2023 Jkt 039200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S1226.IS S1226 kjohnson on DSK79L0C42PROD with BILLS 9 •S 1226 IS (b) INFLATION ADJUSTMENT.—Paragraph (4) of sec- 1 tion 63(c) of the Internal Revenue Code of 1986 is amend- 2 ed to read as follows: 3 ‘‘(4) ADJUSTMENTS FOR INFLATION.— 4 ‘‘(A) IN GENERAL.—In the case of any 5 taxable year beginning in a calendar year after 6 2018, the $18,000 and $12,000 amounts in 7 paragraph (2) shall each be increased by an 8 amount equal to— 9 ‘‘(i) such dollar amount, multiplied by 10 ‘‘(ii) the cost-of-living adjustment de- 11 termined under section 1(f)(3) for the cal- 12 endar year in which the taxable year be- 13 gins, by substituting ‘2017’ for ‘2016’ in 14 subparagraph (A)(ii) thereof. 15 ‘‘(B) CERTAIN AMOUNTS.—In the case of 16 any taxable year beginning in a calendar year 17 after 1988, each dollar amount contained in 18 paragraph (5) or subsection (f) shall be in- 19 creased by an amount equal to— 20 ‘‘(i) such dollar amount, multiplied by 21 ‘‘(ii) the cost-of-living adjustment de- 22 termined under section 1(f)(3) for the cal- 23 endar year in which the taxable year be- 24 VerDate Sep 11 2014 00:06 Apr 22, 2023 Jkt 039200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S1226.IS S1226 kjohnson on DSK79L0C42PROD with BILLS 10 •S 1226 IS gins, by substituting for ‘calendar year 1 2016’ in subparagraph (A)(ii) thereof— 2 ‘‘(I) ‘calendar year 1987’ in the 3 case of the dollar amounts contained 4 in paragraph (5)(A) or subsection (f), 5 and 6 ‘‘(II) ‘calendar year 1997’ in the 7 case of the dollar amount contained in 8 paragraph (5)(B).’’. 9 (c) CONFORMING AMENDMENT.—Section 63(c) of the 10 Internal Revenue Code of 1986 is amended by striking 11 paragraph (7). 12 (d) EFFECTIVE DATE.—The amendments made by 13 this section shall apply to taxable years beginning after 14 December 31, 2022. 15 SEC. 5. PERMANENT INCREASE AND MODIFICATION OF 16 CHILD TAX CREDIT. 17 (a) INCREASE IN CREDIT AMOUNT.—Section 24(a) of 18 the Internal Revenue Code of 1986 is amended by striking 19 ‘‘$1,000’’ and inserting ‘‘$2,000’’. 20 (b) LIMITATION.—Paragraph (2) of section 24(b) of 21 the Internal Revenue Code of 1986 is amended to read 22 as follows: 23 ‘‘(2) THRESHOLD AMOUNT.—For purposes of 24 paragraph (1), the term ‘threshold amount’ means— 25 VerDate Sep 11 2014 00:06 Apr 22, 2023 Jkt 039200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S1226.IS S1226 kjohnson on DSK79L0C42PROD with BILLS 11 •S 1226 IS ‘‘(A) $400,000 in the case of a joint re- 1 turn, and 2 ‘‘(B) $200,000 in any other case.’’. 3 (c) PARTIAL CREDIT ALLOWED FOR CERTAIN 4 OTHER DEPENDENTS.—Subsection (h) of section 24 of 5 the Internal Revenue Code of 1986 is amended to read 6 as follows: 7 ‘‘(h) PARTIAL CREDIT ALLOWED FOR CERTAIN 8 OTHER DEPENDENTS.— 9 ‘‘(1) IN GENERAL.—The credit determined 10 under subsection (a) shall be increased by $500 for 11 each dependent of the taxpayer (as defined in sec- 12 tion 7706) other than a qualifying child described in 13 subsection (c). 14 ‘‘(2) EXCEPTION FOR CERTAIN NONCITIZENS.— 15 Paragraph (1) shall not apply with respect to any 16 individual who would not be a dependent if subpara- 17 graph (A) of section 7706(b)(3) were applied with- 18 out regard to all that follows ‘resident of the United 19 States’. 20 ‘‘(3) CERTAIN QUALIFYING CHILDREN.—In the 21 case of any qualifying child with respect to whom a 22 credit is not allowed under this section by reason of 23 subsection (e)(1), such child shall be treated as a de- 24 pendent to whom subparagraph (A) applies.’’. 25 VerDate Sep 11 2014 00:06 Apr 22, 2023 Jkt 039200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S1226.IS S1226 kjohnson on DSK79L0C42PROD with BILLS 12 •S 1226 IS (d) MAXIMUM AMOUNT OF REFUNDABLE CREDIT.— 1 Subsection (d) of s [Text truncated for display. 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