II 118TH CONGRESS 1ST SESSION S. 1992 To amend the Internal Revenue Code of 1986 to expand the earned income and child tax credits, and for other purposes. IN THE SENATE OF THE UNITED STATES JUNE 14, 2023 Mr. BROWN (for himself, Mr. BENNET, Mr. BOOKER, Mr. WARNOCK, Mr. WYDEN, Mr. DURBIN, Ms. BALDWIN, Mr. BLUMENTHAL, Ms. CANT- WELL, Mr. CARDIN, Mr. CASEY, Mr. COONS, Ms. CORTEZ MASTO, Ms. DUCKWORTH, Mrs. FEINSTEIN, Mr. FETTERMAN, Mrs. GILLIBRAND, Ms. HASSAN, Mr. HEINRICH, Ms. HIRONO, Mr. KAINE, Mr. KING, Ms. KLO- BUCHAR, Mr. MARKEY, Mr. MERKLEY, Mr. MURPHY, Mrs. MURRAY, Mr. PETERS, Mr. REED, Ms. ROSEN, Mr. SANDERS, Mr. SCHATZ, Mr. SCHU- MER, Mrs. SHAHEEN, Ms. SMITH, Ms. STABENOW, Mr. VAN HOLLEN, Mr. WARNER, Ms. WARREN, Mr. WELCH, and Mr. WHITEHOUSE) intro- duced the following bill; which was read twice and referred to the Com- mittee on Finance A BILL To amend the Internal Revenue Code of 1986 to expand the earned income and child tax credits, 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. 3 This Act may be cited as the ‘‘Working Families Tax 4 Relief Act of 2023’’. 5 VerDate Sep 11 2014 23:36 Jul 07, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S1992.IS S1992 kjohnson on DSK79L0C42PROD with BILLS 2 •S 1992 IS TITLE I—EXPANSION OF THE 1 EARNED INCOME CREDIT 2 SEC. 101. PERMANENT EXTENSION OF EARNED INCOME 3 CREDIT RULES FOR INDIVIDUALS WITHOUT 4 QUALIFYING CHILDREN. 5 (a) DECREASE IN MINIMUM AGE FOR CREDIT.— 6 (1) IN GENERAL.—Subclause (II) of section 7 32(c)(1)(A)(ii) of the Internal Revenue Code of 8 1986 is amended by striking ‘‘age 25’’ and inserting 9 ‘‘the applicable minimum age’’. 10 (2) APPLICABLE MINIMUM AGE.—Paragraph 11 (1) of section 32(c) of such Code is amended by add- 12 ing at the end the following new subparagraph: 13 ‘‘(F) APPLICABLE MINIMUM AGE.—For 14 purposes of this paragraph— 15 ‘‘(i) IN GENERAL.—The term ‘applica- 16 ble minimum age’ means— 17 ‘‘(I) except as otherwise provided 18 in this clause, age 19, 19 ‘‘(II) in the case of a specified 20 student (other than a qualified former 21 foster youth or a qualified homeless 22 youth), age 24, and 23 VerDate Sep 11 2014 23:36 Jul 07, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1992.IS S1992 kjohnson on DSK79L0C42PROD with BILLS 3 •S 1992 IS ‘‘(III) in the case of a qualified 1 former foster youth or a qualified 2 homeless youth, age 18. 3 ‘‘(ii) SPECIFIED STUDENT.—For pur- 4 poses of this subparagraph, the term ‘spec- 5 ified student’ means, with respect to any 6 taxable year, an individual who is an eligi- 7 ble student (as defined in section 8 25A(b)(3)) during at least 5 calendar 9 months during the taxable year. 10 ‘‘(iii) QUALIFIED FORMER FOSTER 11 YOUTH.—For purposes of this subpara- 12 graph, the term ‘qualified former foster 13 youth’ means an individual who— 14 ‘‘(I) on or after the date that 15 such individual attained age 14, was 16 in foster care provided under the su- 17 pervision or administration of an enti- 18 ty administering (or eligible to admin- 19 ister) a plan under part B or part E 20 of title IV of the Social Security Act 21 (without regard to whether Federal 22 assistance was provided with respect 23 to such child under such part E), and 24 VerDate Sep 11 2014 23:36 Jul 07, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S1992.IS S1992 kjohnson on DSK79L0C42PROD with BILLS 4 •S 1992 IS ‘‘(II) provides (in such manner 1 as the Secretary may provide) consent 2 for entities which administer a plan 3 under part B or part E of title IV of 4 the Social Security Act to disclose to 5 the Secretary information related to 6 the status of such individual as a 7 qualified former foster youth. 8 ‘‘(iv) QUALIFIED HOMELESS 9 YOUTH.—For purposes of this subpara- 10 graph, the term ‘qualified homeless youth’ 11 means, with respect to any taxable year, 12 an individual who certifies, in a manner as 13 provided by the Secretary, that such indi- 14 vidual is either an unaccompanied youth 15 who is a homeless child or youth, or is un- 16 accompanied, at risk of homelessness, and 17 self-supporting.’’. 18 (b) ELIMINATION OF MAXIMUM AGE FOR CREDIT.— 19 Subclause (II) of section 32(c)(1)(A)(ii) of the Internal 20 Revenue Code of 1986 is amended by striking ‘‘but not 21 attained age 65’’. 22 (c) INCREASE IN CREDIT AND PHASEOUT PERCENT- 23 AGES.—The table contained in paragraph (1) of section 24 32(b) of the Internal Revenue Code of 1986 is amended 25 VerDate Sep 11 2014 23:36 Jul 07, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S1992.IS S1992 kjohnson on DSK79L0C42PROD with BILLS 5 •S 1992 IS by striking ‘‘7.65’’ each place it appears and inserting 1 ‘‘15.3’’. 2 (d) INCREASE IN EARNED INCOME AND PHASEOUT 3 AMOUNTS.—The table contained in subparagraph (A) of 4 section 32(b)(2) of the Internal Revenue Code of 1986 is 5 amended— 6 (1) by striking ‘‘$4,220’’ and inserting 7 ‘‘$9,820’’, and 8 (2) by striking ‘‘$5,280’’ and inserting 9 ‘‘$11,610’’. 10 (e) INFLATION ADJUSTMENTS.— 11 (1) IN GENERAL.—Paragraph (1) of section 12 32(j) of the Internal Revenue Code of 1986 is 13 amended to read as follows: 14 ‘‘(1) IN GENERAL.—In the case of any taxable 15 year beginning after— 16 ‘‘(A) 2021, in the case of the dollar 17 amount in subsection (i)(1), 18 ‘‘(B) 2024, in the case of the dollar 19 amounts in the third row of the table in sub- 20 section (b)(2)(A), and 21 ‘‘(C) 2015, in any other case, 22 each of the dollar amounts in subsections (b)(2) and 23 (i)(1) shall be increased by an amount equal to the 24 inflation amount.’’. 25 VerDate Sep 11 2014 23:36 Jul 07, 2023 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S1992.IS S1992 kjohnson on DSK79L0C42PROD with BILLS 6 •S 1992 IS (2) INFLATION AMOUNT.—Subsection (j) of sec- 1 tion 32 of such Code is amended by adding at the 2 end the following new paragraph: 3 ‘‘(3) INFLATION AMOUNT.—For purposes of 4 paragraph (1), the inflation amount with respect to 5 any dollar amount for any taxable year is the 6 amount equal to— 7 ‘‘(A) such dollar amount, multiplied by 8 ‘‘(B) the percentage (if any) by which— 9 ‘‘(i) the CPI (as defined in section 10 1(f)(4)) for the calendar year preceding 11 the year in which the taxable year begins, 12 exceeds 13 ‘‘(ii) the CPI (as so defined) for— 14 ‘‘(I) in the case of amounts in 15 the third row of the table in sub- 16 section (b)(2)(A), 2023, 17 ‘‘(II) in the case of any other 18 amount in subsection (b)(2)(A), 1995, 19 ‘‘(III) in the case of the $5,000 20 amount in subsection (b)(2)(B), 2008, 21 and 22 ‘‘(IV) in the case of the $10,000 23 amount in subsection (i)(1), 2020.’’. 24 VerDate Sep 11 2014 23:36 Jul 07, 2023 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S1992.IS S1992 kjohnson on DSK79L0C42PROD with BILLS 7 •S 1992 IS (f) CONFORMING AMENDMENT.—Section 32 of the 1 Internal Revenue Code of 1986 is amended by striking 2 subsection (n). 3 (g) EFFECTIVE DATE.—The amendments made by 4 this section shall apply to taxable years beginning after 5 December 31, 2023. 6 SEC. 102. APPLICATION OF EARNED INCOME CREDIT TO 7 POSSESSIONS OF THE UNITED STATES. 8 (a) PUERTO RICO.—Subparagraph (B) of section 9 7530(a)(1) of the Internal Revenue Code of 1986 is 10 amended by striking ‘‘in the case of calendar years 2021 11 through 2025,’’. 12 (b) POSSESSIONS WITH MIRROR CODE TAX SYS- 13 TEMS.—Subparagraph (B) of section 7530(b)(1) of the 14 Internal Revenue Code of 1986 is amended by striking ‘‘in 15 the case of calendar years 2021 through 2025,’’. 16 (c) AMERICAN SAMOA.—Subparagraph (B) of section 17 7530(c)(1) of the Internal Revenue Code of 1986 is 18 amended by striking ‘‘in the case of calendar years 2021 19 through 2025,’’. 20 SEC. 103. ELECTION TO USE PRIOR YEAR EARNED INCOME. 21 (a) IN GENERAL.—Paragraph (2) of section 32(c) of 22 the Internal Revenue Code of 1986 is amended by adding 23 at the end the following new subparagraph: 24 VerDate Sep 11 2014 23:36 Jul 07, 2023 Jkt 039200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S1992.IS S1992 kjohnson on DSK79L0C42PROD with BILLS 8 •S 1992 IS ‘‘(C) ELECTION TO USE PRIOR YEAR 1 EARNED INCOME.— 2 ‘‘(i) IN GENERAL.—If the earned in- 3 come of the taxpayer for any taxable year 4 is less than the earned income of the tax- 5 payer for the preceding taxable year, the 6 credit allowed under subsection (a) may, at 7 the election of the taxpayer, be determined 8 by substituting— 9 ‘‘(I) such earned income for such 10 preceding taxable year, for 11 ‘‘(II) such earned income for the 12 taxable year for which such credit is 13 being determined. 14 ‘‘(ii) APPLICATION TO JOINT RE- 15 TURNS.—For purposes of clause (i), in the 16 case of a joint return, the earned income 17 of the taxpayer for the preceding taxable 18 year shall be the sum of the earned income 19 of each spouse for such taxable year. 20 ‘‘(iii) SPECIAL RULES.— 21 ‘‘(I) ERRORS TREATED AS MATH- 22 EMATICAL ERRORS.—For purposes of 23 section 6213, an incorrect use on a re- 24 turn of earned income pursuant to 25 VerDate Sep 11 2014 23:36 Jul 07, 2023 Jkt 039200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S1992.IS S1992 kjohnson on DSK79L0C42PROD with BILLS 9 •S 1992 IS clause (i) shall be treated as a mathe- 1 matical or clerical error. 2 ‘‘(II) NO EFFECT ON DETER- 3 MINATION OF GROSS INCOME, ETC.— 4 Except as otherwise provided in this 5 subparagraph, this title shall be ap- 6 plied without regard to any substi- 7 tution under clause (i).’’. 8 (b) EFFECTIVE DATE.—The amendment made by 9 subsection (a) shall apply to taxable years beginning after 10 December 31, 2023. 11 TITLE II—EXPANSION OF THE 12 CHILD TAX CREDIT 13 SEC. 201. PERMANENT ESTABLISHMENT OF CHILD TAX 14 CREDIT WITH MONTHLY ADVANCE PAYMENT. 15 (a) CREDIT AMOUNT.—Subsection (a) of section 24 16 of the Internal Revenue Code of 1986 is amended by strik- 17 ing ‘‘equal to $1,000’’ and inserting ‘‘equal to— 18 ‘‘(1) $250 ($300 in the case of a qualifying 19 child who has not attained age 6 as of the close of 20 the taxable year), multiplied by 21 ‘‘(2) the number of qualifying months of the 22 taxpayer occurring during the taxable year.’’. 23 VerDate Sep 11 2014 23:36 Jul 07, 2023 Jkt 039200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S1992.IS S1992 kjohnson on DSK79L0C42PROD with BILLS 10 •S 1992 IS (b) LIMITATION BASED ON ADJUSTED GROSS IN- 1 COME.—Subsection (b) of section 24 of the Internal Rev- 2 enue Code of 1986 is amended to read as follows: 3 ‘‘(b) LIMITATIONS BASED ON MODIFIED ADJUSTED 4 GROSS INCOME.— 5 ‘‘(1) INITIAL REDUCTION.— 6 ‘‘(A) IN GENERAL.—The amount of the 7 credit allowable under subsection (a) shall be 8 reduced (but not below zero) by 5 percent of 9 the excess (if any) of the taxpayer’s modified 10 adjusted gross income for the applicable taxable 11 year over the initial threshold amount in effect 12 for such applicable taxable year. 13 ‘‘(B) LIMITATION ON INITIAL REDUC- 14 TION.—The amount of the reduction under sub- 15 paragraph (A) shall not exceed the lesser of— 16 ‘‘(i) the excess (if any) of— 17 ‘‘(I) the credit allowable under 18 subsection (a) for the taxable year de- 19 termined without regard to this para- 20 graph, over 21 ‘‘(II) the amount which would be 22 described in subclause (I) if sub- 23 section (a)(1) were applied by sub- 24 stituting ‘$166.67’ for ‘$250 ($300 in 25 VerDate Sep 11 2014 23:36 Jul 07, 2023 Jkt 039200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S1992.IS S1992 kjohnson on DSK79L0C42PROD with BILLS 11 •S 1992 IS the case of a qualifying child who has 1 not attained age 6 as of the close of 2 the taxable year)’ and subsection (i) 3 did not apply, or 4 ‘‘(ii) 5 percent of the excess of the 5 secondary threshold amount over the initial 6 threshold amount. 7 ‘‘(2) SECONDARY REDUCTION.—The amount of 8 the credit allowable under subsection (a), determined 9 after the application of paragraph (1), shall be fur- 10 ther reduced (but not below zero) by 5 percent of 11 the excess (if any) of the taxpayer’s modified ad- 12 justed gross income for the applicable taxable year 13 over the secondary threshold amount. 14 ‘‘(3) THRESHOLD AMOUNTS.—For purposes of 15 this subsection— 16 ‘‘(A) INITIAL THRESHOLD AMOUNT.—The 17 term ‘initial threshold amount’ means— 18 ‘‘(i) $150,000, in the case of a joint 19 return or surviving spouse (as defined in 20 section 2(a)), 21 ‘‘(ii) 1⁄2 the dollar amount in effect 22 under clause (i), in the case of a married 23 individual filing a separate return, and 24 ‘‘(iii) $112,500, in any other case. 25 VerDate Sep 11 2014 23:36 Jul 07, 2023 Jkt 039200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S1992.IS S1992 kjohnson on DSK79L0C42PROD with BILLS 12 •S 1992 IS ‘‘(B) SECONDARY THRESHOLD AMOUNT.— 1 The term ‘secondary threshold amount’ 2 means— 3 ‘‘(i) $400,000, in the case of a joint 4 return or surviving spouse (as defined in 5 section 2(a)), 6 ‘‘(ii) $300,000, in the case of a head 7 of household (as defined in section 2(b)), 8 and 9 ‘‘(iii) $200,000, in any other case. 10 ‘‘(4) OTHER TERMS.—For purposes of this sub- 11 section— 12 ‘‘(A) APPLICABLE TAXABLE YEAR.—The 13 term ‘applicable taxable year’ means, with re- 14 spect to any taxable year for which the credit 15 under this section is determined— 16 ‘‘(i) such taxable year, or 17 ‘‘(ii) if the taxpayer elects the applica- 18 tion of this clause (at such time and in 19 such form and manner as the Secretary 20 may provide), the preceding taxable year 21 or the second preceding taxable year (as 22 specified in such election). 23 ‘‘(B) MODIFIED ADJUSTED GROSS IN- 24 COME.—The term ‘modified adjusted gross in- 25 VerDate Sep 11 2014 23:36 Jul 07, 2023 Jkt 039200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S1992.IS S1992 kjohnson on DSK79L0C42PROD with BILLS 13 •S 1992 IS come’ means adjusted gross income increased 1 by any amount excluded from gross income 2 under section 911, 931, or 933.’’. 3 (c) INFLATION ADJUSTMENTS.—Subsection (i) of 4 section 24 of the Internal Revenue Code of 1986 is amend- 5 ed to read as follows: 6 ‘‘(i) ADJUSTMENTS FOR INFLATION.—In the case of 7 any taxable year beginning after December 31, 2024— 8 ‘‘(1) IN GENERAL.—The dollar amounts in sub- 9 section (a) and clauses (i) and (iii) of subsection 10 (b)(3)(A) shall each be increased by an amount 11 equal to— 12 ‘‘(A) such dollar amount, multiplied by 13 ‘‘(B) the percentage (if any) by which— 14 ‘‘(i) the CPI (as defined in section 15 1(f)(4)) for the calendar year preceding 16 the calendar year in which such month be- 17 gins, exceeds 18 ‘‘(ii) the CPI (as so defined) for cal- 19 endar year 2023. 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