S. 2281 – A bill to amend the Internal Revenue Code of 1986 to make permanent the individ…

115th CONGRESS

2d Session

S. 2281

IN THE SENATE OF THE UNITED STATES

January 4, 2018

Mr. Cruz 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 rates in effect for taxable years 2018 through 2025.

Permanent modification of individual rate brackets

(a)

Married individuals filing joint returns and surviving spouses

The table contained in subsection (a) of section 1 of the Internal Revenue Code of 1986 is amended to read as follows:

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 in subsection (b) of section 1 of the Internal Revenue Code of 1986 is amended to read as follows:

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 surviving spouses and heads of households

The table contained in subsection (c) of section 1 of the Internal Revenue Code of 1986 is amended to read as follows:

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 $500,000	$45,689.50, plus 35% of the excess over $200,000.
Over $500,000	$150,689.50, plus 37% of the excess over $500,000.

(d)

Married individuals filing separate returns

The table contained in subsection (d) of section 1 of the Internal Revenue Code of 1986 is amended to read as follows:

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 subsection (e) of section 1 of the Internal Revenue Code of 1986 is amended to read as follows:

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.

(f)

Adjustment for inflation

Subsection (f) of section 1 of the Internal Revenue Code of 1986 is amended—

(1)

by striking 1993 in paragraph (1) and inserting 2018,

(2)

by striking 1992 in paragraph (2)(A)(i) and inserting 2017,

(3)

by striking a married individual filing a separate return in paragraph (7)(B) and inserting any unmarried individual other than a surviving spouse or head of household,

(4)

by striking married individuals filing separately in the heading of subparagraph (B) of paragraph (7) and inserting certain unmarried individuals, and

(5)

by striking paragraph (8).

(g)

Special rules for certain children with unearned income

Subsection (g) of section 1 of the Internal Revenue Code of 1986 is amended—

(1)

by striking paragraphs (1), (3), and (5),

(2)

by redesignating paragraphs (4), (6), and (7) as paragraphs (5), (7), and (8), respectively,

(3)

by redesignating paragraph (2) as paragraph (6) and by moving such paragraph to the position between paragraphs (5) and (7) (as so redesignated),

(4)

by inserting before paragraph (5) (as so redesignated) the following new paragraphs:

(1)

In general

In the case of a child to whom this subsection applies for the taxable year, the amount of tax imposed by this section on such child shall be determined as provided in paragraphs (2) and (3).

(2)

Modifications to applicable rate brackets

The income tax table otherwise applicable under this section to the child shall be applied with the following modifications:

(A)

24-percent bracket

The maximum taxable income which is taxed at a rate below 24 percent shall not be more than the sum of—

(i)

the earned taxable income of such child, plus

(ii)

the minimum taxable income for the 24-percent bracket in the table under subsection (e) (as adjusted under subsection (f)) for the taxable year.

(B)

35-percent bracket

The maximum taxable income which is taxed at a rate below 35 percent shall not be more than the sum of—

(i)

the earned taxable income of such child, plus

(ii)

the minimum taxable income for the 35-percent bracket in the table under subsection (e) (as adjusted under subsection (f)) for the taxable year.

(C)

37-percent bracket

The maximum taxable income which is taxed at a rate below 37 percent shall not be more than the sum of—

(i)

the earned taxable income of such child, plus

(ii)

the minimum taxable income for the 37-percent bracket in the table under subsection (e) (as adjusted under subsection (f)) for the taxable year.

(3)

Coordination with capital gains rates

For purposes of applying subsection (h)—

(A)

the maximum zero rate amount shall not be more than the sum of—

(i)

the earned taxable income of such child, plus

(ii)

the amount in effect under subsection (h)(12)(A)(iv) for the taxable year, and

(B)

the maximum 15-percent rate amount shall not be more than the sum of—

(i)

the earned taxable income of such child, plus

(ii)

the amount in effect under subsection (h)(12)(B)(iv) for the taxable year.

(4)

Earned taxable income

For purposes of this subsection, the term earned taxable income means, with respect to any child for any taxable year, the taxable income of such child reduced (but not below zero) by the net unearned income of such child.

, and

(5)

by striking paragraph (4)(A)(ii)(I) each place it appears in subparagraphs (A)(ii), (B)(i), and (B)(ii)(II) of paragraph (8) (as so redesignated) and inserting paragraph (5)(A)(ii)(I).

(h)

Capital gains brackets

Subsection (h) of section 1 of the Internal Revenue Code of 1986 is amended—

(1)

by striking which would (without regard to this paragraph) be taxed at a rate below 25 percent in paragraph (1)(B)(i) and inserting below the maximum zero rate amount,

(2)

by striking which would (without regard to this paragraph) be taxed at a rate below 39.6 percent in paragraph (1)(C)(ii)(I) and inserting below the maximum 15-percent rate amount, and

(3)

by adding at the end the following new paragraph:

(12)

Maximum amounts defined

For purposes of this subsection—

(A)

Maximum zero rate amount

The maximum zero rate amount shall be—

(i)

in the case of a joint return or surviving spouse, $77,200,

(ii)

in the case of an individual who is a head of household (as defined in section 2(b)), $51,700,

(iii)

in the case of any other individual (other than an estate or trust), an amount equal to ½ of the amount in effect for the taxable year under clause (i), and

(iv)

in the case of an estate or trust, $2,600.

(B)

Maximum 15-percent rate amount

The maximum 15-percent rate amount shall be—

(i)

in the case of a joint return or surviving spouse, $479,000 (½ such amount in the case of a married individual filing a separate return),

(ii)

in the case of an individual who is the head of a household (as defined in section 2(b)), $452,400,

(iii)

in the case of any other individual (other than an estate or trust), $425,800, and

(iv)

in the case of an estate or trust, $12,700.

(C)

Inflation adjustment

In the case of any taxable year beginning after 2018, each of the dollar amounts in subparagraphs (A) and (B) shall be increased by an amount equal to—

(i)

such dollar amount, multiplied by

(ii)

the cost-of-living adjustment determined under subsection (f)(3) for the calendar year in which the taxable year begins, determined by substituting calendar year 2017 for calendar year 2016 in subparagraph (A)(ii) thereof.

If any increase under this subparagraph is not a multiple of $50, such increase shall be rounded to the next lowest multiple of $50.

(i)

Conforming amendments

(1)

Section 1 of the Internal Revenue Code of 1986 is amended by striking subsections (i) and (j).

(2)

Section 3402(q)(1) of such Code is amended by striking third lowest and inserting fourth lowest.

(j)

Section 15 not To apply

Section 15 of the Internal Revenue Code of 1986 shall not apply to any change in a rate of tax by reason of this section.

(k)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2018.

A bill to amend the Internal Revenue Code of 1986 to make permanent the individual tax rates in effect for taxable years 2018 through 2025.

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