S. 5078Senate119th Congress (2025-2027)In Committee

Small Tax Case Threshold Modernization Act

AI-Generated Summary

Updated July 29, 2026 at 3:52 AM UTC

The Small Tax Case Threshold Modernization Act raises the dollar amount that defines a “small dispute” in Tax Court from $50,000 to $100,000. It also adds a provision that the $100,000 limit will be automatically increased each year after 2026 based on a cost‑of‑living adjustment, with any increase rounded down to the nearest $1,000. The changes apply to any Tax Court case that starts after the law is enacted.

Key Provisions

Increases the small‑dispute threshold in Internal Revenue Code §7463 from $50,000 to $100,000.
Adds an inflation‑adjustment rule: for petitions filed in calendar years after 2026, the $100,000 amount is multiplied by the cost‑of‑living adjustment factor (using 2025 as the base year).
Rounds any calculated increase down to the nearest $1,000.
Updates the heading and table‑of‑contents language to refer to “small disputes” instead of the old $50,000 wording.
Makes the new rules effective for Tax Court proceedings that begin after the act’s enactment date.

Legislative Activity

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1 earlier action

SenateIntro Referral Latest Action

Read twice and referred to the Committee on Finance.

Finance Committee

July 22, 2026

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SenateIntro Referral

Introduced in Senate

July 22, 2026

SenateIntro Referral

Read twice and referred to the Committee on Finance.

Finance Committee

July 22, 2026

Bill Text

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Introduced in SenateIssued July 22, 2026

119th CONGRESS

2d Session

S. 5078

IN THE SENATE OF THE UNITED STATES

July 22, 2026

Mr. Cornyn (for himself and Mr. Luján) 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 adjust the threshold for conducting Tax Court proceedings relating to small disputes.

Short title

This Act may be cited as the Small Tax Case Threshold Modernization Act.

Adjustment of threshold for small disputes

(a)

In general

Section 7463 of the Internal Revenue Code of 1986 is amended—

(1)

by striking $50,000 each place it appears in subsections (a) and (f) and inserting $100,000, and

(2)

by adding at the end the following new subsection:

(g)

Inflation adjustment

(1)

In general

In the case of any petition or appeal filed in a calendar year beginning after 2026, each of the $100,000 amounts in subsections (a) and (f) shall be increased by an amount equal to—

(A)

such dollar amount, multiplied by

(B)

the cost-of-living adjustment determined under section 1(f)(3) for the calendar year, determined by substituting calendar year 2025 for calendar year 2016 in subparagraph (A)(ii) thereof.

(2)

Rounding

If any increase determined under paragraph (1) is not a multiple of $1,000, such increase shall be rounded to the next lowest multiple of $1,000.

(b)

Conforming amendments

(1)

The heading for section 7463 of such Code is amended by striking Disputes involving $50,000 or less and inserting Small disputes.

(2)

The item relating to section 7463 in the table of section for part II of subchapter C of chapter 76 of such Code is amended by striking Disputes involving $50,000 or less and inserting Small disputes.

(c)

Effective date

The amendments made by this section shall apply to proceedings commencing after the date of the enactment of this Act.