115th CONGRESS 2d Session |
To amend the Internal Revenue Code of 1986 to make permanent the individual tax rates in effect for taxable years 2018 through 2025.
January 10, 2018
Mr. Cruz introduced the following bill; which was read twice and referred to the Committee on Finance
To amend the Internal Revenue Code of 1986 to make permanent the individual tax rates in effect for taxable years 2018 through 2025.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. 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 “determined—” and all that follows in paragraph (2)(A) and inserting “determined by substituting ‘2017’ for ‘2016’ in paragraph (3)(A)(ii),”;
(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.”.
(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.