“To amend the Internal Revenue Code of 1986 to expand, and make permanent certain modifications of, the earned income credit.”
No CRS summary available for this bill.
This section permanently extends and expands the earned income tax credit (EITC) for individuals without qualifying children—currently available at a 7.65% rate with a minimum age of 25 and maximum age of 65—effective for taxable years beginning after December 31, 2025, by (1) lowering the minimum age to 19 (from 25), or to 24 for non-foster/homeless students and 18 for qualified former foster youth or homeless youth; (2) eliminating the maximum age limit; (3) doubling the credit rate and phaseout rate to 15.3% (from 7.65%); and (4) increasing the phase-in ceiling and phaseout floor to $9,820 and $11,610, respectively (from $4,220 and $5,280). The section further provides for annual inflation adjustments to these dollar amounts (generally using 1995 as the base year, with specified exceptions) and strikes the prior temporary extension provision.
This section makes permanent the application of the earned income tax credit (EITC)—a refundable tax credit for eligible low- and moderate-income workers—to (1) Puerto Rico, (2) possessions with mirror code tax systems (i.e., Guam and the Northern Mariana Islands), and (3) American Samoa (previously limited to calendar years 2021 through 2025).
This section establishes an election allowing taxpayers to substitute prior-year earned income for current-year earned income in calculating the earned income tax credit (EITC) if current-year earned income is lower. The election applies to joint returns using the sum of both spouses' prior-year earned income; treats incorrect elections as mathematical errors under section 6213; and does not otherwise affect gross income determinations. The amendment applies to taxable years beginning after December 31, 2025.