“To amend the Internal Revenue Code of 1986 to increase the earned income tax credit, child tax credit, and for other purposes.”
No CRS summary available for this bill.
This section designates the Act as the "All-Americans Tax Relief Act of 2025" and includes a table of contents listing its 11 sections.
This section expands the earned income tax credit for taxable years beginning after December 31, 2026, by revising the credit percentage and phaseout percentage in Section 32(b)(1) as follows: (1) for 1 qualifying child, to 38 percent credit and 20 percent phaseout (from 34 percent and 15.98 percent); (2) for 2 qualifying children, to 43 percent credit and 25 percent phaseout (from 40 percent and 21.06 percent); (3) for 3 or more qualifying children, to 45 percent credit and 25 percent phaseout (from 45 percent and 21.06 percent); and (4) for no qualifying children, to 30 percent credit (35 percent for joint returns) and 15 percent phaseout (from 7.65 percent for both). The section also (1) establishes in new Section 32(b)(2)(B) an earned income amount (i.e., income level at which maximum credit is reached) of $15,000 for 1 qualifying child (from approximately $12,400 in TY2024), $20,000 for 2 or more qualifying children (from approximately $17,400), and $10,000 for no qualifying children on a joint return or $8,500 otherwise (from approximately $8,300); (2) establishes in new Section 32(b)(2)(C) a phaseout amount (i.e., income level at which credit reduction begins) of $47,120 for joint returns or $40,000 otherwise, uniform across family sizes (replacing current family-size-differentiated amounts of approximately $18,600-$60,000 single filers and $25,500-$66,800 joint filers in TY2024); and (3) revises the inflation adjustment in Section 32(j)(1) to apply to taxable years beginning after 2027 using a calendar year 2026 base (from 2016) for amounts in subsection (b)(2) and a calendar year 2020 base (from 2016) for the $10,000 amount in subsection (i)(1).
This section establishes a new refundable child tax credit under new IRC §36D (inserted after §36B) of $2,000 per qualifying child (i.e., under age 17 and meeting §152(c) definition, excluding certain noncitizen children) for up to three such children of the taxpayer, plus $500 per additional qualifying child. The credit phases out (but not below zero) by $50 for each $1,000 (or fraction thereof) of modified adjusted gross income exceeding $110,000 ($75,000 for unmarried individuals; $55,000 for married filing separately). This section requires a Social Security number (issued timely by the Social Security Administration to U.S. citizens or certain others) for the taxpayer, spouse (if joint return), and each qualifying child; denies the credit for short taxable years (except deaths) and for taxpayers with prior fraudulent (10-year ban), reckless (2-year ban), or unsubstantiated claims; and applies the credit in U.S. possessions, including payments to mirror-code jurisdictions and American Samoa equivalent to losses from crediting residents, and direct allowability for Puerto Rico residents. (Thus, the credit is fully refundable against all federal income tax liability with any excess paid as a refund, expanding benefits to low-income families with qualifying children.)
This section expands the medical expense deduction by removing the adjusted gross income threshold (from 7.5% of AGI to fully deductible) and allowing the deduction for taxpayers claiming the standard deduction rather than itemizing. (As background, under current law, only itemizers may deduct qualified medical, dental, and long-term care expenses.) The changes apply to taxable years beginning after December 31, 2026.
This section establishes an above-the-line deduction for qualified daycare expenses (i.e., tuition paid for a dependent under age 7 to attend a childcare institution, as defined in 45 C.F.R. §1355.20) for taxable years beginning after December 31, 2026.
This section establishes an above-the-line deduction for qualified commuting expenses (i.e., public transit costs between an individual's principal residence and place of work, where the individual works an average of at least 20 hours per week at that location) for eligible individuals (i.e., those with modified adjusted gross income—AGI increased by certain foreign earned income exclusions—not exceeding $250,000 for joint returns or $125,000 for others). The provision applies to taxable years beginning after December 31, 2026, and directs the Secretary of the Treasury to issue implementing regulations by January 1, 2027.
This section establishes an above-the-line deduction of up to $2,500 for qualified tutoring expenses paid by an eligible individual for a dependent attending a public elementary or secondary school eligible for funds under part A of title I of the Elementary and Secondary Education Act of 1965 (i.e., schools serving disadvantaged students) or any charter school (as defined in that Act). Qualified tutoring expenses are for direct tutoring services in groups of no more than four students per instructor, to increase academic achievement in reading, math, science, writing and language arts, social studies, history, civics, or a foreign language, through planned sessions of 1-3 hours occurring at least weekly for six consecutive weeks or for nine weeks in a one-year period. The deduction applies to taxable years beginning after December 31, 2026.
This section establishes an above-the-line deduction of up to $2,500 for interest paid by an individual on credit card debt under an open-end consumer credit plan (as defined in the Truth in Lending Act) for taxable years beginning after December 31, 2026.
This section establishes an above-the-line deduction under new IRC §228 for an individual's qualifying rent payments (i.e., rent paid for the principal residence, as defined in IRC §121) for taxable years beginning after December 31, 2026. The deduction equals the full amount of qualifying rent payments but phases out (to zero) for modified adjusted gross income over $75,000 ($150,000 for joint returns), reduced by 1% for every $500 ($1,000 joint) or fraction thereof exceeding the threshold (with modified adjusted gross income defined as adjusted gross income increased by amounts excluded under IRC §§911, 931, and 933).
This section revises the exclusion from gross income for discharge of indebtedness under IRC §108(a)(1)(E) to apply if the taxpayer is an individual (from only if the discharge occurs in a title 11 bankruptcy case). It amends the coordination rules in §108(a)(2) to provide that the individual exclusion takes precedence over the exclusions for insolvency (§108(a)(1)(A)), qualified farm indebtedness (§108(a)(1)(B)), qualified real property business indebtedness (§108(a)(1)(C)), and qualified principal residence indebtedness (§108(a)(1)(D)). (Thus, individuals may exclude all discharge of indebtedness income for applicable debt, superseding other bases for exclusion.) It strikes §§108(f) (student loan discharge exclusion) and 108(h) (certain attribute reduction rules), and §163(h)(3)(F)(iv) (home mortgage interest limitation), as conforming amendments. The amendments apply to debt incurred after December 31, 2026.
This section increases the maximum long-term capital gains tax rate to 25% (from 20%) for taxable years beginning December 31, 2026.