“A bill to amend the Internal Revenue Code of 1986 to increase the standard deduction, and for other purposes.”
No CRS summary available for this bill.
This section designates the Act as the "Keep Your Pay Act" and sets forth its table of contents.
This section increases the standard deduction for taxable years beginning after December 31, 2025, and before January 1, 2036, to $56,250 (from $23,625) and $37,500 (from $15,750) each place those amounts appear in the temporary standard deduction increase provision and updates related inflation adjustment reference years to 2026 (from 2025) and 2025 (from 2024).
This section increases the individual income tax rates applicable to the two highest brackets to 41% (from 35%) and 43% (from 37%), respectively, for taxable years beginning after December 31, 2025, and before January 1, 2036.
This section permanently extends and expands the Earned Income Tax Credit (EITC) for individuals without qualifying children by striking the prior sunset provision, effective for taxable years beginning after December 31, 2025. It (1) lowers the minimum age to claim the credit to age 19 (from 25) generally, age 24 for students (as defined in IRC §152(f)(2)) other than qualified former foster youth or qualified homeless youth, and age 18 for qualified former foster youth or qualified homeless youth; (2) eliminates the maximum age limit of 65; (3) doubles the credit rate and phaseout rate to 15.3% (from 7.65%); (4) increases the maximum earned income amount to $9,820 (from $4,220) and phaseout amount to $11,610 (from $5,280); and (5) revises inflation adjustments for these dollar amounts with specified base years (e.g., 2025 for the phaseout amount, 1995 for the earned income amount).
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., those that use tax laws mirroring the Internal Revenue Code), and (3) American Samoa (previously limited to calendar years 2021 through 2025).
This section establishes an election allowing a taxpayer to substitute prior-year earned income for current-year earned income—when the latter is lower—in calculating the Earned Income Tax Credit (EITC), a refundable credit for low- and moderate-income workers (particularly those with qualifying children). For joint returns, prior-year earned income is the combined amount for both spouses; incorrect use of prior-year income is treated as a mathematical error under IRC §6213, and the election does not otherwise affect tax determinations. The provision applies to taxable years beginning after December 31, 2025.
This section establishes a refundable monthly child tax credit under new IRC §24A equal to the sum of monthly specified child allowances determined for each calendar month of the taxable year ($300 per specified child age 6 or older; $360 [120% of $300] per specified child under age 6; $2,400 [800% of $300] per specified child under 1 month old). A specified child is an individual under age 18 sharing the taxpayer's principal place of abode for more than half the month, receiving uncompensated care from the taxpayer, who is not the taxpayer's spouse, and who is a U.S. citizen, national, or resident (or, if the taxpayer is a U.S. citizen or national, legally adopted by or placed with the taxpayer for adoption). The monthly allowance phases down ratably (1/12 of 5% of excess modified adjusted gross income [MAGI]) over an initial threshold of $150,000 (joint return or surviving spouse)/$112,500 (other than married filing separately [MFS])/$75,000 (MFS), with the reduction capped to preserve a minimum benefit of $166.67 per child until the secondary threshold of $400,000/$300,000/$200,000, followed by further phaseout (not below zero); thresholds and $300 base amount indexed for inflation after 2025 (using 2023 CPI base for thresholds, 2025 for allowances, rounded to nearest $5,000/$10). This section also amends the permanent appropriation at 31 U.S.C. §1324(b)(2) to authorize disbursements for refunds due from §24A (added to the list of specified credits).