119-hr2927

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2927 Introduced in House

    (IH) ]

<DOC>

119th CONGRESS
 1st Session
 H. R. 2927

 To amend the Internal Revenue Code of 1986 to increase the earned 
 income tax credit, child tax credit, and for other purposes.

_______________________________________________________________________

 IN THE HOUSE OF REPRESENTATIVES

 April 17, 2025

 Mrs. Cherfilus-McCormick (for herself, Mrs. McIver, Mr. Johnson of 
 Georgia, and Ms. Tlaib) introduced the following bill; which was 
 referred to the Committee on Ways and Means

_______________________________________________________________________

 A BILL

 To amend the Internal Revenue Code of 1986 to increase the earned 
 income tax credit, child tax credit, and for other purposes.

 Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; REFERENCES; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``All-Americans Tax 
Relief Act of 2025''.

    (b) References.--Except as otherwise expressly provided, whenever 
in this Act an amendment or repeal is expressed in terms of an 
amendment to, or repeal of, a section or other provision, the reference 
shall be considered to be made to a section or other provision of the 
Internal Revenue Code of 1986.
            (c) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; references; table of contents.

Sec. 2. Expansion of earned income tax credit.

Sec. 3. Child tax credit made fully refundable.

Sec. 4. Medical expenses deduction expanded and allowed to non-
 itemizers.

Sec. 5. Deduction for daycare expenses.

Sec. 6. Commuting expense deduction.

Sec. 7. Tutoring expenses deduction.

Sec. 8. Exclusion of interest payments on credit card debt.

Sec. 9. Rent deduction for primary residence.

Sec. 10. Exclusion of discharge of indebtedness.

Sec. 11. Increase in capital gains rate.

SEC. 2. EXPANSION OF EARNED INCOME TAX CREDIT.

    (a) Decrease in Phaseout Percentage.--

Section 32

    (b)

    (1) is amended 
to read as follows:
 ``

    (1) Percentages.--The credit percentage and phaseout 
 percentage shall be determined as follows:

----------------------------------------------------------------------------------------------------------------
 The credit
 ``In the case of an eligible individual percentage The phaseout percentage is:
 with: is:
----------------------------------------------------------------------------------------------------------------
1 qualifying child......................... 38 20
2 qualifying children...................... 43 25
3 or more qualifying children.............. 45 25
No qualifying children..................... 30 (35 in 15''.
 the case of
 a joint
 return)
----------------------------------------------------------------------------------------------------------------

    (b) Increase in Maximum Credit Amount.--

Section 32

    (b)

    (2) is amended 
to read as follows:
 ``

    (2) Amounts.--
 ``
        (B) Earned income amount.--The term `earned 
 income amount' means--
 ``
            (i) in the case of an eligible individual 
 with 1 qualifying child, $15,000,
 ``
            (ii) in the case of an individual with 2 
 or more qualifying children, $20,000, or
 ``
            (iii) in the case of an individual with 
 no children--
 ``
            (I) in the case of a joint 
 return, $10,000, or
 ``
            (II) in the case of any other 
 individual, $8,500.
 ``
            (C) Phaseout amount.--The phaseout amount shall 
 be--
 ``
            (i) $47,120 in the case of a joint 
 return, or
 ``
            (ii) $40,000 in the case of any other 
 individual.''.
            (c) Conforming Amendment.--

Section 32

    (j)

    (1) is amended to read as 
follows:
 ``

    (1) In general.--In the case of any taxable year 
 beginning after 2027 (2021 in the case of the dollar amount in 
 subsection
            (i) (1) ), each of the dollar amounts in subsections

    (b)

    (2) and
            (i) (1) 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 in which 
 the taxable year begins, determined by substituting in 
 subparagraph
        (A)
            (ii) thereof--
 ``
            (i) in the case of amounts in subsection

    (b)

    (2) , `calendar year 2026' for `calendar year 
 2016', and
 ``
            (ii) in the case of the $10,000 amount in 
 subsection
            (i) (1) , `calendar year 2020' for 
 `calendar year 2016'.''.
            (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2026.

SEC. 3. CHILD TAX CREDIT MADE FULLY REFUNDABLE.

    (a) In General.--Subpart C of part IV of subchapter A of chapter 1 
of subtitle A is amended by inserting after 

section 36B the following 
new section:

``

SEC. 36D. CHILD TAX CREDIT.

 ``

    (a) Allowance of Credit.--
 ``There shall be allowed as a credit against the tax 
 imposed by this chapter for the taxable year an amount equal to 
 the sum of--
 ``

    (1) $2,000 for each of up to 3 qualifying children of the 
 taxpayer for which the taxpayer is allowed a deduction under 
 

section 151, plus
 ``

    (2) $500 for each other such qualifying child of the 
 taxpayer.
 ``

    (b) Limitations.--
 ``

    (1) Limitation based on adjusted gross income.--
 ``The amount of the credit allowable under 
 subsection

    (a) shall be reduced (but not below zero) by 
 $50 for each $1,000 (or fraction thereof) by which the 
 taxpayer's modified adjusted gross income exceeds the 
 threshold amount. For purposes of the preceding 
 sentence, the term `modified adjusted gross income' 
 means adjusted gross income increased by any amount 
 excluded from gross income under 

section 911, 931, or 
 933.
 ``

    (2) Threshold amount.--For purposes of paragraph

    (1) , the 
 term `threshold amount' means--
 ``
        (A) $110,000 in the case of a joint return,
 ``
        (B) $75,000 in the case of an individual who is 
 not married, and
 ``
            (C) $55,000 in the case of a married individual 
 filing a separate return.
 For purposes of this paragraph, marital status shall be 
 determined under 

section 7703.
 ``
            (c) Qualifying Child.--For purposes of this section--
 ``

    (1) In general.--
 ``The term `qualifying child' means a qualifying 
 child of the taxpayer (as defined in 

section 152
            (c) ) 
 who has not attained age 17.
 ``

    (2) Exception for certain noncitizens.--
 ``The term `qualifying child' shall not include any 
 individual who would not be a dependent if subparagraph
        (A) of 

section 152

    (b)

    (3) were applied without regard to 
 all that follows `resident of the United States'.
 ``
            (d) Social Security Number Required.--No credit shall be allowed 
under this section to a taxpayer with respect to any qualifying child 
unless the taxpayer includes the social security number of the taxpayer 
(and the taxpayer's spouse, in the case of a joint return) and of such 
child on the return of tax for the taxable year. For purposes of the 
preceding sentence, the term `social security number' means a social 
security number issued to an individual by the Social Security 
Administration, but only if the social security number is issued--
 ``

    (1) to a citizen of the United States or pursuant to 
 subclause
            (I) (or that portion of subclause
            (III) that relates 
 to subclause
            (I) ) of 

section 205
            (c) (2)
        (B)
            (i) of the Social 
 Security Act, and
 ``

    (2) before the due date for such return.
 ``

    (e) Taxable Year Must Be Full Taxable Year.--
 ``Except in the case of a taxable year closed by reason of 
 the death of the taxpayer, no credit shall be allowable under 
 this section in the case of a taxable year covering a period of 
 less than 12 months.
 ``

    (f) Restrictions on Taxpayers Who Improperly Claimed Credit in 
Prior Year.--
 ``

    (1) Taxpayers making prior fraudulent or reckless 
 claims.--
 ``
        (A) In general.--
 ``No credit shall be allowed under this 
 section for any taxable year in the 
 disallowance period.
 ``
        (B) Disallowance period.--For purposes of 
 subparagraph
        (A) , the disallowance period is--
 ``
            (i) the period of 10 taxable years after 
 the most recent taxable year for which there 
 was a final determination that the taxpayer's 
 claim of credit under this section was due to 
 fraud, and
 ``
            (ii) the period of 2 taxable years after 
 the most recent taxable year for which there 
 was a final determination that the taxpayer's 
 claim of credit under this section was due to 
 reckless or intentional disregard of rules and 
 regulations (but not due to fraud).
 ``

    (2) Taxpayers making improper prior claims.--
 ``In the case of a taxpayer who is denied credit 
 under this section for any taxable year as a result of 
 the deficiency procedures under subchapter B of chapter 
 63, no credit shall be allowed under this section for 
 any subsequent taxable year unless the taxpayer 
 provides such information as the Secretary may require 
 to demonstrate eligibility for such credit.
 ``

    (g) Application of Credit in Possessions.--
 ``

    (1) Mirror code possessions.--
 ``
        (A) In general.--
 ``The Secretary shall pay to each 
 possession of the United States with a mirror 
 code tax system amounts equal to the loss (if 
 any) to that possession by reason of the 
 application of this section (determined without 
 regard to this subsection) with respect to 
 taxable years beginning after 2020. Such 
 amounts shall be determined by the Secretary 
 based on information provided by the government 
 of the respective possession.
 ``
        (B) Coordination with credit allowed against 
 united states income taxes.--
 ``No credit shall be allowed under this 
 section for any taxable year to any individual 
 to whom a credit is allowable against taxes 
 imposed by a possession of the United States 
 with a mirror code tax system by reason of the 
 application of this section in such possession 
 for such taxable year.
 ``
            (C) Mirror code tax system.--
 ``For purposes of this paragraph, the term 
 `mirror code tax system' means, with respect to 
 any possession of the United States, the income 
 tax system of such possession if the income tax 
 liability of the residents of such possession 
 under such system is determined by reference to 
 the income tax laws of the United States as if 
 such possession were the United States.
 ``

    (2) Puerto rico.--The credit determined under this 
 section shall be allowable to any bona fide resident of Puerto 
 Rico (within the meaning of 

section 937

    (a) ).
 ``

    (3) American samoa.--
 ``
        (A) In general.--
 ``The Secretary shall pay to American Samoa 
 amounts estimated by the Secretary as being 
 equal to the aggregate benefits that would have 
 been provided to residents of American Samoa by 
 reason of the application of this section for 
 taxable years beginning after 2020 if the 
 provisions of this section had been in effect 
 in American Samoa (applied as if American Samoa 
 were the United States and without regard to 
 the application of this section to bona fide 
 residents of Puerto Rico under subsection
            (i) (1) ).
 ``
        (B) Distribution requirement.--
 ``Subparagraph
        (A) shall not apply unless 
 American Samoa has a plan, which has been 
 approved by the Secretary, under which American 
 Samoa will promptly distribute such payments to 
 its residents.
 ``
            (C) Coordination with credit allowed against 
 united states income taxes.--
 ``
            (i) In general.--
 ``In the case of a taxable year 
 with respect to which a plan is 
 approved under subparagraph
        (B) , this 
 section (other than this subsection) 
 shall not apply to any individual 
 eligible for a distribution under such 
 plan.
 ``
            (ii) Application of section in event of 
 absence of approved plan.--In the case of a 
 taxable year with respect to which a plan is 
 not approved under subparagraph
        (B) rules 
 similar to the rules of paragraph

    (2)
        (B) shall 
 apply with respect to bona fide residents of 
 American Samoa (within the meaning of 

section 937

    (a) ).
 ``

    (4) Treatment of payments.--
 ``For purposes of 

section 1324 of title 31, United 
 States Code, the payments under this subsection shall 
 be treated in the same manner as a refund due from a 
 credit provision referred to in subsection

    (b)

    (2) of 
 such section.
 ``

    (h) Inflation Adjustment.--
 ``

    (1) In general.--In the case of any taxable year 
 beginning after 2025, the dollar amounts in subsections

    (a) and

    (b) 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 in which 
 the taxable year begins, determined by substituting 
 `calendar year 2024' for `calendar year 2016' in 
 subparagraph
        (A)
            (ii) thereof.
 ``

    (2) Rounding.--If any increase under paragraph

    (1) is not 
 a multiple of $50, such increase shall be rounded to the 
 nearest multiple of $50.''.

    (b) Clerical Amendment.--The table of sections for subpart C of 
part IV of subchapter A of chapter 1 of subtitle A is amended by 
inserting after the item relating to 

section 36B the following new 
section:

``

Sec. 36D. Child tax credit.''.
            (c) Conforming Amendments.--

    (1) The table of sections for subpart A of part IV of 
 subchapter A of chapter 1 of subtitle A is amended by striking 
 the item relating to 

section 24.

    (2) Section 26

    (b)

    (2) is amended by inserting ``and'' after 
 the comma in subparagraph
            (X) , by striking ``, and'' at the end 
 of subparagraph
        (Y) , and by striking subparagraph
        (Z) .

    (3) Section 45R

    (f)

    (3)
        (B) is amended by inserting ``(as in 
 effect on the day before the date of the enactment of the [All-
 Americans Tax Relief Act of 2025])'' after ``

section 24
            (d) (2)
            (C) ''.

    (4) Section 48D
            (d) (4) is amended by striking ``

section 24

    (k) '' and inserting ``

section 36D

    (j) ''.

    (5) Section 152

    (f)

    (6)
        (B)
            (ii) is amended by striking 
 ``

section 24'' and inserting ``

section 36D''.

    (6) Section 501
            (c) (26) is amended by striking ``

section 24
            (c) '' in the matter following subparagraph
            (D) and inserting 
 ``

section 36D
            (c) ''.

    (7) Section 3402

    (f)

    (1)
            (C) is amended by striking ``

section 24 (determined after application of subsection

    (j) thereof)'' 
 and inserting ``

section 36D''.

    (8) Section 6103
            (l) (13)
        (A)
            (v) is amended by striking 
 ``

section 24'' and inserting ``

section 36D''.

    (9) Section 6213

    (g)

    (2) is amended--
        (A) in subparagraph
            (I) , by striking ``

section 24

    (e) '' and inserting ``

section 36D
            (d) '',
        (B) in subparagraph
            (L) , by striking ``24, 32'' and 
 inserting ``32, 36D'', and
            (C) in subparagraph
        (P) , by striking ``

section 24

    (g)

    (2) or an entry on the return claiming the credit 
 under 

section 24'' and inserting ``

section 36D

    (f)

    (2) or 
 an entry on the return claiming the credit under 
 

section 36D''.

    (10) Section 6402
            (m) is amended by striking ``

section 24 
 (by reason of subsection
            (d) thereof)'' and inserting ``

section 36D''.

    (11) Section 6417

    (f) is amended by striking ``

section 24

    (k) '' and inserting ``

section 36D

    (h) ''.

    (12) Subchapter B of chapter 65 of subtitle F is amended by 
 repealing sections 6428, 6428A, 6428B, and 6429 and the table 
 of sections for such subchapter is amended by striking the 
 items relating to such sections.

    (13) Section 6695

    (g)

    (2) is amended by striking ``

section 24, 25A

    (a)

    (1) , or 32'' and inserting ``

section 25A

    (a)

    (1) , 32, 
 or 36D''.

    (14) Chapter 77 of subtitle F is amended by repealing 
 

section 7527A and the table of sections for such chapter is 
 amended by striking the item relating to such section.
            (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2026.

SEC. 4. MEDICAL EXPENSES DEDUCTION EXPANDED AND ALLOWED TO NON-
 ITEMIZERS.

    (a) Threshold Removed.--

Section 213

    (a) is amended by striking ``, 
to the extent'' and all that follows through ``gross income''.

    (b) Deduction Allowed to Non-Itemizers.--

Section 63

    (b) is amended 
by striking ``and'' at the end of paragraph

    (3) , by striking the period 
at the end of paragraph

    (4) and inserting ``, and'', and by adding at 
the end the following new paragraph:
 ``

    (5) the deduction provided in 

section 213.''.
            (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2026.

SEC. 5. DEDUCTION FOR DAYCARE EXPENSES.

    (a) In General.--Part VI of subchapter B of chapter 1 of subtitle A 
is amended by redesignating 

section 224 as 

section 225 and inserting 
after 

section 223 the following new section:

``

SEC. 224. DAYCARE EXPENSES.

 ``

    (a) In General.--In the case of an individual, there shall be 
allowed as a deduction for the taxable year an amount equal to the 
qualified daycare expenses of the individual for such taxable year.
 ``

    (b) Qualified Daycare Expenses.--For purposes of this section, 
the term `qualified daycare expenses' means the amounts paid or 
incurred by the individual as tuition for a dependent of the taxpayer 
who has not attained the age of 7 to attend a childcare institution (as 
defined in 

section 1355.20 of title 45, Code of Federal 
Regulations).''.

    (b) Deduction Allowed to Non-Itemizers.--

Section 63

    (b) (as amended 
by 

section 4) is further amended by striking ``and'' at the end of 
paragraph

    (4) , by striking the period at the end of paragraph

    (5) and 
inserting ``, and'', and by adding at the end the following new 
paragraph:
 ``

    (6) the deduction provided in 

section 224.''.
            (c) Clerical Amendment.--The table of sections for part VI of 
subchapter B of chapter 1 of subtitle A is amended by striking the item 
relating to 

section 224 and inserting the following new items:

``

Sec. 224. Daycare expenses.
``

Sec. 225. Cross reference.''.
            (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2026.

SEC. 6. COMMUTING EXPENSE DEDUCTION.

    (a) In General.--Part VI of subchapter B of chapter 1 of subtitle A 
is further amended by redesignating 

section 225 as 

section 226 and 
inserting after 

section 224 the following new section:

``

SEC. 225. COMMUTING EXPENSES.

 ``

    (a) In General.--In the case of an eligible individual, there 
shall be allowed as a deduction for the taxable year an amount equal to 
the qualified commuting expenses of the individual for such taxable 
year.
 ``

    (b) Qualified Commuting Expenses.--For purposes of this section, 
the term `qualified commuting expenses' means the amounts paid or 
incurred by the individual to use public transit to travel between such 
individual's principal residence (as such term is used in 

section 121) 
and such individual's place of work at which such individual works not 
less than 20 hours per week (determined by averaging the number of 
hours worked at such location during the taxable year over the number 
of weeks such individual is employed by the same employer at the same 
location during such taxable year).
 ``
            (c) Eligible Individual.--
 ``

    (1) In general.--For purposes of this section, the term 
 `eligible individual' means an individual whose modified 
 adjusted gross income does not exceed--
 ``
        (A) $250,000 in the case of a joint return, and
 ``
        (B) $125,000 in the case of any other individual.
 ``

    (2) Modified adjusted gross income.--For purposes of this 
 section, the term `modified adjusted gross income' means 
 adjusted gross income increased by an amount excluded from 
 gross income under sections 911, 931, and 933.
 ``
            (d) Regulations.--Not later than January 1, 2027, the Secretary 
shall issue such regulations or other guidance as may be necessary or 
appropriate to carry out the purposes of this section, including--
 ``

    (1) identifying qualified commuting expenses, and
 ``

    (2) establishing a process to verify such expenses 
 incurred by individuals.''.

    (b) Deduction Allowed to Non-Itemizers.--

Section 63

    (b) is further 
amended by striking ``and'' at the end of paragraph

    (5) , by striking 
the period at the end of paragraph

    (6) and inserting ``, and'', and by 
adding at the end the following new paragraph:
 ``

    (7) the deduction provided in 

section 225.''.
            (c) Clerical Amendment.--The table of sections for part VI of 
subchapter B of chapter 1 of subtitle A is further amended by striking 
the item relating to 

section 225 (as amended by 

section 5) and 
inserting the following new items:

``

Sec. 225. Commuting expenses.
``

Sec. 226. Cross reference.''.
            (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2026.

SEC. 7. TUTORING EXPENSES DEDUCTION.

    (a) In General.--Part VI of subchapter B of chapter 1 of subtitle A 
is further amended by redesignating 

section 226 as 

section 227 and 
inserting after 

section 225 the following new section:

``

SEC. 226. TUTORING EXPENSES.

 ``

    (a) In General.--In the case of an eligible individual, there 
shall be allowed as a deduction for the taxable year an amount equal to 
so much of the qualified tutoring expenses of the individual for such 
taxable year as does not exceed $2,500.
 ``

    (b) Qualified Tutoring Expenses.--For purposes of this section--
 ``

    (1) In general.--The term `qualified tutoring expenses' 
 means the amounts paid or incurred by the individual for 
 tutoring services for a dependent of the taxpayer who attends a 
 public elementary school or public secondary school (as defined 
 in 

section 8101 of the Elementary and Secondary Education Act 
 of 1965) eligible for funds under part A of title I of the 
 Elementary or Secondary Education Act of 1965 or any charter 
 school (as defined in 

section 4310 of such Act).
 ``

    (2) Tutoring services.--The term `tutoring services' 
 means direct tutoring of a student--
 ``
        (A) in a group of not more than 4 students per 
 instructor,
 ``
        (B) for the purpose of increasing academic 
 achievement in reading, math, science, writing and 
 language arts, social studies, history, civics, or a 
 foreign language,
 ``
            (C) through planned sessions of not less than 1 
 hour and not more than 3 hours which occur--
 ``
            (i) not less frequently than once per 
 week for 6 consecutive weeks, or
 ``
            (ii) not less frequently than once per 
 week for 9 weeks during a 1-year period, 
 consistent, one-on-one or small-group sessions.
 ``
            (c) Regulations.--The Secretary shall issue such regulations or 
other guidance as may be necessary or appropriate to carry out the 
purposes of this section.''.

    (b) Deduction Allowed to Non-Itemizers.--

Section 63

    (b) is further 
amended by striking ``and'' at the end of paragraph

    (5) , by striking 
the period at the end of paragraph

    (6) and inserting ``, and'', and by 
adding at the end the following new paragraph:
 ``

    (7) the deduction provided in 

section 226.''.
            (c) Clerical Amendment.--The table of sections for part VI of 
subchapter B of chapter 1 of subtitle A is further amended by striking 
the item relating to 

section 226 (as added by 

section 6) and inserting 
the following new items:

``

Sec. 226. Tutoring expenses.
``

Sec. 227. Cross reference.''.
            (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2026.

SEC. 8. EXCLUSION OF INTEREST PAYMENTS ON CREDIT CARD DEBT.

    (a) In General.--Part VI of subchapter B of chapter 1 of subtitle A 
is further amended by redesignating 

section 227 as 

section 228 and 
inserting after 

section 226 the following new section:

``

SEC. 227. CREDIT CARD INTEREST PAYMENTS.

 ``

    (a) In General.--In the case of an individual, there shall be 
allowed as a deduction for the taxable year an amount equal to so much 
of the interest paid by the individual during the taxable year on an 
open-end credit plan involving a credit card as does not exceed $2,500.
 ``

    (b) 

=== Definitions. ===
-The terms `open end consumer credit plan' and 
`credit card' have the meaning given such terms in 

section 103 of the 
Truth in Lending Act.''.

    (b) Deduction Allowed to Non-Itemizers.--

Section 63

    (b) is further 
amended by striking ``and'' at the end of paragraph

    (6) , by striking 
the period at the end of paragraph

    (7) and inserting ``, and'', and by 
adding at the end the following new paragraph:
 ``

    (8) the deduction provided in 

section 227.''.
            (c) Clerical Amendment.--The table of sections for part VI of 
subchapter B of chapter 1 of subtitle A is further amended by striking 
the item relating to 

section 226 (as added by 

section 6) and inserting 
the following new items:

``

Sec. 227. Credit card interest payments.
``

Sec. 228. Cross reference.''.
            (d) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2026.

SEC. 9. RENT DEDUCTION FOR PRIMARY RESIDENCE.

    (a) In General.--Part VI of subchapter B of chapter 1 of subtitle A 
is further amended by redesignating 

section 228 as 

section 229 and 
inserting after 

section 227 the following new section:

``

SEC. 228. RENT.

 ``

    (a) In General.--In the case of an individual, there shall be 
allowed as a deduction for the taxable year an amount equal to the 
qualifying rent payments of such individual for the taxable year.
 ``

    (b) Qualifying Rent Payments.--For purposes of this section, the 
term `qualifying rent payments' means amounts paid by the individual in 
rent for such individual's principal residence (as such term is used in 

section 121).
 ``
            (c) Income Phaseout.--
 ``

    (1) In general.--The amount of the deduction determined 
 under subsection

    (a) shall be reduced (but not below zero) by 
 an amount equal to 1 percent for every $500 ($1,000 in the case 
 of a joint return) or fraction thereof by which such 
 individual's modified adjusted gross income exceeds the 
 applicable threshold.
 ``

    (2) Applicable threshold.--For purposes of this 
 subsection, the term `applicable threshold' means--
 ``
        (A) $150,000 in the case of a joint return, or
 ``
        (B) $75,000 in the case of any other individual.
 ``

    (3) Modified adjusted gross income.--For purposes of this 
 section, the term `modified adjusted gross income' means 
 adjusted gross income increased by an amount excluded from 
 gross income under sections 911, 931, and 933.''.

    (b) Deduction Allowed to Non-Itemizers.--

Section 63

    (b) is further 
amended by striking ``and'' at the end of paragraph

    (8) , by striking 
the period at the end of paragraph

    (9) and inserting ``, and'', and by 
adding at the end the following new paragraph:
 ``

    (10) the deduction provided in 

section 228.''.
            (c) Clerical Amendment.--The table of sections for part VI of 
subchapter B of chapter 1 of subtitle A is further amended by striking 
the item relating to 

section 228 (as added by 

section 8) and inserting 
the following new items:

``

Sec. 228. Rent.
``

Sec. 229. Cross reference.''.
            (d) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2026.

SEC. 10. EXCLUSION OF DISCHARGE OF INDEBTEDNESS.

    (a) In General.--

Section 108

    (a)

    (1)
        (E) is amended to read as 
follows:
 ``
        (E) the taxpayer is an individual.''.

    (b) Coordination of Exclusions.--

Section 108

    (a)

    (2) is amended--

    (1) by striking subparagraph
            (C) ,

    (2) by redesignating subparagraphs
        (A) and
        (B) as 
 subparagraphs
        (B) and
            (C) , respectively,

    (3) by inserting before subparagraph
        (B) (as so 
 redesignated) the following new subparagraph:
 ``
        (A) Individual exclusion takes precedence.--
 Subparagraphs
        (A) ,
        (B) ,
            (C) , and
            (D) of paragraph

    (1) shall not apply to a discharge to which subparagraph
        (E) of such paragraph applies.'', and

    (4) in subparagraph
        (A) (as so redesignated), by inserting 
 ``over insolvency exclusion, qualified farm exclusion, and 
 qualified real property business exclusion'' after 
 ``precedence'' in the heading.
            (c) Conforming Amendments.--

    (1) Section 108 is amended by striking subsections

    (f) and

    (h) .

    (2) Section 163

    (h)

    (3)
        (F) is amended by striking clause
            (iv) .
            (d) Effective Date.--The amendments made by this section shall 
apply to debt incurred after December 31, 2026.

SEC. 11. INCREASE IN CAPITAL GAINS RATE.

    (a) In General.--

Section 1

    (h)

    (1)
            (D) is amended by striking ``20 
percent'' and inserting ``25 percent''.

    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning December 31, 2026.
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