119-hr463

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 463 Introduced in House

    (IH) ]

<DOC>

119th CONGRESS
 1st Session
 H. R. 463

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

_______________________________________________________________________

 IN THE HOUSE OF REPRESENTATIVES

 January 15, 2025

 Mrs. Sykes 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 expand the earned income 
 and child tax credits, 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; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Lower Your Taxes 
Act''.

    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.

Sec. 2. Sense of Congress.

Sec. 3. Expansion of earned income tax credit.

Sec. 4. Payments to taxpayers determined by treating State non-
 refundable earned income tax credits as 
 refundable.

Sec. 5. Establishment of refundable child tax credit with monthly 
 advance payment.

Sec. 6. Capital gains rates not applicable to certain high income 
 taxpayers.

Sec. 7. Increase in rates of certain corporate taxes.

SEC. 2. SENSE OF CONGRESS.

 It is the sense of Congress that the net revenue derived from this 
Act should be used to reduce the national deficit, to the extent 
thereof, and thereafter to reduce the national debt.

SEC. 3. EXPANSION OF EARNED INCOME TAX CREDIT.

    (a) Credit Percentage.--The table contained in 

section 32

    (b)

    (1) of 
the Internal Revenue Code of 1986 is amended--

    (1) by striking ``34'' and inserting ``68'',

    (2) by striking ``40'' and inserting ``80'',

    (3) by striking ``45'' and inserting ``90'', and

    (4) by striking ``7.65'' in the column with the heading 
 ``The credit percentage is:'' and inserting ``35''.

    (b) Phaseout Percentage.--The table contained in 

section 32

    (b)

    (1) of such Code is amended--

    (1) by striking ``15.98'' and inserting ``7'',

    (2) by striking ``21.06'' both places it appears and 
 inserting ``10'', and

    (3) by striking ``7.65'' in the column with the heading 
 ``The phaseout percentage is:'' and inserting ``7''.
            (c) Earned Income Amount.--The table contained in 

section 32

    (b)

    (2)
        (A) of such Code is amended--

    (1) by striking ``$6,330'' and inserting ``$19,000'',

    (2) by striking ``$8,890'' and inserting ``$27,000'', and

    (3) by striking ``$4,220'' and inserting ``$15,000''.
            (d) Phaseout Amount.--

    (1) In general.--The table contained in 

section 32

    (b)

    (2)
        (A) of such Code is amended--
        (A) by striking ``$11,610'' both places it appears 
 and inserting ``$30,000'', and
        (B) by striking ``$5,280'' and inserting 
 ``$15,000''.

    (2) Joint returns.--

Section 32

    (b)

    (2)
        (B) of such Code is 
 amended by striking ``determined under subparagraph
        (A) shall 
 be increased by $5,000'' and inserting ``twice the amount 
 determined under subparagraph
        (A) ''.

    (3) Inflation adjustment.--

Section 32

    (j) of such Code is 
 amended to read as follows:
 ``

    (j) Inflation Adjustments.--
 ``

    (1) Earned income and phaseout amounts.--
 ``
        (A) In general.--In the case of any taxable year 
 beginning after 2026, each of the dollar amounts in 
 subsection

    (b)

    (2)
        (A) shall be increased by an amount 
 equal to--
 ``
            (i) such dollar amount, multiplied by
 ``
            (ii) the GDP adjustment determined under 
 subparagraph
        (B) for the calendar year in which 
 the taxable year begins.
 ``
        (B) GDP adjustment.--For purposes of this 
 paragraph, the term `GDP adjustment' for any calendar 
 year is the percentage (if any) by which--
 ``
            (i) the per capita nominal gross domestic 
 product for the preceding calendar year (as 
 determined by the Secretary), exceeds
 ``
            (ii) the per capita nominal gross 
 domestic product for calendar year 2025 (as 
 determined by the Secretary).
 ``
            (C) Rounding.--If any dollar amount in subsection

    (b)

    (2)
        (A) , after any increase under subparagraph
        (A) , 
 is not a multiple of $10, such dollar amount shall be 
 rounded to the nearest multiple of $10.
 ``

    (2) Excessive investment income.--
 ``
        (A) In general.--In the case of any taxable year 
 beginning after 2021, the dollar amount in subsection
            (i) (1) shall be increased by an amount equal to--
 ``
            (i) such dollar amount, multiplied by
 ``
            (ii) 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 2020' 
 for `calendar year 2016' in subparagraph
        (A)
            (ii) thereof.
 ``
        (B) Rounding.--If the dollar amount in subsection
            (i) (1) , after any increase under subparagraph
        (A) , is 
 not a multiple of $50, such dollar amount shall be 
 rounded to the next lowest multiple of $50.''.

    (e) Age Limitations.--

Section 32
            (c) (1)
        (A)
            (ii) 
            (II) of such Code is 
amended by striking ``has attained age 25 but not attained age 65'' and 
inserting ``has attained age 18''.

    (f) Notification of Taxpayers by Treasury of Potential Eligibility 
for the Earned Income Tax Credit.--

    (1) In general.--With respect to taxable years beginning in 
 calendar years after 2025, the Secretary shall establish a 
 program to notify (whether by electronic means or otherwise) 
 specified individuals that such individuals may be eligible for 
 the earned income tax credit.

    (2) Specified individual.--For purposes of this subsection, 
 the term ``specified individual'' means any individual who--
        (A) based on information available to the Secretary 
 related to the taxable year or the preceding taxable 
 year, the Secretary determines is likely to be eligible 
 for the earned income tax credit, and
        (B) either--
            (i) filed a return of tax for such taxable 
 year and did not claim the earned income tax 
 credit, or
            (ii) did not (as of such determination) 
 file a return of tax for such taxable year.

    (3) Secretary.--For purposes of this subsection, the term 
 ``Secretary'' means the Secretary of the Treasury or the 
 Secretary's delegate.

    (g) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2025.

SEC. 4. PAYMENTS TO TAXPAYERS DETERMINED BY TREATING STATE NON-
 REFUNDABLE EARNED INCOME TAX CREDITS AS REFUNDABLE.

    (a) In General.--The Secretary shall establish a program for making 
annual payments to eligible individuals equal to the State refundable 
earned income tax credit equivalency amount with respect to taxable 
years beginning in calendar years after 2025.

    (b) Eligible Individual.--For purposes of this section--

    (1) In general.--The term ``eligible individual'' means any 
 individual who is eligible for, and claims, a non-refundable 
 earned income tax credit for a taxable year beginning after 
 December 31, 2025, under the income tax laws of an eligible 
 State.

    (2) Eligible state.--The term ``eligible State'' means any 
 State if--
        (A) the Secretary determines that such States has 
 in effect, as of the date of the enactment of this Act, 
 a non-refundable earned income tax credit, and
        (B) such State enters into an agreement with the 
 Secretary to provide the Secretary such information as 
 the Secretary may require to administer this section.

    (3) Non-refundable earned income tax credit.--
        (A) In general.--The term ``non-refundable earned 
 income tax credit'' means, with respect to any State, a 
 credit against the income tax imposed by such State 
 which the Secretary has determined is based on the 
 earned income of the taxpayer and which is limited to 
 the tax liability of such taxpayer.
        (B) Treatment of certain credit modifications.--A 
 credit shall not be treated as a non-refundable earned 
 income tax credit for any taxable year if the Secretary 
 determines that such credit as in effect for such 
 taxable year has been modified (relative to such credit 
 as in effect on the date of the enactment of this Act) 
 in a manner which suggests that a significant purpose 
 of such modification was to increase the amount of 
 payments made under this section.
            (C) Treatment of credits scheduled to terminate.--A 
 credit shall not be treated as non-refundable earned 
 income tax credit for any taxable year if such credit 
 was not scheduled to be in effect for such taxable year 
 under the income tax laws of the State as in effect on 
 the date of the enactment of this Act.
            (c) State Refundable Earned Income Tax Credit Equivalency Amount.--
For purposes of this section, the term ``State refundable earned income 
tax credit equivalency amount'' means, with respect to any individual 
for any taxable year, the amount determined by the Secretary as being 
the excess (if any) of--

    (1) the amount of the non-refundable earned income tax 
 credit which would have been allowed to such individual for 
 such taxable year if such credit were not limited based on the 
 tax liability of the taxpayer, over

    (2) the amount by which such individual's State income tax 
 liability would increase if such credit were not allowed 
 (determined after taking into account all other income tax 
 credits other than income tax credits which constitute credits 
 for the payment of tax).
            (d) Payments Treated in Same Manner as Refundable Income Tax 
Credits.--Except as otherwise provided by the Secretary, the program 
established under subsection

    (a) shall effectuate the payments 
described therein by deeming the amount of such payment as a payment of 
Federal income tax for purposes of the Internal Revenue Code of 1986. 
Any overpayment of tax attributable to such deemed payment shall be 
refunded by the Secretary as soon as practicable. For purposes of 

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

    (b)

    (2) of such section.

    (e) Secretary.--For purposes of this section, the term 
``Secretary'' means the Secretary of the Treasury or the Secretary's 
delegate.

SEC. 5. ESTABLISHMENT OF REFUNDABLE CHILD TAX CREDIT WITH MONTHLY 
 ADVANCE PAYMENT.

    (a) In General.--Subpart A of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by inserting after 

section 24 the following new sections:

``

SEC. 24A. MONTHLY 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 the sum of 
the monthly specified child allowances determined with respect to the 
taxpayer under subsection

    (b) for each calendar month during such 
taxable year.
 ``

    (b) Monthly Specified Child Allowance.--
 ``

    (1) In general.--For purposes of this section, the term 
 `monthly specified child allowance' means, with respect to any 
 taxpayer for any calendar month, the sum of--
 ``
        (A) $300, with respect to each specified child of 
 such taxpayer who will (as of the close of such month) 
 have attained age 6, plus
 ``
        (B) $350, with respect to each specified child of 
 such taxpayer who will not (as of the close of such 
 month) have attained age 6.
 ``

    (2) Limitations based on modified adjusted gross 
 income.--
 ``
        (A) Initial reduction.--The monthly specified 
 child allowance otherwise determined under paragraph

    (1) with respect to any taxpayer for any calendar month 
 shall be reduced (but not below zero) by \1/12\ of 5 
 percent of the excess (if any) of the taxpayer's 
 modified adjusted gross income for the applicable 
 taxable year over the initial threshold amount in 
 effect for such applicable taxable year.
 ``
        (B) Limitation on initial reduction.--In the case 
 of any calendar month beginning before January 1, 2026, 
 the amount of the reduction under subparagraph
        (A) shall not exceed the lesser of--
 ``
            (i) the excess (if any) of--
 ``
            (I) the monthly specified child 
 allowance with respect to the taxpayer 
 for such calendar month (determined 
 without regard to this paragraph), over
 ``
            (II) the amount which would be 
 determined under subclause
            (I) if the 
 dollar amounts in effect under 
 subparagraphs
        (A) and
        (B) of paragraph

    (1) were each equal to $166.67, or
 ``
            (ii) \1/12\ of 5 percent of the excess of 
 the secondary threshold amount over the initial 
 threshold amount.
 ``
            (C) Secondary reduction.--In the case of any 
 calendar month beginning before January 1, 2026, the 
 monthly specified child allowance otherwise determined 
 under paragraph

    (1) with respect to any taxpayer for 
 such calendar month (determined after the application 
 of subparagraphs
        (A) and
        (B) ) shall be reduced (but not 
 below zero) by \1/12\ of 5 percent of the excess (if 
 any) of the taxpayer's modified adjusted gross income 
 for the applicable taxable year over the secondary 
 threshold amount.
 ``
            (D) Definitions related to limitations based on 
 modified adjusted gross income.--For purposes of this 
 paragraph--
 ``
            (i) Initial threshold amount.--The term 
 `initial threshold amount' means--
 ``
            (I) $150,000, in the case of a 
 joint return or surviving spouse (as 
 defined in 

section 2

    (a) ),
 ``
            (II) \1/2\ the dollar amount in 
 effect under subclause
            (I) , in the case 
 of a married individual filing a 
 separate return, and
 ``
            (III) $112,500, in any other 
 case.
 ``
            (ii) Secondary threshold amount.--The 
 term `secondary threshold amount' means--
 ``
            (I) $400,000, in the case of a 
 joint return or surviving spouse (as 
 defined in 

section 2

    (a) ),
 ``
            (II) $300,000, in the case of a 
 head of household (as defined in 
 

section 2

    (b) ), and
 ``
            (III) $200,000, in any other 
 case.
 ``
            (iii) Applicable taxable year.--The term 
 `applicable taxable year' means, with respect 
 to any taxable year for which the credit under 
 this section is determined--
 ``
            (I) such taxable year, or
 ``
            (II) if the taxpayer elects the 
 application of this subclause (at such 
 time and in such form and manner as the 
 Secretary may provide), the preceding 
 taxable year or the second preceding 
 taxable year (as specified in such 
 election).
 ``
            (iv) Modified adjusted gross income.--The 
 term `modified adjusted gross income' means 
 adjusted gross income increased by any amount 
 excluded from gross income under 

section 911, 
 931, or 933.
 ``

    (3) Inflation adjustments.--
 ``
        (A) Monthly specified child allowance.--In the 
 case of any month beginning after December 31, 2025, 
 each dollar amount in paragraph

    (1) shall be increased 
 by an amount equal to--
 ``
            (i) such dollar amount, multiplied by--
 ``
            (ii) the percentage (if any) by which--
 ``
            (I) the CPI (as defined in 
 

section 1

    (f)

    (4) ) for the calendar year 
 preceding the calendar year in which 
 such month begins, exceeds
 ``
            (II) the CPI (as so defined) for 
 calendar year 2020.
 ``
        (B) Initial threshold amount.--In the case of any 
 taxable year beginning after December 31, 2025, the 
 dollar amounts in subclauses
            (I) and
            (III) of paragraph

    (2)
            (D) 
            (i) shall each be increased by an amount equal 
 to--
 ``
            (i) such dollar amount, multiplied by
 ``
            (ii) the percentage (if any) which would 
 be determined under subparagraph
        (A)
            (ii) if 
 subclause
            (II) thereof were applied by 
 substituting `2022' for `2020'.
 ``
            (C) Rounding.--
 ``
            (i) Monthly specified child allowance.--
 Any increase under subparagraph
        (A) which is 
 not a multiple of $10 shall be rounded to the 
 nearest multiple of $10.
 ``
            (ii) Initial threshold amount.--Any 
 increase under subparagraph
        (B) which is not a 
 multiple of $5,000 shall be rounded to the 
 nearest multiple of $5,000.
 ``
            (c) Specified Child.--For purposes of this section--
 ``

    (1) In general.--The term `specified child' means, with 
 respect to any taxpayer for any calendar month, an individual--
 ``
        (A) who has the same principal place of abode as 
 the taxpayer for more than one-half of such month,
 ``
        (B) who is younger than the taxpayer and will 
 not, as of the close of such month, have attained age 
 18,
 ``
            (C) who receives care from the taxpayer during 
 such month that is not compensated,
 ``
            (D) who is not the spouse of the taxpayer at any 
 time during such month, and
 ``
        (E) who either--
 ``
            (i) is a citizen, national, or resident 
 of the United States, or
 ``
            (ii) if the taxpayer is a citizen or 
 national of the United States, such individual 
 is described in 

section 152

    (f)

    (1)
        (B) with 
 respect to such taxpayer.
 ``

    (2) Certain individuals ineligible.--In the case of an 
 individual who is a specified child with respect to another 
 taxpayer for any calendar month, such individual shall be 
 treated for such calendar month as having no specified 
 children.
 ``

    (3) Care from the taxpayer.--
 ``
        (A) In general.--Except as otherwise provided by 
 the Secretary, whether any individual receives care 
 from the taxpayer (within the meaning of paragraph

    (1)
            (C) ) shall be determined on the basis of facts and 
 circumstances with respect to the following factors:
 ``
            (i) The supervision provided by the 
 taxpayer regarding the daily activities and 
 needs of the individual.
 ``
            (ii) The maintenance by the taxpayer of a 
 secure environment at which the individual 
 resides.
 ``
            (iii) The provision or arrangement by the 
 taxpayer of, and transportation by the taxpayer 
 to, medical care at regular intervals and as 
 required for the individual.
 ``
            (iv) The involvement by the taxpayer in, 
 and financial and other support by the taxpayer 
 for, educational or similar activities of the 
 individual.
 ``
            (v) Any other factor that the Secretary 
 determines to be appropriate to determine 
 whether the individual receives care from the 
 taxpayer.
 ``
        (B) Determination of whether care is 
 compensated.--For purposes of determining if care is 
 compensated within the meaning of paragraph

    (1)
            (C) , 
 compensation from the Federal Government, a State or 
 local government, a Tribal government, or any 
 possession of the United States shall not be taken into 
 account.
 ``

    (4) Application of tie-breaker rules.--
 ``
        (A) In general.--Except as provided in 
 subparagraph
            (D) , if any individual would (but for this 
 paragraph) be a specified child of 2 or more taxpayers 
 for any month, such individual shall be treated as the 
 specified child only of the taxpayer who is--
 ``
            (i) the parent of the individual (or, if 
 such individual would (but for this paragraph) 
 be a specified child of 2 or more parents of 
 the individual for such month, the parent of 
 the individual determined under subparagraph
        (B) ),
 ``
            (ii) if the individual is not a specified 
 child of any parent of the individual 
 (determined without regard to this paragraph), 
 the specified relative of the individual with 
 the highest adjusted gross income for the 
 taxable year which includes such month, or
 ``
            (iii) if the individual is neither a 
 specified child of any parent of the individual 
 nor a specified child of any specified relative 
 of the individual (in both cases determined 
 without regard to this paragraph), the taxpayer 
 with the highest adjusted gross income for the 
 taxable year which includes such month.
 ``
        (B) Tie-breaker among parents.--If any individual 
 would (but for this paragraph) be the specified child 
 of 2 or more parents of the individual for any month, 
 such child shall be treated only as the specified child 
 of--
 ``
            (i) the parent with whom the child 
 resided for the longest period of time during 
 such month, or
 ``
            (ii) if the child resides with both 
 parents for the same amount of time during such 
 month, the parent with the highest adjusted 
 gross income for the taxable year which 
 includes such month.
 ``
            (C) Specified relative.--For purposes of this 
 paragraph, the term `specified relative' means an 
 individual who is--
 ``
            (i) an ancestor of a parent of the 
 specified child,
 ``
            (ii) a brother or sister of a parent of 
 the specified child, or
 ``
            (iii) a brother, sister, stepbrother, or 
 stepsister of the specified child.
 ``
            (D) Certain parents or specified relatives not 
 taken into account.--This paragraph shall be applied 
 without regard to any parent or specified relative of 
 an individual for any month if--
 ``
            (i) such parent or specified relative 
 elects to have such individual not be treated 
 as a specified child of such parent or 
 specified relative for such month,
 ``
            (ii) in the case of a parent of such 
 individual, the adjusted gross income of the 
 taxpayer (with respect to whom such individual 
 would be treated as a specified child after 
 application of this subparagraph) for the 
 taxable year which includes such month is 
 higher than the highest adjusted gross income 
 of any parent of the individual for any taxable 
 year which includes such month (determined 
 without regard to any parent with respect to 
 whom such individual is not a specified child, 
 determined without regard to subparagraphs
        (A) and
        (B) and after application of this 
 subparagraph), and
 ``
            (iii) in the case of a specified relative 
 of such individual, the adjusted gross income 
 of the taxpayer (with respect to whom such 
 individual would be treated as a specified 
 child after application of this subparagraph) 
 for the taxable year which includes such month 
 is higher than the highest adjusted gross 
 income of any parent and any specified relative 
 of the individual for any taxable year which 
 includes such month (determined without regard 
 to any parent and any specified relative with 
 respect to whom such individual is not a 
 specified child, determined without regard to 
 subparagraphs
        (A) and
        (B) and after application 
 of this subparagraph).
 ``
        (E) Treatment of joint returns.--For purposes of 
 this paragraph, with respect to any month, the adjusted 
 gross income of each person who files a joint return 
 for the taxable year which includes such month is the 
 total adjusted gross income shown on the joint return 
 for the taxable year.
 ``
        (F) Parent.--Except as otherwise provided by the 
 Secretary, the term `parent' shall have the same 
 meaning as when used in 

section 152
            (c) (4) .
 ``

    (5) Treatment of temporary absences.--Except as provided 
 in regulations or other guidance issued by the Secretary, for 
 purposes of this subsection--
 ``
        (A) In general.--In the case of any individual's 
 temporary absence from such individual's principal 
 place of abode, each day composing the temporary 
 absence shall--
 ``
            (i) be treated as a day at such 
 individual's principal place of abode,
 ``
            (ii) be treated as satisfying the care 
 requirement described in paragraph

    (1)
            (C) for 
 each day described in clause
            (i) , and
 ``
            (iii) not be treated as a day at any 
 other location.
 ``
        (B) Temporary absence.--For purposes of 
 subparagraph
        (A) , an absence shall be treated as 
 temporary if--
 ``
            (i) the individual would have resided at 
 the place of abode but for the absence, and
 ``
            (ii) under the facts and circumstances, 
 it is reasonable to assume that the individual 
 will return to reside at the place of abode.
 ``

    (6) Special rule for divorced parents, etc.--Rules 
 similar to the rules 

section 152

    (e) shall apply for purposes of 
 this subsection.
 ``

    (7) Eligibility determined on basis of presumptive 
 eligibility.--
 ``
        (A) In general.--If a period of presumptive 
 eligibility is established under 

section 7527B
            (c) for 
 any individual with respect to any taxpayer--
 ``
            (i) such individual shall be treated as 
 the specified child of such taxpayer for any 
 month in such period of presumptive 
 eligibility, and
 ``
            (ii) such individual shall not be treated 
 as the specified child of any other taxpayer 
 with respect to whom a period of presumptive 
 eligibility has not been established for any 
 such month.
 ``
        (B) Ability of credit claimants to establish 
 presumptive eligibility.--Nothing in 

section 7527B
            (c) shall be interpreted to preclude a taxpayer from 
 establishing a period of presumptive eligibility 
 (including any such period described in 

section 7527B
            (c) (2)
            (D) ) with respect to any specified child for 
 purposes of this section solely because such taxpayer 
 affirmatively elects not to receive monthly advance 
 child payments under 

section 7527B.
 ``
            (d) Credit Refundable.--If the taxpayer (in the case of a joint 
return, either spouse) has a principal place of abode (determined as 
provided in 

section 32) in the United States or Puerto Rico for more 
than one-half of any calendar month during the taxable year, so much of 
the credit otherwise allowed under subsection

    (a) as is attributable to 
monthly specified child allowances with respect to any such calendar 
month shall be allowed under subpart C (and not allowed under this 
subpart).
 ``

    (e) Identification Requirements.--
 ``

    (1) Qualifying child identification requirement.--No 
 credit shall be allowed under this section to a taxpayer with 
 respect to any qualifying child unless the taxpayer includes 
 the name and taxpayer identification number of such qualifying 
 child on the return of tax for the taxable year and such 
 taxpayer identification number was issued on or before the due 
 date for filing such return.
 ``

    (2) Taxpayer identification requirement.--No credit shall 
 be allowed under this section if the taxpayer identification 
 number of the taxpayer was issued after the due date for filing 
 the return for the taxable year.
 ``

    (f) Restrictions on Taxpayers Who Improperly Claimed Credit or 
Improperly Received Monthly Advance Child Payment.--
 ``

    (1) Taxpayers making prior fraudulent or reckless 
 claims.--
 ``
        (A) In general.--No credit shall be allowed under 
 this section for any taxable year (and no payment shall 
 be made under 

section 7527B for any month) 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 or 

section 24 (or payment received under 

section 7527A or 
 7527B) was due to fraud,
 ``
            (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 or 

section 24 (or payment received under 

section 7527A or 
 7527B) was due to reckless or intentional 
 disregard of rules and regulations (but not due 
 to fraud), and
 ``
            (iii) in addition to any period 
 determined under clause
            (i) or
            (ii) (as the 
 case may be), the period beginning on the date 
 of the final determination described in such 
 clause and ending with the beginning of the 
 period described in such clause.
 ``

    (2) Taxpayers making improper prior claims.--In the case 
 of a taxpayer who is denied credit under this section or 
 

section 24 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 (and 
 no payment shall be made under 

section 7527B for any subsequent 
 month) unless the taxpayer provides such information as the 
 Secretary may require to demonstrate eligibility for such 
 credit.
 ``

    (3) Coordination with possessions of the united states.--
 For purposes of this subsection, a taxpayer's claim of credit 
 under this section or 

section 24 (or payment received under 
 

section 7527A or 

section 7527B) includes a claim of credit 
 under this section or 

section 24 of the income tax law of any 
 jurisdiction other than the United States (or similar payment 
 received under 

section 7527A or 

section 7527B of such income 
 tax law), and a claim made or a payment received from American 
 Samoa pursuant to a plan described in subsection
            (i) (3)
        (B) or 
 

section 24

    (k)

    (3)
        (B) .
 ``

    (g) Reconciliation of Credit and Monthly Advance Child 
Payments.--
 ``

    (1) In general.--The amount otherwise determined under 
 subsection

    (a) with respect to any taxpayer for any taxable 
 year shall be reduced (but not below zero) by the aggregate 
 amount of payments made under 

section 7527B to such taxpayer 
 for one or more calendar months in such taxable year. Any 
 failure to so reduce the credit shall be treated as arising out 
 of a mathematical or clerical error and assessed according to 
 

section 6213

    (b)

    (1) .
 ``

    (2) Recapture of excess advance payments in certain 
 circumstances.--In the case of a taxpayer described in 
 paragraph

    (3) for any taxable year, the tax imposed by this 
 chapter for such taxable year shall be increased by the excess 
 (if any) of--
 ``
        (A) the aggregate amount of payments made to the 
 taxpayer under 

section 7527B for one or more calendar 
 months in such taxable year, over
 ``
        (B) the amount determined under subsection

    (a) with respect to the taxpayer for such taxable year 
 (without regard to paragraph

    (1) of this subsection).
 ``

    (3) Taxpayers subject to recapture.--
 ``
        (A) Fraud or reckless or intentional disregard of 
 rules and regulations.--A taxpayer is described in this 
 paragraph with respect to any taxable year if the 
 Secretary determines that the amount described in 
 paragraph

    (2)
        (A) with respect to the taxpayer for such 
 taxable year was determined on the basis of fraud or a 
 reckless or intentional disregard of rules and 
 regulations.
 ``
        (B) Understatement of income; changes in filing 
 status.--If the amount described in paragraph

    (2)
        (A) with respect to the taxpayer for the taxable year was 
 determined on the basis of an amount of the taxpayer's 
 modified adjusted gross income which was less than the 
 taxpayer's modified adjusted gross income for the 
 applicable taxable year (as defined in subsection

    (b) )--
 ``
            (i) such taxpayer shall be treated as 
 described in this paragraph, and
 ``
            (ii) the increase determined under 
 paragraph

    (2) by reason of this subparagraph 
 shall not exceed the excess of--
 ``
            (I) the amount described in 
 paragraph

    (2)
        (A) , over
 ``
            (II) the amount which would be so 
 described if the payments described 
 therein had been determined on the 
 basis of the taxpayer's modified 
 adjusted gross income for the 
 applicable taxable year (as defined in 
 subsection

    (b) ).
 A rule similar to the rule of the preceding 
 sentence shall apply if the amount described in 
 paragraph

    (2)
        (A) with respect to the taxpayer 
 for the taxable year was determined on the 
 basis of a filing status of the taxpayer which 
 differs from the taxpayer's filing status for 
 the applicable taxable year (as so defined).
 ``
            (C) Payments made outside of period of 
 presumptive eligibility.--If any payment described in 
 paragraph

    (2)
        (A) with respect to the taxpayer for the 
 taxable year was made with respect to a child for a 
 month which was not part of a period of presumptive 
 eligibility established under 

section 7527B
            (c) for such 
 child with respect to such taxpayer--
 ``
            (i) such taxpayer shall be treated as 
 described in this paragraph, and
 ``
            (ii) the increase determined under 
 paragraph

    (2) by reason of this subparagraph 
 shall not exceed the portion of such payment so 
 made.
 ``
            (D) Certain payments made after notice from 
 secretary.--If the Secretary notifies a taxpayer under 
 

section 7527B

    (j)

    (2) that such taxpayer is subject to 
 recapture with respect to any payments--
 ``
            (i) such taxpayer shall be treated as 
 described in this paragraph, and
 ``
            (ii) the increase determined under 
 paragraph

    (2) by reason of this subparagraph 
 shall not exceed the aggregate amount of such 
 payments.
 ``
        (E) Taxpayers moving to another jurisdiction.--To 
 minimize the amount of advance payments made under 
 

section 7527B to ineligible individuals, the Secretary 
 shall issue regulations or other guidance for purposes 
 of this paragraph which apply with respect to taxpayers 
 who are described in 

section 7527B

    (b)

    (4) with respect 
 to the reference month but are not so described with 
 respect to one or more months during the taxable year 
 for which advance payments under 

section 7527B are 
 made.
 ``
        (F) Other circumstances to prevent abuse.--A 
 taxpayer is described in this paragraph with respect to 
 any taxable year pursuant to regulations or other 
 guidance of the Secretary describing other recapture 
 circumstances to facilitate the administration and 
 enforcement by the Secretary of 

section 7527B to 
 minimize the amount of advance payments made under 
 

section 7527B to ineligible individuals and to prevent 
 abuse.
 ``

    (4) Joint returns.--Except as otherwise provided by the 
 Secretary, in the case of an advance payment made under 

section 7527B with respect to a joint return, half of such payment 
 shall be treated as having been made to each individual filing 
 such return.
 ``

    (5) Coordination with possessions of the united states.--
 For purposes of this subsection, payments made under 

section 7527B include payments made by any jurisdiction other than the 
 United States under 

section 7527B of the income tax law of such 
 jurisdiction, and advance payments made by American Samoa 
 pursuant to a plan described in subsection

    (h)

    (3)
        (B) . Any 
 increase in tax imposed on a taxpayer by reason of paragraph

    (2) of the income tax law of a jurisdiction other than the 
 United States shall be considered to reduce the aggregate 
 amount of payments made to such taxpayer by such jurisdiction. 
 In carrying out this section, the Secretary shall coordinate 
 with each possession of the United States to prevent any 
 application of this paragraph that is inconsistent with the 
 purposes of this subsection.
 ``

    (h) 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 in calendar years 
 after 2025. 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) Cross references related to application of credit to 
 residents of puerto rico.--
 ``
        (A) For application of refundable credit to 
 residents of Puerto Rico, see subsection
            (d) .
 ``
        (B) For application of advance payment to 
 residents of Puerto Rico, see 

section 7527B

    (b)

    (4) .
 ``

    (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 in calendar years after 2025 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 residents of Puerto Rico under 
 subsection
            (d) ).
 ``
        (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) , subsection
            (d) shall be applied by substituting `, Puerto 
 Rico, or American Samoa' for `or Puerto Rico'.
 ``

    (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.
 ``
            (i) Regulations.--The Secretary shall issue such regulations or 
other guidance as the Secretary determines necessary or appropriate to 
carry out the purposes of this section, including regulations or other 
guidance--
 ``

    (1) for determining whether an individual receives care 
 from a taxpayer for purposes of subsection
            (c) (1) , and
 ``

    (2) to coordinate or modify the application of this 
 section and sections 24, 7527A, and 7527B in the case of any 
 taxpayer--
 ``
        (A) whose taxable year is other than a calendar 
 year,
 ``
        (B) whose filing status for a taxable year is 
 different from the status used for determining one or 
 more monthly payments under 

section 7527B during such 
 taxable year, or
 ``
            (C) whose principal place of abode for any month 
 is different from the principal place of abode used for 
 determining the monthly payment under 

section 7527B for 
 such month.

``

SEC. 24B. CREDIT FOR CERTAIN OTHER DEPENDENTS.

 ``

    (a) In General.--There shall be allowed as a credit against the 
tax imposed by this chapter for the taxable year an amount equal to 
$500 with respect to each specified dependent of such taxpayer for such 
taxable year.
 ``

    (b) Limitation Based on Modified Adjusted Gross Income.--
 ``

    (1) In general.--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.
 ``

    (2) Threshold amount.--For purposes of this subsection, 
 the term `threshold amount' means--
 ``
        (A) $400,000, in the case of a joint return or 
 surviving spouse (as defined in 

section 2

    (a) ),
 ``
        (B) $300,000, in the case of a head of household 
 (as defined in 

section 2

    (b) ), and
 ``
            (C) $200,000, in any other case.
 ``

    (3) Modified adjusted gross income.--For purposes of this 
 subsection, the term `modified adjusted gross income' means 
 adjusted gross income increased by any amount excluded from 
 gross income under 

section 911, 931, or 933.
 ``
            (c) Specified Dependent.--For purposes of this section, the term 
`specified dependent' means, with respect to any taxpayer for any 
taxable year, any dependent of such taxpayer for such taxable year 
unless such dependent--
 ``

    (1) is a specified child of the taxpayer, or any other 
 taxpayer, for any month during such taxable year, or
 ``

    (2) 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) Identification Requirements.--Rules similar to the rules of 

section 24A

    (e) shall apply for purposes of this section.
 ``

    (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) Regulations.--The Secretary shall issue such regulations or 
other guidance as the Secretary determines necessary or appropriate to 
carry out the purposes of this section.''.

    (b) Monthly Payment of Child Tax Credit.--Chapter 77 of such Code 
is amended by inserting after 

section 7527A the following new section:

``

SEC. 7527B. MONTHLY PAYMENTS OF CHILD TAX CREDIT.

 ``

    (a) In General.--The Secretary shall establish a program for 
making payments to taxpayers with respect to each calendar month equal 
to the monthly advance child payment determined with respect to such 
taxpayer for such month.
 ``

    (b) Monthly Advance Child Payment.--For purposes of this section 
and except as otherwise provided in this section, the term `monthly 
advance child payment' means, with respect to any taxpayer for any 
calendar month, the amount (if any) which is estimated by the Secretary 
as being equal to the monthly specified child allowance which would be 
determined under 

section 24A

    (b) with respect to such taxpayer for such 
calendar month if--
 ``

    (1) unless determined by the Secretary based on any 
 information known to the Secretary, the only specified children 
 of such taxpayer for such calendar month are the specified 
 children of such taxpayer for the reference month,
 ``

    (2) unless determined by the Secretary based on any 
 information known to the Secretary, the ages of such children 
 (and the status of such children as specified children) are 
 determined for such calendar month by taking into account the 
 passage of time since such reference month,
 ``

    (3) the limitations of 

section 24A

    (b)

    (2) were applied 
 with respect to the reference taxable year rather than with 
 respect to the applicable taxable year, and
 ``

    (4) unless determined by the Secretary based on any 
 information known to the Secretary, no monthly specified child 
 allowance were determined with respect to such taxpayer for 
 such calendar month unless the taxpayer (in the case of a joint 
 return, either spouse) has a principal place of abode 
 (determined as provided in 

section 32) in the United States or 
 Puerto Rico for more than one-half of the reference month.
 ``
            (c) Presumptive Eligibility.--
 ``

    (1) In general.--An individual shall be treated as a 
 specified child of a taxpayer for purposes of determining any 
 monthly advance child payment under this section only if such 
 month is part of the period of presumptive eligibility 
 determined by the Secretary under this subsection with respect 
 to such specified child and such taxpayer (determined by 
 treating the month described in subclause
            (I) of paragraph

    (2)
        (A)
            (ii) as being the first month beginning after the 
 determination described in such subclause).
 ``

    (2) Period of presumptive eligibility.--For purposes of 
 this section--
 ``
        (A) In general.--Except as otherwise provided by 
 the Secretary, the term `period of presumptive 
 eligibility' means the period--
 ``
            (i) beginning with the month for which 
 presumptive eligibility is established, and
 ``
            (ii) ending with the earliest of--
 ``
            (I) the beginning of the month 
 described in clause
            (i) if the 
 Secretary determines that the taxpayer 
 committed fraud or intentionally 
 disregarded rules or regulations in 
 establishing or maintaining presumptive 
 eligibility,
 ``
            (II) in the case of any 
 notification from the Secretary that 
 the period of presumptive eligibility 
 has been terminated or suspended by 
 reason of any question regarding 
 eligibility of the taxpayer for monthly 
 advance child payments with respect to 
 such child, the month specified in such 
 notice as the month on which such 
 termination or suspension begins, and
 ``
            (III) the month following any 
 failure of the taxpayer to make the 
 required annual renewal of presumptive 
 eligibility by such date as the 
 Secretary may provide.
 ``
        (B) Establishing presumptive eligibility.--A 
 taxpayer shall establish presumptive eligibility with 
 respect to any specified child for any month at such 
 time and in such manner as the Secretary may provide. 
 Except as otherwise provided by the Secretary, in order 
 to establish a period of presumptive eligibility the 
 taxpayer must express a reasonable expectation and 
 intent that the taxpayer will continue to be eligible 
 with respect to such specified child for at least the 
 two months following the month for which presumptive 
 eligibility is to be established.
 ``
            (C) Method of establishing presumptive 
 eligibility.--The Secretary shall ensure information to 
 establish presumptive eligibility under this paragraph 
 may be provided on the return of tax for the taxable 
 year ending before the calendar year which includes the 
 month for which such eligibility is to be established, 
 through the on-line portal described in subsection

    (e) , 
 or in such other manner as the Secretary may provide.
 ``
            (D) Inclusion of automatic grace periods and 
 periods of hardship.--The period of presumptive 
 eligibility shall include any period to which paragraph

    (1) or

    (2) of subsection

    (g) applies.
 ``
        (E) Automatic eligibility for birth of child.--
 The Secretary shall issue regulations or other guidance 
 to establish procedures pursuant to which, to the 
 maximum extent administratively practicable--
 ``
            (i) a parent of a child born during a 
 calendar month shall be treated as 
 automatically establishing presumptive 
 eligibility with respect to such child,
 ``
            (ii) the period of such automatic 
 presumptive eligibility is determined, and
 ``
            (iii) the first monthly advance child 
 payment with respect to such child is increased 
 to properly take into account the months in the 
 period of such automatic presumptive 
 eligibility which precede such payment.
 ``
        (F) Presumptive eligibility based on certain 
 government programs.--The Secretary shall issue 
 regulations or other guidance to establish procedures 
 under which--
 ``
            (i) based on information provided to the 
 Secretary by one or more government entities, a 
 parent or specified relative of a child is 
 treated as automatically establishing 
 presumptive eligibility with respect to such 
 child, and
 ``
            (ii) the period for which such automatic 
 presumptive eligibility is determined 
 (including any additional circumstances under 
 which such period will terminate).
 ``
        (G) Coordination with presumption.--For purposes 
 of determining the status of any individual as a 
 specified child for purposes of determining presumptive 
 eligibility with respect to any period, 

section 24A
            (c) shall be applied without regard to paragraph

    (7) thereof.
 ``

    (3) Notice of termination of presumptive eligibility by 
 reason of failure to make annual renewal.--If a taxpayer's 
 period of presumptive eligibility with respect to any specified 
 child terminates by reason of paragraph

    (2)
        (A)
            (ii) 
            (III) , the 
 Secretary shall provide the taxpayer a written notice of such 
 termination.
 ``
            (d) Determination of Reference Month and Reference Taxable 
Year.--For purposes of this section--
 ``

    (1) Reference month.--The term `reference month' means, 
 with respect to any taxpayer for any calendar month, the most 
 recent of--
 ``
        (A) in the case of a taxpayer who filed a return 
 of tax for the last taxable year ending before such 
 calendar month, the last month of such taxable year,
 ``
        (B) in the case of a taxpayer who filed a return 
 of tax for the taxable year preceding the taxable year 
 described in subparagraph
        (A) , the last month of such 
 preceding taxable year, and
 ``
            (C) in the case of a taxpayer who provides, 
 through a specified alternative mechanism, information 
 which is sufficient to estimate the taxpayer's monthly 
 advance child payment for such month.
 ``

    (2) Reference taxable year.--The term `reference taxable 
 year' means, with respect to any taxpayer for any calendar 
 month, the most recent of--
 ``
        (A) the taxable year described in subparagraph
        (A) or
        (B) of paragraph

    (1) , or
 ``
        (B) in the case of a taxpayer who provides, 
 through a specified alternative mechanism, information 
 which is sufficient to estimate the taxpayer's modified 
 adjusted gross income for the taxable year which 
 includes such month, such taxable year.
 ``

    (3) Availability of information.--Any month or year 
 referred to in subparagraph
        (A) ,
        (B) , or
            (C) of paragraph

    (1) or subparagraph
        (A) or
        (B) of paragraph

    (2) shall not be taken 
 into account in determining the reference month or reference 
 taxable year with respect to any calendar month unless all 
 relevant information with respect to such month or year is 
 available to the Secretary and the Secretary has adequate time 
 to make estimates under this section on the basis of such 
 information before the beginning of such calendar month.
 ``

    (4) Treatment of insufficient information.--Except as 
 otherwise provided by the Secretary--
 ``
        (A) if a taxpayer is not described in 
 subparagraph
        (A) ,
        (B) , or
            (C) of paragraph

    (1) with 
 respect to any calendar month, the monthly advance 
 child payment with respect to such taxpayer for such 
 calendar month shall be treated as zero unless the 
 Secretary determines that the Secretary can make the 
 estimate described in subsection

    (b) on the basis of 
 information known to the Secretary which the Secretary 
 determines is reasonably reliable, and
 ``
        (B) if the taxpayer is not described in paragraph

    (1)
            (C) and the information on the return of tax 
 referred to in subparagraph
        (A) or
        (B) of paragraph

    (1) does not establish the status of the taxpayer (in the 
 case of a joint return, either spouse) as having a 
 principal place of abode (determined as provided in 
 

section 32) in the United States or Puerto Rico for 
 more than one-half of the reference month, the 
 Secretary shall determine such status based on 
 information known to the Secretary.
 ``

    (5) Transition rule.--In any case with respect to which 
 

section 24A was not in effect for the taxable year described in 
 subparagraph
        (A) ,
        (B) , or
            (C) of paragraph

    (1) (whichever is 
 applicable), subsection

    (b)

    (1) shall be applied by substituting 
 `the qualifying children of such taxpayer for the taxable year 
 which includes the reference month' for `the specified children 
 of such taxpayer for the reference month'.
 ``

    (e) On-Line Information Portal; Specified Alternative 
Mechanisms.--
 ``

    (1) On-line information portal.--The Secretary shall 
 establish an on-line portal which allows taxpayers to--
 ``
        (A) subject to such restrictions as the Secretary 
 may provide, elect to begin or cease receiving payments 
 under this section, and
 ``
        (B) provide information to the Secretary which is 
 relevant in determining the monthly advance child 
 payment and the taxpayer's eligibility for such 
 payment, including information regarding--
 ``
            (i) the number of the taxpayer's 
 specified children, including by reason of the 
 birth of a child,
 ``
            (ii) the taxpayer's marital status,
 ``
            (iii) the taxpayer's modified adjusted 
 gross income,
 ``
            (iv) the taxpayer's principal place of 
 abode, and
 ``
            (v) any other factor which the Secretary 
 may provide.
 ``

    (2) Specified alternative mechanism.--For purposes of 
 this section, the term `specified alternative mechanism' means 
 the on-line portal established under paragraph

    (1) , the on-line 
 portal established under 

section 7527A, and any other mechanism 
 or method established by the Secretary to allow taxpayers to 
 provide the information described in paragraph

    (1) (including 
 in connection with the filing of any return of tax).
 ``

    (3) Availability in multiple languages.--The Secretary 
 shall ensure that the on-line portal described in paragraph

    (1) is available in multiple languages.
 ``

    (f) Specified Child of More Than 1 Taxpayer.--
 ``

    (1) In general.--In the event that (without regard to 
 this paragraph) a period of presumptive eligibility with 
 respect to the same specified child would exist for more than 1 
 taxpayer at the same time--
 ``
        (A) except as otherwise provided in this section 
 or by the Secretary, a period of presumptive 
 eligibility shall exist only respect to the taxpayer 
 with the most recent reference month,
 ``
        (B) the Secretary shall establish procedures 
 under which the Secretary expeditiously adjudicates 
 taxpayers' competing claims of presumptive eligibility 
 with respect to the same child, and
 ``
            (C) the Secretary shall notify any taxpayer of 
 the termination of a period of presumptive eligibility 
 pursuant to this subsection.
 ``

    (2) Provisions related to adjudication.--
 ``
        (A) Expedited process; appeals.--The procedures 
 established under paragraph

    (1)
        (B) shall include--
 ``
            (i) an expedited process for taxpayers 
 who meet such requirements as the Secretary may 
 establish for such expedited process, and
 ``
            (ii) procedures for adjudicating an 
 appeal of an adverse decision.
 ``
        (B) Information receipt and coordination.--The 
 Secretary may enter into agreements to receive 
 information from, and otherwise coordinate with--
 ``
            (i) Federal agencies (including the 
 Social Security Administration and the 
 Department of Agriculture),
 ``
            (ii) any State, local government, Tribal 
 government, or possession of the United States, 
 and
 ``
            (iii) any other individual or entity that 
 the Secretary determines to be appropriate for 
 purposes of adjudicating a competing claim 
 described in paragraph

    (1) .
 ``
            (C) Adjudication not treated as assessment.--An 
 adjudication under the procedures established under 
 paragraph

    (1)
        (B) (including the adjudication of any 
 appeal) shall not be treated as an assessment described 
 in 

section 6201.
 ``
            (D) Adjudication not treated as inspection of 
 taxpayer's books of account.--The inspection of a 
 taxpayer's books of account in connection with any 
 adjudication under the procedures established under 
 paragraph

    (1)
        (B) (including the adjudication of any 
 appeal) shall not be treated as an examination or 
 inspection of a taxpayer's books of account for 
 purposes of 

section 7605

    (b) .
 ``

    (3) Retroactive payments.--If, pursuant to the procedures 
 established under paragraph

    (1)
        (B) , the Secretary determines 
 that a child is a specified child of a taxpayer and the 
 Secretary did not make payments to such taxpayer with respect 
 to such child for any portion of the period during which the 
 determination was made, the Secretary may make a one-time 
 payment to the taxpayer with respect to which such child is the 
 specified child in an amount equal to the aggregate amount by 
 which the monthly advance child payments to such taxpayer would 
 have increased during such period if such determination had 
 been made immediately.
 ``

    (4) Recapture of payments.--If, pursuant to the 
 procedures established under paragraph

    (1)
        (B) , the Secretary 
 makes payments with respect to the child during the period 
 during which the determination is made--
 ``
        (A) the Secretary shall provide each taxpayer 
 which receives such payments notice that such payments 
 may be subject to recapture, and
 ``
        (B) upon making such determination, the Secretary 
 shall determine on the basis of the facts and 
 circumstances of each such taxpayer whether any such 
 payments should be subject to recapture and shall so 
 notify each such taxpayer.
 ``

    (g) Rules Related to Grace Periods and Hardships.--
 ``

    (1) Automatic grace period.--
 ``
        (A) In general.--Notwithstanding subsection

    (f) , 
 in the case of any failure or delay in establishing a 
 period of presumptive eligibility with respect to which 
 the taxpayer elects the application of this 
 subparagraph, credit under 

section 24A or retroactive 
 payment under this section (similar to the payment 
 described in subsection

    (f)

    (3) ) shall be allowed or 
 made with respect to so much of the period of such 
 failure or delay as does not exceed 3 months. The 
 preceding sentence shall not apply if the Secretary 
 determines that such failure or delay was due to fraud 
 or reckless or intentional disregard of rules and 
 regulations.
 ``
        (B) Limitation.--Subparagraph
        (A) shall not apply 
 with respect to any taxpayer more than once during any 
 36-month period.
 ``

    (2) Hardship.--Notwithstanding subsection

    (f) , if the 
 Secretary determines that a failure or delay in establishing a 
 period of presumptive eligibility with respect to any specified 
 child was due to domestic violence, serious illness, natural 
 disaster, or any other hardship, credit under 

section 24A or 
 retroactive payment under this section (similar to the payment 
 described in subsection

    (f)

    (3) ) shall be allowed or made with 
 respect to so much of the period of such failure or delay as 
 does not exceed 6 months.
 ``

    (h) Provisions Related to Form, Manner, and Treatment of 
Payments.--
 ``

    (1) Application of electronic funds payment 
 requirement.--The payments made by the Secretary under 
 subsection

    (a) shall be made by electronic funds transfer to 
 the same extent and in the same manner as if such payments were 
 Federal payments not made under this title.
 ``

    (2) Delivery of payments.--Notwithstanding any other 
 provision of law, the Secretary may certify and disburse 
 refunds payable under this section electronically to--
 ``
        (A) any account to which the payee authorized, on 
 or after January 1, 2025, the delivery of a refund of 
 taxes under this title or of a Federal payment (as 
 defined in 

section 3332 of title 31, United States 
 Code),
 ``
        (B) any account belonging to a payee from which 
 that individual, on or after January 1, 2025, made a 
 payment of taxes under this title, or
 ``
            (C) any Treasury-sponsored account (as defined in 
 

section 208.2 of title 31, Code of Federal 
 Regulations).
 ``

    (3) Waiver of certain rules.--Notwithstanding 

section 3325 of title 31, United States Code, or any other provision of 
 law, with respect to any payment of a refund under this 
 section, a disbursing official in the executive branch of the 
 United States Government may modify payment information 
 received from an officer or employee described in 

section 3325

    (a)

    (1)
        (B) of such title for the purpose of facilitating the 
 accurate and efficient delivery of such payment. Except in 
 cases of fraud or reckless neglect, no liability under 

section 3325, 3527, 3528, or 3529 of title 31, United States Code, 
 shall be imposed with respect to payments made under this 
 paragraph.
 ``

    (4) Exception from reduction or offset.--Any applicable 
 payment (as defined in paragraph

    (5)
        (E)
            (iii) ) shall not be--
 ``
        (A) subject to reduction or offset pursuant to 
 

section 3716 or 3720A of title 31, United States Code,
 ``
        (B) subject to reduction or offset pursuant to 
 subsection
            (c) ,
            (d) ,

    (e) , or

    (f) of 

section 6402, or
 ``
            (C) reduced or offset by other assessed Federal 
 taxes that would otherwise be subject to levy or 
 collection.
 ``

    (5) Assignment of benefits.--
 ``
        (A) In general.--The right of any person to any 
 applicable payment shall not be transferable or 
 assignable, at law or in equity, and no applicable 
 payment shall be subject to, execution, levy, 
 attachment, garnishment, or other legal process, or the 
 operation of any bankruptcy or insolvency law.
 ``
        (B) Encoding of payments.--In the case of an 
 applicable payment described in subparagraph
        (E)
            (iii) 
            (I) that is paid electronically by direct 
 deposit through the Automated Clearing House

    (ACH) network, the Secretary of the Treasury (or the 
 Secretary's delegate) shall--
 ``
            (i) issue the payment using a unique 
 identifier that is reasonably sufficient to 
 allow a financial institution to identify the 
 payment as an applicable payment, and
 ``
            (ii) further encode the payment pursuant 
 to the same specifications as required for a 
 benefit payment defined in 

section 212.3 of 
 title 31, Code of Federal Regulations.
 ``
            (C) Garnishment.--
 ``
            (i) Encoded payments.--In the case of a 
 garnishment order that applies to an account 
 that has received an applicable payment that is 
 encoded as provided in subparagraph
        (B) , a 
 financial institution shall follow the 
 requirements and procedures set forth in part 
 212 of title 31, Code of Federal Regulations, 
 except--
 ``
            (I) notwithstanding 

section 212.4 
 of title 31, Code of Federal 
 Regulations (and except as provided in 
 subclause
            (II) ), a financial 
 institution shall not fail to follow 
 the procedures of sections 212.5 and 
 212.6 of such title with respect to a 
 garnishment order merely because such 
 order has attached, or includes, a 
 notice of right to garnish federal 
 benefits issued by a State child 
 support enforcement agency, and
 ``
            (II) a financial institution 
 shall not, with regard to any 
 applicable payment, be required to 
 provide the notice referenced in 
 sections 212.6 and 212.7 of title 31, 
 Code of Federal Regulations.
 ``
            (ii) Other payments.--In the case of a 
 garnishment order (other than an order that has 
 been served by the United States) that has been 
 received by a financial institution and that 
 applies to an account into which an applicable 
 payment that has not been encoded as provided 
 in subparagraph
        (B) has been deposited 
 electronically on any date during the lookback 
 period or into which an applicable payment that 
 has been deposited by check on any date in the 
 lookback period, the financial institution, 
 upon the request of the account holder, shall 
 treat the amount of the funds in the account at 
 the time of the request, up to the amount of 
 the applicable payment (in addition to any 
 amounts otherwise protected under part 212 of 
 title 31, Code of Federal Regulations), as 
 exempt from a garnishment order without 
 requiring the consent of the party serving the 
 garnishment order or the judgment creditor.
 ``
            (iii) Liability.--A financial institution 
 that acts in good faith in reliance on clauses
            (i) or
            (ii) shall not be subject to liability 
 or regulatory action under any Federal or State 
 law, regulation, court or other order, or 
 regulatory interpretation for actions 
 concerning any applicable payments.
 ``
            (D) No reclamation rights.--This paragraph shall 
 not alter the status of applicable payments as tax 
 refunds or other nonbenefit payments for purpose of any 
 reclamation rights of the Department of the Treasury or 
 the Internal Revenue Service as per part 210 of title 
 31, Code of Federal Regulations.
 ``
        (E) === Definitions. ===
-For purposes of this 
 paragraph--
 ``
            (i) Account holder.--The term `account 
 holder' means a natural person whose name 
 appears in a financial institution's records as 
 the direct or beneficial owner of an account.
 ``
            (ii) Account review.--The term `account 
 review' means the process of examining deposits 
 in an account to determine if an applicable 
 payment has been deposited into the account 
 during the lookback period. The financial 
 institution shall perform the account review 
 following the procedures outlined in 

section 212.5 of title 31, Code of Federal Regulations 
 and in accordance with the requirements of 
 

section 212.6 of title 31, Code of Federal 
 Regulations.
 ``
            (iii) Applicable payment.--The term 
 `applicable payment' means--
 ``
            (I) any payment made to an 
 individual under this section (other 
 than any payment made pursuant to 
 paragraph

    (6) ),
 ``
            (II) any advance payment made by 
 a possession of the United States with 
 a mirror code tax system (as defined in 
 

section 24

    (h) ) pursuant to an election 
 under paragraph

    (6)
        (B) which 
 corresponds to a payment described in 
 subclause
            (I) , and
 ``
            (III) any advance payment made by 
 American Samoa pursuant to a program 
 for making such payments which is 
 described in paragraph

    (6)
            (C) 
            (ii) .
 ``
            (iv) Garnishment.--The term `garnishment' 
 means execution, levy, attachment, garnishment, 
 or other legal process.
 ``
            (v) Garnishment order.--The term 
 `garnishment order' means a writ, order, 
 notice, summons, judgment, levy, or similar 
 written instruction issued by a court, a State 
 or State agency, a municipality or municipal 
 corporation, or a State child support 
 enforcement agency, including a lien arising by 
 operation of law for overdue child support or 
 an order to freeze the assets in an account, to 
 effect a garnishment against a debtor.
 ``
            (vi) Lookback period.--The term `lookback 
 period' means the two-month period that begins 
 on the date preceding the date of account 
 review and ends on the corresponding date of 
 the month two months earlier, or on the last 
 date of the month two months earlier if the 
 corresponding date does not exist.
 ``

    (6) Application of advance payments in the possessions of 
 the united states.--
 ``
        (A) Puerto rico.--
 ``
            (i) For application of child tax credit 
 to residents of Puerto Rico, see 

section 24A
            (d) .
 ``
            (ii) For application of monthly advance 
 child payments to residents of Puerto Rico, see 
 subsection

    (b)

    (4) .
 ``
        (B) Mirror code possessions.--In the case of any 
 possession of the United States with a mirror code tax 
 system (as defined in 

section 24A

    (h)

    (1)
            (C) ), this 
 section shall not be treated as part of the income tax 
 laws of the United States for purposes of determining 
 the income tax law of such possession unless such 
 possession elects to have this section be so treated.
 ``
            (C) Administrative expenses of advance 
 payments.--
 ``
            (i) Mirror code possessions.--In the case 
 of any possession described in subparagraph
        (B) which makes the election described in such 
 subparagraph, the amount otherwise paid by the 
 Secretary to such possession under 

section 24A

    (h)

    (1)
        (A) with respect to taxable years 
 beginning in 2026, 2027, and 2028 shall each be 
 increased by $300,000 if such possession has a 
 plan, which has been approved by the Secretary, 
 for making monthly advance child payments 
 consistent with such election.
 ``
            (ii) American samoa.--The amount 
 otherwise paid by the Secretary to American 
 Samoa under subparagraph
        (A) of 

section 24A

    (h)

    (3) with respect to taxable years 
 beginning in 2026, 2027, and 2028 shall each be 
 increased by $300,000 if the plan described in 
 subparagraph
        (B) of such section includes a 
 program, which has been approved by the 
 Secretary, for making monthly advance child 
 payments under rules similar to the rules of 
 this section.
 ``
            (iii) Timing of payment.--The Secretary 
 may pay, upon the request of the possession of 
 the United States to which the payment is to be 
 made, the amount of the increase determined 
 under clause
            (i) or
            (ii) , respectively, 
 immediately upon approval of the plan with 
 respect to which such payment relates.
 ``
            (i) Application of Certain Definitions and Rules Applicable to 
Child Tax Credit.--
 ``

    (1) === Definitions. ===
-Except as otherwise provided in this 
 section, terms used in this section which are also used in 
 

section 24A shall have the same respective meanings as when 
 used in 

section 24A.
 ``

    (2) Treatment of certain deaths.--A child shall not be 
 taken into account in determining the monthly advance child 
 payment for any calendar month if the death of such child 
 before the end of such month is known to the Secretary as of 
 date on which the Secretary estimates such payment.
 ``

    (3) Identification requirements.--Rules similar to the 
 rules which apply under 

section 24A

    (e) shall apply for purposes 
 of this section except that such rules shall apply with respect 
 to the return of tax for the reference taxable year or, in the 
 case of information provided through a specified alternative 
 mechanism, with respect to the information provided through 
 such mechanism.
 ``

    (4) Restrictions on taxpayers who improperly claimed 
 credit or received monthly advance child payments.--For 
 restrictions on taxpayers who improperly claimed credit or 
 received monthly advance child payments, see 

section 24A

    (f) .
 ``

    (j) Notice of Payments.--
 ``

    (1) In general.--Not later than January 31 of the 
 calendar year following any calendar year during which the 
 Secretary makes one or more payments to any taxpayer under this 
 section, the Secretary shall provide such taxpayer with a 
 written notice which includes--
 ``
        (A) the taxpayer's taxpayer identity (as defined 
 in 

section 6103

    (b)

    (6) ),
 ``
        (B) the aggregate amount of such payments made to 
 such taxpayer during such calendar year, and
 ``
            (C) such other information as the Secretary 
 determines appropriate.
 ``

    (2) Certain payments subject to recapture.--In the case 
 of any payments made to a taxpayer which the Secretary has 
 determined are subject to recapture, the notice provided under 
 paragraph

    (1) to such taxpayer shall include the amount of such 
 payments.
 ``

    (k) Notification of Certain Events.--With respect to any taxpayer 
receiving monthly advance child payments under this section with 
respect to any specified child, the Secretary shall, to the maximum 
extent practicable, provide reasonable advance notice of each of the 
following:
 ``

    (1) Any month with respect to which such monthly advance 
 child payment will increase (relative to the preceding month) 
 by reason of an inflation adjustment under 

section 24A

    (b)

    (3)
        (A) .
 ``

    (2) Any month with respect to which such monthly advance 
 child payment will be reduced (relative to the preceding month) 
 by reason of such child ceasing to be a specified child by 
 reason of attaining age 18.
 ``

    (3) In the case of a taxpayer with a specified child 
 described in 

section 24A

    (b)

    (1)
        (A) , any month with respect to 
 which such monthly advance child payment will be reduced by 
 reason of such child attaining age 6.
 ``
            (l) Regulations.--The Secretary shall issue such regulations or 
other guidance as the Secretary determines necessary or appropriate to 
carry out the purposes of this section.''.
            (c) Termination of Annual Child Tax Credit.--

Section 24 of such 
Code is amended by adding at the end the following new subsection:
 ``
            (l) Termination.--This section shall not apply to (and no payment 
shall be made under subsection

    (k) with respect to) any taxable year 
beginning after December 31, 2025.''.
            (d) Disclosure of Information Relating to Advance Payment of Child 
Tax Credit.--

Section 6103

    (e) of such Code is amended by adding at the 
end the following new paragraph:
 ``

    (12) Disclosure of information relating to advance 
 payment of child tax credit.--
 ``
        (A) Joint filers.--In the case of an individual 
 to whom the Secretary makes payments under 

section 7527A or who is eligible for monthly advance child 
 payments under 

section 7527B, if the reference taxable 
 year (as defined in 

section 7527A

    (b)

    (2) or 7527B
            (d) (2) , 
 as the case may be) that the Secretary uses to 
 calculate such payments is a year for which the 
 individual filed an income tax return jointly with 
 another individual, the Secretary may disclose to such 
 individual any information which is relevant in 
 determining the payment under 

section 7527A, or the 
 monthly advance child payment under 

section 7527B, and 
 the individual's eligibility for such payment, 
 including information regarding any of the following:
 ``
            (i) The number of specified children, 
 including by reason of the birth of a child.
 ``
            (ii) The name and TIN of specified 
 children.
 ``
            (iii) Marital status.
 ``
            (iv) Modified adjusted gross income.
 ``
            (v) Principal place of abode.
 ``
            (vi) Any other factor which the Secretary 
 may provide pursuant to 

section 7527A
            (c) or 
 7527B

    (e) .
 ``
        (B) Competing claimants.--In the case of an 
 individual who has a competing claim of presumptive 
 eligibility with respect to a specified child under 
 

section 7527B

    (f)

    (1) , the Secretary may disclose to such 
 individual return information provided by another 
 individual who has a competing claim of presumptive 
 eligibility with respect to the same specified child in 
 the course of the Secretary's adjudication of that 
 competing claim, as well as any other information 
 considered by the Secretary with respect to that 
 competing claim. Such information shall be limited to 
 the items specified in subparagraph
        (A) and the 
 following:
 ``
            (i) Information received under any 
 agreements or coordination the Secretary 
 entered into with--
 ``
            (I) any State, local government, 
 Tribal government, or possession of the 
 United States, or
 ``
            (II) any other individual or 
 entity that the Secretary determines to 
 be appropriate for purposes of 
 adjudicating a competing claim.
 ``
            (ii) Information considered by the 
 Secretary about where and with whom the 
 specified child resided.
 ``
            (iii) Information considered by the 
 Secretary about expenditures made by the 
 claimants to the extent such payments relate to 
 the competing claim.''.

    (e) Conforming Amendments.--

    (1) Section 26

    (b)

    (2) of such Code is amended by striking 
 ``and'' at the end of subparagraph
        (Y) , by striking the period 
 at the end of subparagraph
        (Z) and inserting ``, and'', and by 
 adding at the end the following new subparagraph:
 ``

    (AA) section 24A

    (g)

    (2) (relating to recapture of 
 certain monthly advance child payments).''.

    (2) Section 152

    (f)

    (6)
        (B)
            (ii) of such Code is amended to 
 read as follows:
 ``
            (ii) the credits under sections 24, 24A, 
 and 24B and the payments under sections 7527A 
 and 7527B,''.

    (3) Section 3402

    (f)

    (1)
            (C) of such Code is amended by 
 inserting ``or 

section 24A (determined after application of 
 subsection

    (g) thereof)'' after ``

section 24 (determined after 
 application of subsection

    (j) thereof)''.

    (4) Section 6103
            (l) (13)
        (A)
            (v) of such Code is amended by 
 insert ``or 

section 24A, as the case may be'' after ``

section 24''.

    (5) Section 6211

    (b)

    (4)
        (A) of such Code is amended by 
 inserting ``24A by reason of subsection
            (d) thereof,'' after 
 ``24 by reason of subsections
            (d) and
            (i) (1) thereof,''.

    (6) Section 6213

    (g)

    (2)
            (I) of such Code is amended by 
 inserting ``or 

section 24A

    (e) (relating to monthly child tax 
 credit)'' after ``

section 24

    (e) (relating to child tax 
 credit)''.

    (7) Section 6213

    (g)

    (2)
            (L) of such Code is amended by 
 inserting ``24A,'' after ``24,''.

    (8) Section 6213

    (g)

    (2)
        (P) of such Code is amended--
        (A) by inserting ``or 24A

    (f)

    (2) '' after ``

section 24

    (g)

    (2) '',
        (B) by inserting ``or 24A'' after ``under 

section 24'', and
            (C) by striking ``subsection

    (g)

    (1) thereof'' and 
 inserting ``

section 24

    (g)

    (1) or 

section 24A

    (f)

    (1) , 
 respectively''.

    (9) Section 6695

    (g)

    (2) of such Code is amended by inserting 
 ``24A,'' after ``24,''.

    (10) Paragraph

    (2) of 

section 1324

    (b) of title 31, United 
 States Code, as amended by the preceding provisions of this 
 Act, is amended--
        (A) by inserting ``24A,'' after ``24,'', and
        (B) by inserting ``7527B,'' after ``7527A,''.

    (11) The table of sections for subpart A of part IV of 
 subchapter A of chapter 1 of the Internal Revenue Code of 1986 
 is amended by inserting after the item relating to 

section 24 
 the following new items:

``

Sec. 24A. Monthly child tax credit.
``

Sec. 24B. Credit for certain other dependents.''.

    (12) The table of sections for chapter 77 of such Code is 
 amended by inserting after the item relating to 

section 7527A 
 the following new item:

``

Sec. 7527B. Monthly payments of child tax credit.''.

    (f) Effective Dates.--

    (1) In general.--Except as otherwise provided in this 
 subsection, the amendments made by this section shall apply to 
 taxable years beginning after December 31, 2025.

    (2) Monthly advance child payments.--The amendments made by 
 subsection

    (b) shall apply to calendar months beginning after 
 December 31, 2025.

    (3) Information disclosure.--The amendment made by 
 subsection
            (d) shall take effect on the date of the enactment 
 of this Act.

SEC. 6. CAPITAL GAINS RATES NOT APPLICABLE TO CERTAIN HIGH INCOME 
 TAXPAYERS.

    (a) In General.--

Section 1

    (h)

    (1) of the Internal Revenue Code of 
1986 is amended by inserting ``and the taxable income of such taxpayer 
for such taxable year does not exceed $1,000,000 (half such amount in 
the case of a married individual filing a separate return)'' after ``If 
a taxpayer has a net capital gain for any taxable year''.

    (b) Inflation Adjustment.--

Section 1

    (h) of such Code is amended by 
adding at the end the following new paragraph:
 ``

    (12) Inflation adjustment.--
 ``
        (A) In general.--In the case of any taxable year 
 beginning after 2026, the $1,000,000 amount in 
 paragraph

    (1) shall be increased by an amount equal 
 to--
 ``
            (i) such dollar amount, multiplied by
 ``
            (ii) 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 2025' 
 for `calendar year 2016' in subparagraph
        (A)
            (ii) thereof.
 ``
        (B) Rounding.--If any increase under subparagraph
        (A) is not a multiple of $50, such dollar amount shall 
 be rounded to the next lowest multiple of $50.''.
            (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2025.

SEC. 7. INCREASE IN RATES OF CERTAIN CORPORATE TAXES.

    (a) Corporate Income Tax Rate.--

Section 11

    (b) of the Internal 
Revenue Code of 1986 is amended by striking ``21 percent'' and 
inserting ``28 percent''.

    (b) Rate of Tax on Repurchase of Corporate Stock.--

Section 4501

    (a) of such Code is amended by striking ``1 percent'' and inserting ``4 
percent''.
            (c) Corporate Alternative Minimum Tax Rate.--

Section 55

    (b)

    (2)
        (A)
            (i) of such Code is amended to read as follows:
 ``
            (i) the sum of--
 ``
            (I) 15 percent of so much of the 
 adjusted financial statement income (as 
 defined in 

section 56A) as does not 
 exceed $5,000,000,000, plus
 ``
            (II) 25 percent of so much of 
 such adjusted financial statement 
 income as exceeds $5,000,000,000,''.
            (d) Effective Dates.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2025.
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