US Codex
Bill
Notes

Title II — Individual and corporate tax reform

S. 3005 · 113th Congress · Dec 11, 2014 · Lineage

II Individual and corporate tax reform

A Individual income tax reforms

Sec. 201 Individual income tax rate reductions

(a)
In general—
(1)
Married individuals filing joint returns and surviving spouses— Subsection (a) of section 1 is amended by striking the table and inserting the following:
(2)
Heads of households— Subsection (b) of section 1 is amended by striking the table and inserting the following:
(3)
Unmarried individuals (other than surviving spouses and heads of households)— Subsection (c) of section 1 is amended by striking the table and inserting the following:
(4)
Married individuals filing separate returns— Subsection (d) of section 1 is amended by striking the table and inserting the following:
(b)
Conforming amendments relating to cost-of-Living adjustment—
(1)
In general— Paragraph (3) of section 1(f) is amended by inserting “, except as provided in paragraph (7),” after “for any calendar year”.
(2)
Updated cost-of-living adjustment for new rates— Section 1(f) is amended by striking paragraphs (7) and (8) and inserting the following:

“(7) Cost-of-living adjustment for years after 2015

“(A) Calendar year 2016—In prescribing the tables under paragraph (1) which apply in lieu of the tables contained in subsections (a), (b), (c), and (d) with respect to taxable years beginning in calendar year 2016, the Secretary shall make no adjustment to the dollar amounts in any such table.

“(B) Later calendar years—In prescribing tables under paragraph (1) which apply in lieu of the tables contained in subsections (a), (b), (c), and (d) with respect to taxable years beginning after December 31, 2016, the cost-of-living adjustment used in making adjustments to the dollar amounts in such tables shall be determined under paragraph (3) by substituting “2015” for “1992”.”

(3)
Conforming amendments—
(A)
Paragraph (2) of section 1(f) is amended—
(i)
by striking “paragraph (8)” in subparagraph (A) and inserting “paragraph (7)(A)”, and
(ii)
by striking “by adjusting” in subparagraph (C) and inserting “except as provided in paragraph (7)(A), by adjusting”.
(B)
The heading of subsection (f) of section 1 is amended by striking “Phaseout of marriage penalty in 15-percent bracket; adjustments” and inserting “Adjustments”.
(c)
Conforming amendment relating to rates— Section 1 is amended by striking subsection (i).
(d)
Effective date— The amendments made by this section shall apply to taxable years beginning after December 31, 2015.

Sec. 202 Family allowance amounts

(a)
In general— Section 63 is amended to read as follows:

“63. Taxable income defined

“(a) In general—For purposes of this subtitle, the term taxable income means adjusted gross income minus—

“(1) the deductions allowed by this chapter (other than those taken into account in determining adjusted gross income), and

“(2) the family allowance amount.

“(b) Family allowance—For purposes of this subtitle—

“(1) In general—The family allowance amount with respect to a taxpayer shall be determined in accordance with the following table:

“(2) Definitions—For purposes of this subsection—

“(A) the term single or married filing separately means a taxpayer to whom subsection (c) or (d) of section 1 applies,

“(B) the term married filing jointly or a surviving spouse means a taxpayer to whom subsection (a) of section 1 applies, and

“(C) the term head of a household means a taxpayer to whom subsection (b) of section 1 applies.

“(3) Adjustment for inflation—In the case of any taxable year beginning after 2016, each of the dollar amounts in the table under paragraph (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, by substituting “calendar year 2015” for “calendar year 1992” in subparagraph (B) thereof.

“(c) Cross references

“(1) For deductions of estates and trusts in lieu of the family allowance amount, see section 642(b).

“(2) For calculation of family allowance relating to nonresident aliens, see section 873(b)(3).

“(3) For determination of marital status, see section 7703.”

(b)
Termination of personal exemptions—
(1)
In general— Subsection (a) of section 151 is amended by inserting “, for a taxable year beginning before January 1, 2016” after “In the case of an individual”.
(2)
Identifying information required to treat individual as dependent— Section 152 is amended by adding at the end the following new subsection:

“(g) Identifying information required—No individual shall be treated as a dependent of the taxpayer under this section for a taxable year unless the taxpayer includes the TIN of such individual on the return of tax for the taxable year.”

(3)
Conforming amendments—
(A)
Section 2(a)(1)(B)(ii) is amended by striking “of a dependent” and all that follows and inserting “of a dependent (as defined in section 152) who (within the meaning of section 152, determined without regard to subsections (b)(1), (b)(2), and (d)(1)(B) thereof) is a son, stepson, daughter, or stepdaughter of the taxpayer.”.
(B)
Section 2(b)(1)(A)(ii) is amended by striking “if the taxpayer is entitled to a deduction for the taxable year for such person under section 151” and inserting “within the meaning of section 152”.
(C)
Section 2(b)(1)(B) is amended by striking “if the taxpayer is entitled to a deduction for the taxable year for such father or mother under section 151” and inserting “if such father or mother is a dependent of the taxpayer for the taxable year, within the meaning of section 152”.
(D)
Section 36B(b)(3)(B) is amended—
(i)
by striking “who is not allowed a deduction under section 151 for the taxable year with respect to a dependent” in clause (ii)(I)(aa) and inserting “with respect to whom no dependents are taken into account under section 152 for purposes of any provision of this title for the taxable year”, and
(ii)
by striking “unless a deduction is allowed under section 151 for the taxable year with respect to a dependent other than either spouse” and inserting “unless a dependent other than either spouse is taken into account under section 152 for purposes of any provision of this title for the taxable year”.
(E)
Section 36B(c)(1)(D) is amended by striking “with respect to whom a deduction under section 151 is allowable to another taxpayer” and inserting “who is taken into account as a dependent by another taxpayer under section 152 for purposes of any provision of this title”.
(F)
Section 36B(d)(1) is amended by striking “for whom the taxpayer is allowed a deduction under section 151 (relating to allowance of deduction for personal exemptions)” and inserting “who is a dependent of the taxpayer under section 152”.
(G)
Section 36B(e)(1) is amended by striking “for whom a taxpayer is allowed a deduction under section 151 (relating to allowance of deduction for personal exemptions)” and inserting “who is a dependent of the taxpayer under section 152”.
(H)
Section 152(d)(1)(B) is amended by striking “the exemption amount (as defined in section 151(d))” and inserting “the family allowance amount applicable to taxpayers who are single or married filing separately under section 63(b)”.
(I)
Section 152(f)(6)(B)(i) is amended by striking “the deduction under section 151(c)” and inserting “the family allowance amount under section 63(b)”.
(J)
Part V of subchapter B of chapter 1 is amended by striking section 153.
(K)
The table of sections for part V of subchapter B of chapter 1 is amended by striking the item relating to section 153.
(L)
Section 172(d)(3) is amended to read as follows:

“(3) Family allowance amount—Taxable income under section 63 shall be determined without regard to paragraph (2) of section 63(a), relating to the family allowance amount. No deduction in lieu of the exclusion of such family allowance amount shall be allowed.”

(M)
Section 220(b)(6) is amended by striking “with respect to whom a deduction under section 151 is allowable to another taxpayer” and inserting “who is taken into account as a dependent by another taxpayer under section 152 for purposes of any provision of this title”.
(N)
Section 223(b)(6) is amended by striking “with respect to whom a deduction under section 151 is allowable to another taxpayer” and inserting “who is taken into account as a dependent by another taxpayer under section 152 for purposes of any provision of this title”.
(O)
Section 443(c) is amended by striking “the exemptions allowed as a deduction under section 151 (and any deduction in lieu thereof) shall be reduced to amounts which bear the same ratio to the full exemptions” and inserting “the family allowance amount under section 63 (and any deduction in lieu thereof) shall be reduced to an amount which bears the same ratio to the full family allowance amount”.
(P)
Section 642(b)(2)(C)(i) is amended—
(i)
by striking “151(d)” and inserting “151(d) (as in effect for taxable years beginning before January 1, 2016)”, and
(ii)
by striking “151(d)(3)(C)(iii)” in subclause (I) and inserting “151(d)(3)(C)(iii) (as so in effect)”.
(Q)
Section 642(b)(3) is amended by striking “the deductions allowed under section 151 (relating to deduction for personal exemption)” and inserting “the family allowance amount under section 63”.
(R)
Section 703(a) is amended—
(i)
by striking “and” at the end of paragraph (1),
(ii)
by striking subparagraph (A) of paragraph (2) and by redesignating subparagraphs (B), (C), (D), (E), and (F) of such paragraph as subparagraphs (A), (B), (C), (D), and (E),
(iii)
by striking the period at the end of paragraph (2)(F) and inserting “, and”, and
(iv)
by adding at the end the following new paragraph:

“(3) taxable income under section 63 shall be determined without regard to paragraph (2) of section 63(a), relating to the family allowance amount.”

(S)
Section 773(b) is amended—
(i)
by striking subparagraph (A) of paragraph (1) and by redesignating subparagraphs (B) and (C) of such paragraph as subparagraphs (A) and (B), and
(ii)
by adding at the end the following new paragraph:

“(4) Family allowance amount—Taxable income under section 63 shall be determined without regard to paragraph (2) of section 63(a), relating to the family allowance amount.”

(T)
Section 873(b) is amended—
(i)
by striking “deductions” in the matter preceding paragraph (1), and
(ii)
by striking paragraph (3) and inserting the following:

“(3) Family allowance amount—The exclusion of the family allowance amount under section 63(a)(2), except that the taxpayer shall be treated for purposes of section 63(b) as single or married filing separately unless the taxpayer is a resident of a contiguous country or is a national of the United States.”

(U)
The heading of section 873 is amended by striking “Deductions” and inserting “Deductions and allowances”.
(V)
The item relating to section 873 in the table of sections for subpart A of part II of subchapter N of chapter 1 is amended to read as follows:
(W)
Section 874(b) is amended by striking “deduction for exemptions under section 151” and inserting “exclusion of the family allowance amount under section 63(a)(2)”.
(X)
Section 891 is amended by striking “deductions allowable under section 151 and under” and inserting “exclusion of the family allowance amount under section 63(a)(2) and the deductions allowable under”.
(Y)
Section 904(b)(1) is amended to read as follows:

“(1) Family allowance and deductions—For purposes of subsection (a), the taxable income in the case of an individual, estate, or trust shall be computed without regard to the exclusion of the family allowance amount under section 63(a)(2) or any deduction in lieu of such exclusion.”

(Z)
Section 931(b)(1) is amended by striking “deductions (other than the deduction under section 151, relating to personal exemptions)” and inserting “deductions”.
(AA)
Section 933 is amended—
(i)
by striking “deductions (other than the deduction under section 151, relating to personal exemptions)” in paragraph (1) and inserting “deductions”, and
(ii)
by striking “deductions (other than the deduction for personal exemptions under section 151)” in paragraph (2) and inserting “deductions”.
(BB)
Section 1212(b)(2)(B)(ii) is amended to read as follows:

“(ii) the family allowance amount for the taxable year under section 63(b) or any deduction allowed in lieu thereof.”

(CC)
Section 1402(a)(7) is amended to read as follows:

“(7) taxable income under section 63 shall be determined without regard to paragraph (2) of section 63(a), relating to the family allowance amount;”

(DD)
Section 5000A(c)(4)(A) is amended by striking “for whom the taxpayer is allowed a deduction under section 151 (relating to allowance of deduction for personal exemptions)” and inserting “who are taken into account as a dependent by the taxpayer under section 152 for purposes of any provision of this title”.
(EE)
Section 6012(a)(1) is amended to read as follows:

“(1)

“(A) Every individual—

“(i) having for the taxable year gross income which equals or exceeds the family allowance amount applicable to the individual under section 63, or

“(ii) in the case of individuals entitled to make a joint return (but only if the individual and the individual's spouse had the same household as their home at the close of the taxable year), every individual whose gross income, when combined with the gross income of the individual's spouse, equals or exceeds the family allowance amount applicable to taxpayers who are married filing jointly under section 63.

“(B) Every individual not described in subparagraph (A) who is taken into account as a dependent by another taxpayer under section 152 for purposes of any provision of this title, but only if such individual's gross income, when combined with the gross income of all individuals taken into account in determining the family allowance amount under section 63(b) of the taxpayer, equals or exceeds the family allowance amount applicable to the taxpayer under such section.”

(FF)
Section 6012(a)(8) is amended by striking “is not less than the sum of the exemption amount plus the basic standard deduction under section 63(c)(2)(D)” and inserting “equals or exceeds the family allowance amount applicable to the estate under section 1398(c)(3)”.
(GG)
Section 6013(b)(3)(A) is amended by striking “has the meaning given to such term” and all that follows and inserting “means the family allowance amount applicable to a taxpayer who is single or married filing separately under section 63(b).”.
(HH)
Section 6014(a) is amended by striking “who does not itemize his deductions and who is not described in section 6012(a)(1)(C)(i)” and inserting “who is not described in section 6012(a)(1)(B)”.
(II)
Section 6103(l)(21)(A)(iii) is amended by striking “for whom a deduction is allowed under section 151” and inserting “who is taken into account as a dependent under section 152 for purposes of any provision of this title”.
(JJ)
Section 6334(d)(2)(A) is amended to read as follows:

“(A) the family allowance amount determined under section 63(b) with respect to the taxpayer for the taxable year in which such levy occurs, divided by”

(KK)
Section 7703(b)(1) is amended by striking “with respect to whom such individual is entitled to a deduction for the taxable year under section 151 (or would be so entitled but for section 152(e))” and inserting “who is a dependent (within the meaning of section 152) of the individual for the taxable year”.
(4)
Amendments relating to payroll withholding—
(A)
In general— Paragraph (1) of section 3402(f) is amended by striking subparagraph (A) and all that follows and inserting the following:

“(A) an exemption equal to the family allowance exemption amount; and

“(B) any allowance to which the employee is entitled under subsection (m), but only if the employee's spouse does not have in effect a withholding exemption certificate claiming such allowance.”

(B)
Family allowance exemption amount— Subsection (f) of section 3402 is amended—
(i)
by redesignating paragraphs (2), (3), (4), (5), (6), and (7) as paragraphs (3), (4), (5), (6), (7), and (8), respectively,
(ii)
by striking “paragraph (2)(C)” in paragraph (3)(B)(iii) and inserting “paragraph (3)(C)”, and
(iii)
by inserting after paragraph (1) the following new paragraph:

“(2) Family allowance exemption amount—For purposes of this section—

“(A) In general—Except as provided in subparagraphs (B) and (C), the term family allowance exemption amount means the family allowance amount with respect to the taxpayer under section 63(b) for the taxable year in which the payroll period begins, prorated to the payroll period.

“(B) Married employees—If the employee is married filing jointly and the employee's spouse is an employee receiving wages, the employee and the employee's spouse may divide the family allowance amount determined under section 63(b) in the proportion of their choice for purposes of this paragraph, but the sum of the family allowance exemption amounts claimed by the employee and the employee's spouse shall not exceed such family allowance amount.

“(C) Employees with more than 1 employer—In the case of an employee that has withholding exemption certificates in effect with respect to more than 1 employer, the employee may divide the family allowance amount (or the employee's share of such amount after the application of subparagraph (B), if applicable) determined under section 63(b) among employers in the proportion of the employee's choice for purposes of this paragraph, but the sum of the family allowance exemption amounts claimed by the employee with respect to all employers shall not exceed such family allowance amount (or the employee's share of such amount after the application of subparagraph (B), if applicable).”

(C)
Conforming amendments—
(i)
Paragraph (2) of section 3402(a) is amended by striking “the number of withholding exemptions claimed” and all that follows and inserting “the total amount of the withholding exemptions claimed.”.
(ii)
Paragraph (3) of section 3402(f), as redesignated by subparagraph (B)(i) of this paragraph, is amended—
(I)
by striking “the number of withholding exemptions” and all that follows in subparagraph (A) and inserting “the total amount of the withholding exemptions which the employee claims, which shall in no event exceed the amount to which the employee is entitled.”,
(II)
by striking “the number of withholding exemptions” each place it appears in subparagraphs (B) and (C) and inserting “the total amount of the withholding exemptions”,
(III)
by striking “the number to which he is entitled” each place it appears in subparagraph (B) and inserting “the amount to which the employee is entitled”,
(IV)
by striking “the number to which the employee is entitled” in subparagraph (C) and inserting “the amount to which the employee is entitled”, and
(V)
by striking “the number to which he will be, or reasonably may be expected to be, so entitled” in subparagraph (C) and inserting “the amount to which the employee will be, or reasonably may be expected to be, so entitled”.
(iii)
Paragraph (7) of section 3402(f), as redesignated by subparagraph (B)(i) of this paragraph, is amended by striking “shall be entitled to only one withholding exemption” and inserting “shall be treated as single or married filing separately for purposes of determining the family allowance exemption amount”.
(iv)
Paragraph (8) of section 3402(f), as redesignated by subparagraph (B)(i) of this paragraph, is amended by inserting “, except as provided in paragraph (2)(C)” after “with respect to one employer”.
(v)
Paragraph (3) of section 3402(m) is amended by striking “deductions (including the additional standard deduction under section 63(c)(3) for the aged and blind)” and inserting “deductions”.
(vi)
Paragraph (2) of section 3402(r) is amended striking “the sum of” and all that follows and inserting “the family allowance amount determined under section 63(b) for a taxpayer who is single or married filing separately.”.
(vii)
Section 6040(4) is amended by striking “section 3402(f)(2), (3), (4), and (5)” and inserting “paragraphs (3), (4), (5), and (6) of section 3402(f)”.
(c)
Conforming amendments—
(1)
Section 1(f)(6) is amended—
(A)
by striking “63(c)(4)” each place it appears and inserting “63(b)(3)”, and
(B)
by inserting “, subsection (g)(4)(B)” after “paragraph (2)(A)” in subparagraph (A).
(2)
Section 1(g)(4) is amended—
(A)
by striking clause (ii) of subparagraph (A) and inserting the following:

“(ii) the sum of—

“(I) $500, plus

“(II) the greater of the amount described in subclause (I) or the amount of the itemized deductions allowed by this chapter which are directly connected with the production of the portion of adjusted gross income referred to in clause (i).”

(B)
by redesignating subparagraphs (B) and (C) as subparagraphs (C) and (D), respectively, and inserting after subparagraph (A) the following new subparagraph:

“(B) Adjustment for inflation—In the case of any taxable year beginning in a calendar year after 1988, the $500 amount in subparagraph (A)(ii)(I) shall be increased by an amount equal to—

“(i) such dollar amount, multiplied by

“(ii) the cost-of-living adjustment determined under subsection (f)(3) for the calendar year in which the taxable year begins, by substituting “calendar year 1987” for “calendar year 1992” in subparagraph (B) thereof.”

(3)
Section 3(a) is amended to read as follows:

“(a)

“(1) In general—In lieu of the tax imposed by section 1, there is hereby imposed for each taxable year on the taxable income of every individual whose taxable income does not exceed the ceiling amount a tax determined under tables, applicable to such taxable year, which shall be prescribed by the Secretary and which shall be in such form as the Secretary determines appropriate. In the table so prescribed, the amounts of the tax shall be computed on the basis of the rates prescribed by section 1.

“(2) Ceiling amount defined—For purposes of paragraph (1), the term ceiling amount means, with respect to any taxpayer, the amount (not less than $20,000) determined by the Secretary for the tax rate category in which such taxpayer falls.”

(4)
Section 861(b) is amended by striking the last sentence.
(5)
Section 862(b) is amended by striking the last sentence.
(6)
Section 1398(c) is amended—
(A)
by striking paragraph (3) and inserting the following:

“(3) Family allowance amount—The family allowance amount under section 63(b) taken into account for the estate for the taxable year shall be the same as for a taxpayer who is single or married filing separately.”

(B)
by striking “basic standard deduction” in the heading and inserting “family allowance amount”.
(7)
Section 6212(c)(2) is amended by striking subparagraph (A) and by redesignating subparagraphs (B) and (C) as subparagraphs (A) and (B), respectively.
(8)
Section 6014(b)(4) is amended by striking “deductions” and all that follows and inserting “deductions.”.
(9)
Section 6504 is amended by striking paragraph (2) and by redesignating paragraphs (3), (4), (5), (6), (7), (8), (9), (10), and (11) as paragraphs (2), (3), (4), (5), (6), (7), (8), (9), and (10), respectively.
(d)
Effective date— The amendments made by this section shall apply to taxable years beginning after December 31, 2015.

Sec. 203 Repeal of limitations relating to itemized deductions

(a)
In general— Sections 67 and 68 are repealed.
(b)
Conforming amendments—
(1)
Section 162(o) is amended by striking paragraph (2) and redesignating paragraph (3) as paragraph (2).
(2)
Section 164(b)(5)(H)(ii) is amended—
(A)
by striking the comma at the end of subclause (I) and inserting “, and”,
(B)
by striking “, and” at the end of subclause (II) and inserting a period, and
(C)
by striking subclause (III).
(3)
Section 302(b)(5) is amended by inserting “, as in effect on December 31, 2015” after “67(c)(2)(B)”.
(4)
Section 562(c) is amended by inserting “, as in effect on December 31, 2015” after “67(c)(2)(B)”.
(5)
Section 642(b)(2)(C)(i)(II) is amended by inserting “, and as in effect on December 31, 2015” after “642(b)”.
(6)
Section 772(c)(3) is amended—
(A)
by striking subparagraph (B), and
(B)
by striking “Income or loss from other activities.—” and all that follows through “For purposes of this chapter” and inserting “Income or loss from other activities.—For purposes of this chapter”.
(7)
Section 773(a)(3)(B) is amended by striking clause (i) and by redesignating clauses (ii), (iii), and (iv) as clauses (i), (ii), and (iii), respectively.
(8)
Section 773(b) is amended by striking paragraph (3).
(9)
Section 1411(a)(2)(B)(i) is amended by inserting “, as in effect on December 31, 2015” after “67(e)”.
(10)
Subparagraphs (C)(iii) and (D)(v) of section 6654(d)(1) are each amended by inserting “, as in effect on December 31, 2015” before the period.
(c)
Effective date— The repeal and the amendments made by this section shall apply to taxable years beginning after December 31, 2015.

Sec. 204 Termination of separate treatment of capital gains

Subsection (h) of section 1 is amended by adding at the end the following new paragraph:

“(12) Termination—This subsection shall not apply to any taxable year beginning after December 31, 2015.”

Sec. 205 Repeals

(a)
In general— The following provisions of the Internal Revenue Code of 1986 are repealed:
(1)
Subpart A of part IV of subchapter A of chapter 1 (relating to nonrefundable personal credits).
(2)
Subpart B of part IV of subchapter A of chapter 1 (relating to other credits), other than section 27 (relating to taxes of foreign countries and possessions of the United States; possession tax credit).
(3)
Subpart C of part IV of subchapter A of chapter 1 (relating to refundable credits), other than sections 32 (relating to earned income) and 36B (relating to refundable credit for coverage under a qualified health plan).
(4)
Part VI of subchapter A of chapter 1 (relating to alternative minimum tax).
(5)
Section 217 (relating to moving expenses).
(6)
Section 221 (relating to interest on education loans).
(7)
Section 222 (relating to qualified tuition and related expenses).
(8)
Chapter 2A (relating to unearned income medicare contribution).
(b)
Effective date— The repeals made by subsection (a) shall take effect for taxable years beginning after December 31, 2015.

Sec. 206 Establishment of progressive tax rebate

(a)
In general— Section 32 is amended to read as follows:

“32. Progressive tax rebate

“(a) Allowance of credit—In the case of an eligible taxpayer, there shall be allowed as a credit against the tax imposed by this subtitle for the taxable year an amount equal to the sum of—

“(1) the earned income amount (as determined under subsection (b)),

“(2) the child benefit amount (as determined under subsection (c)), plus

“(3) the additional child benefit amount (as determined under subsection (d)).

“(b) Earned income amount

“(1) Single workers—In the case of an eligible taxpayer (other than a head of a household as defined in section 2(b)) who is not filing a joint return for the taxable year under section 6013, the earned income amount shall be equal to—

“(A) in the case of a taxpayer whose earned income for the taxable year does not exceed $6,100, 25.1 percent of such earned income,

“(B) in the case of a taxpayer whose earned income for the taxable year exceeds $6,100 but does not exceed $9,000, $1,530 plus 17.1 percent of such earned income in excess of $6,100,

“(C) in the case of a taxpayer whose earned income (or, if greater, adjusted gross income) for the taxable year exceeds $9,000, but does not exceed $49,494, $2,025 minus 5 percent of such earned income or adjusted gross income in excess of $9,000, or

“(D) in the case of a taxpayer whose earned income (or, if greater, adjusted gross income) for the taxable year exceeds $49,494, $0.

“(2) Head of household—In the case of an eligible taxpayer who is a head of a household (as defined in section 2(b)), the earned income amount shall be equal to—

“(A) in the case of a taxpayer whose earned income for the taxable year does not exceed $9,150, 25.1 percent of such earned income,

“(B) in the case of a taxpayer whose earned income for the taxable year exceeds $9,150 but does not exceed $13,500, $2,294 plus 17.1 percent of such earned income in excess of $9,150,

“(C) in the case of a taxpayer whose earned income (or, if greater, adjusted gross income) for the taxable year exceeds $13,500, but does not exceed $74,241, $3,037 minus 5 percent of such earned income or adjusted gross income in excess of $13,500, or

“(D) in the case of a taxpayer whose earned income (or, if greater, adjusted gross income) for the taxable year exceeds $74,241, $0.

“(3) Married filing jointly—In the case of an eligible taxpayer filing a joint return under section 6013, the earned income amount shall be determined pursuant to paragraph (1), except that the dollar amounts in effect under such paragraph shall be multiplied by 2.

“(c) Child benefit amount

“(1) In general—In the case of an eligible taxpayer with a qualifying child, the child benefit amount shall be equal to 15 percent of the earned income of such taxpayer for the taxable year.

“(2) Limitations

“(A) Limitation based on number of children—The child benefit amount determined under paragraph (1) shall not exceed an amount equal to the product of—

“(i) the number of qualifying children of the taxpayer, multiplied by

“(ii) $1,590.

“(B) Reduction based on earnings or adjusted gross income—The child benefit amount determined under this subsection (as determined after application of subparagraph (A)) shall be reduced (but not below zero) by an amount equal to 5 percent of the earned income (or, if greater, the adjusted gross income) of the taxpayer for the taxable year in excess of $75,000 ($110,000 in the case of a joint return).

“(d) Additional child benefit amount

“(1) In general—In the case of an eligible taxpayer with a qualifying child, the additional child benefit amount shall be equal to—

“(A) in the case of a taxpayer whose earned income for the taxable year does not exceed $20,000, the applicable percentage of such earned income,

“(B) in the case of a taxpayer whose earned income exceeds $20,000 but does not exceed $25,000, the applicable percentage of $20,000,

“(C) in the case of a taxpayer whose earned income (or, if greater, adjusted gross income) exceeds $25,000 but does not exceed the applicable amount, an amount equal to—

“(i) the applicable percentage of $20,000, minus

“(ii) 15 percent of such earned income or adjusted gross income in excess of $25,000, or

“(D) in the case of a taxpayer whose earned income (or, if greater, adjusted gross income) exceeds the applicable amount, $0.

“(2) Applicable percentage—For purposes of paragraph (1), the applicable percentage is—

“(A) in the case of a taxpayer with 1 qualifying child, 11 percent,

“(B) in the case of a taxpayer with 2 qualifying children, 17 percent, and

“(C) in the case of a taxpayer with 3 or more qualifying children, 19 percent.

“(3) Applicable amount—For purposes of paragraph (1), the applicable amount is—

“(A) in the case of a taxpayer with 1 qualifying child, $39,667,

“(B) in the case of a taxpayer with 2 qualifying children, $47,667, and

“(C) in the case of a taxpayer with 3 or more qualifying children, $50,333.

“(e) Eligible taxpayer

“(1) In general—The term eligible taxpayer means an individual—

“(A) whose principal place of abode is in the United States for more than one-half of such taxable year, and

“(B) is not a dependent (as defined under section 152) to another taxpayer for any taxable year beginning in the same calendar year as such taxable year.

“(2) Qualifying child ineligible—If an individual is the qualifying child of a taxpayer for any taxable year of such taxpayer beginning in a calendar year, such individual shall not be treated as an eligible taxpayer for any taxable year of such individual beginning in such calendar year.

“(3) Exception for taxpayer claiming benefits under section 911—The term “eligible taxpayer” does not include any taxpayer who claims the benefits of section 911 for the taxable year.

“(4) Limitation on eligibility of nonresident aliens—The term “eligible taxpayer” shall not include any individual who is a nonresident alien individual for any portion of the taxable year unless such individual is treated for such taxable year as a resident of the United States for purposes of this chapter by reason of an election under subsection (g) or (h) of section 6013.

“(5) Identification number requirement—No credit shall be allowed under this section to an eligible taxpayer who does not include on the return of tax for the taxable year—

“(A) such individual's taxpayer identification number, and

“(B) if the individual is married (within the meaning of section 7703), the taxpayer identification number of such individual's spouse.

“(6) Taxpayers who do not include TIN, etc., of any qualifying child—No credit shall be allowed under this section to any eligible taxpayer who has one or more qualifying children if no qualifying child of such taxpayer is taken into account under subsection (c) or (d) by reason of subsection (f)(4).

“(7) Treatment of military personnel stationed outside of the United States—For purposes of paragraph (1)(A) and subsection (f)(3), the principal place of abode of a member of the Armed Forces of the United States shall be treated as in the United States during any period during which such member is stationed outside the United States while serving on extended active duty with the Armed Forces of the United States. For purposes of the preceding sentence, the term “extended active duty” means any period of active duty pursuant to a call or order to such duty for a period in excess of 90 days or for an indefinite period.

“(8) Joint return

“(A) Married individuals—In the case of an individual who is married (within the meaning of section 7703), this section shall apply only if a joint return is filed for the taxable year under section 6013.

“(B) Other—In the case of taxpayer filing a joint return under section 6013, such taxpayer shall not be treated as an eligible taxpayer for purposes of this section unless either the taxpayer or the taxpayer's spouse satisfies each of the requirements under this subsection.

“(f) Qualifying child

“(1) In general—The term qualifying child means a qualifying child of the taxpayer (as defined in section 152(c), determined without regard to paragraph (1)(D) thereof and section 152(e)).

“(2) Married individual—The term qualifying child shall not include an individual who is married as of the close of the eligible taxpayer's taxable year unless the individual qualifies as a dependent (as defined under section 152) of the taxpayer for such taxable year.

“(3) Place of abode—For purposes of paragraph (1), the requirements of section 152(c)(1)(B) shall be met only if the principal place of abode is in the United States.

“(4) Identification requirements

“(A) In general—A qualifying child shall not be taken into account under subsection (c) or (d) unless the taxpayer includes the name, age, and TIN of the qualifying child on the return of tax for the taxable year.

“(B) Other methods—The Secretary may prescribe other methods for providing the information described in subparagraph (A).

“(g) Earned income

“(1) In general—The term earned income means—

“(A) wages, salaries, tips, and other employee compensation, but only if such amounts are includible in gross income for the taxable year, plus

“(B) the amount of the taxpayer's net earnings from self-employment for the taxable year (within the meaning of section 1402(a)), but such net earnings shall be determined with regard to the deduction allowed to the taxpayer by section 164(f).

“(2) Special rules—For purposes of paragraph (1)—

“(A) no amount received as a pension or annuity shall be taken into account,

“(B) no amount to which section 871(a) applies (relating to income of nonresident alien individuals not connected with United States business) shall be taken into account,

“(C) no amount received for services provided by an individual while the individual is an inmate at a penal institution shall be taken into account,

“(D) no amount described in paragraph (1) received for service performed in work activities as defined in paragraph (4) or (7) of section 407(d) of the Social Security Act to which the taxpayer is assigned under any State program under part A of title IV of such Act shall be taken into account, but only to the extent such amount is subsidized under such State program, and

“(E) a taxpayer may elect to treat amounts excluded from gross income by reason of section 112 as earned income.

“(h) Taxable year must be full taxable year—Except in the case of a taxable year closed by reason of the death of the eligible taxpayer, no credit shall be allowable under this section in the case of a taxable year covering a period of less than 12 months.

“(i) Coordination with certain means-Tested programs—For purposes of—

“(1) the United States Housing Act of 1937,

“(2) title V of the Housing Act of 1949,

“(3) section 101 of the Housing and Urban Development Act of 1965,

“(4) sections 221(d)(3), 235, and 236 of the National Housing Act, and

“(5) the Food and Nutrition Act of 2008,

“(j) Amount of credit To be determined under tables—The amount of the credit allowed by this section shall be determined under tables prescribed by the Secretary.

“(k) Denial of credit for individuals having excessive investment income

“(1) In general—No credit shall be allowed under subsection (a) for the taxable year if the aggregate amount of disqualified income of the taxpayer for the taxable year exceeds $5,000.

“(2) Disqualified income—For purposes of paragraph (1), the term disqualified income means—

“(A) interest or dividends to the extent includible in income for the taxable year,

“(B) interest received or accrued during the taxable year which is exempt from tax imposed by this chapter,

“(C) the excess (if any) of—

“(i) gross income from rents or royalties not derived in the ordinary course of a trade or business, over

“(ii) the sum of—

“(I) the deductions (other than interest) which are clearly and directly allocable to such gross income, plus

“(II) interest deductions properly allocable to such gross income,

“(D) the capital gain net income (as defined in section 1222) of the taxpayer for such taxable year, and

“(E) the excess (if any) of—

“(i) the aggregate income from all passive activities for the taxable year (determined without regard to any amount included in earned income under subsection (f) or described in a preceding subparagraph), over

“(ii) the aggregate losses from all passive activities for the taxable year (as so determined).

“(3) Passive activity—For purposes of paragraph (2)(E), the term passive activity has the meaning given such term by section 469.

“(l) Inflation adjustments

“(1) In general—In the case of any taxable year beginning after 2015, each of the dollar amounts in subsections (b), (c), (d), and (j)(1) shall each 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 2014” for “calendar year 1992” in subparagraph (B) thereof.

“(2) Rounding—If any dollar amount in subsections (b), (c), (d), and (j)(1), after being increased under paragraph (1), is not a multiple of $100, such dollar amount shall be rounded to the nearest multiple of $100.

“(m) 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.”

(b)
Conforming amendments—
(1)
Section 86(f)(2) is amended by striking “section 32(c)(2)” and inserting “section 32(g)”.
(2)
Section 129(e)(2) is amended by striking “section 32(c)(2)” and inserting “section 32(g)”.
(3)
Section 6213(g)(2) is amended—
(A)
in subparagraph (G), by striking “section 32(c)(2)(A)” and inserting “section 32(g)(1)”, and
(B)
in subparagraph (K), by striking “section 32(k)(2)” and inserting “section 32(m)(2)”.
(4)
Paragraph (2) of section 1324(b) of title 31, United States Code, is amended by inserting “32,” after “25A,”.
(5)
The table of sections for subpart C of part IV of subchapter A of chapter 1 of subtitle A is amended by striking the item relating to section 32 and inserting the following:
(c)
Effective date— The amendments made by this section shall apply to taxable years beginning after December 31, 2015.

Sec. 207 Technical and conforming amendments

The Secretary of the Treasury or the Secretary’s delegate shall, not later than 90 days after the date of the enactment of this Act, submit to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate a draft of any technical and conforming changes in the Internal Revenue Code of 1986 which are necessary to reflect throughout such Code the purposes of the provisions of, and amendments made by, this title.

B Corporate tax reforms

Sec. 211 Corporate income tax rate reduction

(a)
In general— Subsection (b) of section 11 is amended to read as follows:

“(b) Amount of tax—The amount of the tax imposed by subsection (a) shall be an amount equal to 17 percent of the taxable income.”

(b)
Conforming amendment— Section 1551 is amended—
(1)
by striking “benefits of the graduated corporate rates and” in the heading,
(2)
by striking “the benefits of the rates contained in section 11(b) which are lower than the highest rate specified in such section, or” in subsection (a), and
(3)
by striking “such benefits or credit” in subsection (a) and inserting “such credit”.
(c)
Effective date— The amendments made by this section shall apply to taxable years beginning after December 31, 2015.