Bill Summary
The "Dependent Income Exclusion Act of 2025" is proposed legislation aimed at amending the Internal Revenue Code to modify how certain dependent income is considered when determining eligibility for premium tax credits under the Affordable Care Act.
Key provisions of the bill include:
1. **Exclusion of Dependent Income**: The bill allows for the exclusion of certain wages and net earnings from self-employment of dependents when calculating a taxpayer's modified adjusted gross income (MAGI) for premium tax credit eligibility. This exclusion applies to dependents under 18 years old or dependents aged 18 to 24 who are participating in a qualified job-training or apprenticeship program.
2. **Income Limitation**: The exclusion applies only to dependent income that does not exceed 15% of the taxpayer's MAGI, ensuring that only a limited amount of dependent income is disregarded for credit calculations.
3. **Considerations for Medicaid Non-Expansion States**: Special provisions are included for taxpayers living in states that do not expand Medicaid, allowing for the exclusion of dependent income only if it does not reduce household income below 100% of the poverty line.
4. **Conforming Amendments**: The bill also includes amendments to ensure consistency across related sections of the Internal Revenue Code and the Affordable Care Act regarding dependent income reporting.
5. **Effective Date**: The changes would take effect for taxable years beginning after the enactment of the legislation.
Overall, this bill seeks to make premium tax credits more accessible by allowing taxpayers to disregard certain dependent income, potentially increasing the affordability of health insurance for families.
Possible Impacts
The "Dependent Income Exclusion Act of 2025" could affect people in several significant ways:
1. **Increased Eligibility for Premium Tax Credits**: By excluding certain dependent income from the calculation of modified adjusted gross income (MAGI), families with dependents who earn income (like part-time jobs or apprenticeship wages) may find that they become eligible for premium tax credits. This can lower their healthcare premiums under the Affordable Care Act, making health insurance more affordable for lower- to middle-income families.
2. **Support for Young Workers and Apprentices**: The legislation acknowledges and supports young dependents participating in job-training or apprenticeship programs. By excluding their income from the family’s MAGI calculation, it encourages families to allow their dependents to gain work experience without the fear of losing financial support or tax credits. This can help in fostering a skilled workforce and reducing youth unemployment.
3. **Impact on Families in Medicaid Non-Expansion States**: For families living in states that have not expanded Medicaid, the legislation provides a specific provision that allows for the exclusion of dependent income under certain conditions. This means that even in states where access to Medicaid is limited, families can still benefit from the tax credits, potentially improving their access to healthcare. However, it also creates a stress test by ensuring that the exclusion does not push their household income below the poverty line, which could affect how families manage their dependents' earnings.
[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3769 Introduced in House (IH)]
<DOC>
119th CONGRESS
1st Session
H. R. 3769
To amend the Internal Revenue Code of 1986 to exclude certain dependent
income when calculating modified adjusted gross income for the purposes
of eligibility for premium tax credits.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
June 5, 2025
Mr. Horsford (for himself and Ms. Moore of Wisconsin) 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 exclude certain dependent
income when calculating modified adjusted gross income for the purposes
of eligibility for premium tax credits.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Dependent Income Exclusion Act of
2025''.
SEC. 2. EXCLUSION OF CERTAIN DEPENDENT INCOME FOR PURPOSES OF PREMIUM
TAX CREDIT.
(a) In General.--Paragraph (2) of section 36B(d) of the Internal
Revenue Code of 1986 is amended by adding at the end the following new
subparagraph:
``(C) Exception for certain dependent income.--
``(i) In general.--There shall not be taken
into account under subparagraph (A)(ii) any
wages (determined under section 3401(a)) or net
earnings from self-employment (as defined in
section 1402(a)) of any dependent of the
taxpayer who--
``(I) has not attained age 18 as of
the last day of the calendar year in
which the taxable year of the taxpayer
begins, or
``(II) has not attained age 24 as
of the last day of such calendar year
and, during each of 5 calendar months
during such calendar year, is described
in subparagraph (A) or (B) of section
152(f)(2) (applied by substituting
`part-time or full-time' for `full-
time' each place it appears, and by
deeming any for-profit educational
institution not to be an educational
organization described in section
170(b)(1)(A)(ii)), is participating in
a qualified job-training program, or is
participating in an apprenticeship
program registered under the Act of
August 16, 1937 (commonly known as the
`National Apprenticeship Act'; 50 Stat.
664, chapter 663; 29 U.S.C. 50 et
seq.).
``(ii) Qualified job-training program.--For
purposes of this subparagraph, the term
`qualified job-training program' means any
program of training services described in
section 134(c)(3) of the Workforce Innovation
and Opportunity Act (29 U.S.C. 3174(c)(3)).
``(iii) Limitation.--Clause (i) shall not
apply to so much of the aggregate income of all
dependents of the taxpayer as exceeds an amount
equal to 15 percent of the modified adjusted
gross income of the taxpayer.
``(iv) Taxpayers residing in medicaid non-
expansion states.--In the case of a taxpayer
residing in a State which (as of the first day
of the taxable year) does not provide for
eligibility under clause (i)(VIII) or (ii)(XX)
of section 1902(a)(10)(A) of the Social
Security Act for medical assistance under title
XIX of such Act (or a waiver of the State plan
approved under section 1115 of the Social
Security Act), clause (i) shall apply to any
dependent of such taxpayer only to the extent
that the application of such clause would not
reduce the household income below 100 percent
of the amount equal to the poverty line for a
family of the size involved.''.
(b) Conforming Amendments.--
(1) Clause (ii) of section 36B(d)(2)(A) of the Internal
Revenue Code of 1986 is amended by inserting ``, except as
provided in subparagraph (C),'' after ``individuals''.
(2) Paragraph (3) of section 1411(b) of the Patient
Protection and Affordable Care Act (42 U.S.C. 18081) is amended
by adding at the end the following new subparagraph:
``(D) Information regarding certain dependents.--
Information regarding whether section 36B(d)(2)(C) will
apply to any individuals taken into account as members
of the household of the enrollee, and the amount of
income from employment of each such individual for the
taxable year described in subparagraph (A).''.
(c) Effective Date.--The amendments made by this section shall
apply to credits allowed under section 36B of the Internal Revenue Code
of 1986 for, and advance payments of credits under section 1412 of the
Patient Protection and Affordable Care Act with respect to, taxable
years beginning after the date of the enactment of this Act.
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