[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 4083 Introduced in Senate (IS)]

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119th CONGRESS
  2d Session
                                S. 4083

      To amend the Internal Revenue Code of 1986 to make certain 
 modifications in relation to the taxation of income required to fund 
             basic living expenses, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             March 12, 2026

 Mr. Van Hollen (for himself, Mr. Kelly, Mrs. Gillibrand, Mr. Booker, 
     Mr. Kim, Mr. Durbin, Mr. Sanders, Mr. Merkley, Mr. Coons, Mr. 
  Blumenthal, Mr. Schatz, Ms. Baldwin, Ms. Hirono, Mr. Heinrich, Mr. 
   King, Mr. Markey, Mr. Welch, Mr. Schiff, and Ms. Blunt Rochester) 
introduced the following bill; which was read twice and referred to the 
                          Committee on Finance

_______________________________________________________________________

                                 A BILL


 
      To amend the Internal Revenue Code of 1986 to make certain 
 modifications in relation to the taxation of income required to fund 
             basic living expenses, 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.

    This Act may be cited as the ``Working Americans' Tax Cut Act''.

SEC. 2. ALTERNATIVE MAXIMUM TAX FOR LOW-INCOME INDIVIDUALS.

    (a) In General.--Part I of subchapter A of chapter 1 of the 
Internal Revenue Code of 1986 is amended by inserting after section 1 
the following new section:

``SEC. 1A. ALTERNATIVE MAXIMUM TAX FOR LOW- AND MIDDLE-INCOME 
              INDIVIDUALS.

    ``(a) In General.--In the case of a qualified individual, the tax 
imposed under section 1 for any taxable year shall not exceed 25.5 
percent of the excess of--
            ``(1) the taxpayer's modified adjusted gross income for 
        such taxable year, over
            ``(2) the cost-of-living exemption for such taxable year.
    ``(b) Qualified Individual.--
            ``(1) In general.--For purposes of this section, the term 
        `qualified individual' means, with respect to any taxable year, 
        any individual if the taxpayer's modified adjusted gross income 
        for such taxable year is less than 175 percent of the cost-of-
        living exemption for such taxable year.
            ``(2) Exception.--The term `qualified individual' shall not 
        include any person described in section 63(c)(6).
    ``(c) Cost-of-Living Exemption.--For purposes of this section--
            ``(1) In general.--The term `cost-of-living exemption' 
        means, with respect to any taxable year--
                    ``(A) in the case of a taxpayer not described in 
                subparagraph (B) or (C), 100 percent of the annualized 
                cost-of-living wage,
                    ``(B) in the case of a joint return, 200 percent of 
                the annualized cost-of-living wage, and
                    ``(C) in the case of a head of household, 140 
                percent of the annualized cost-of-living wage.
            ``(2) Annualized cost of living wage.--
                    ``(A) In general.--The term `annualized cost-of-
                living wage' means, with respect to any taxable year, 
                an amount equal to $46,000, multiplied by the ratio 
                of--
                            ``(i) the CPI-U for the calendar year 
                        preceding the calendar year in which such 
                        taxable year begins, to
                            ``(ii) the CPI-U for the calendar year 
                        preceding the calendar year of the date of 
                        enactment of the Working Americans' Tax Cut 
                        Act.
                    ``(B) CPI-U.--For purposes of this paragraph, the 
                term `CPI-U' means, when used with respect to a 
                calendar year, the Consumer Price Index for all urban 
                consumers, as published by the Bureau of Labor 
                Statistics, for September of such year.
    ``(d) Modified Adjusted Gross Income.--For purposes of this 
section, the term `modified adjusted gross income' means adjusted gross 
income increased by--
            ``(1) any amount excluded from gross income under section 
        911, 931, or 933, and
            ``(2) an amount equal to the portion of the taxpayer's 
        social security benefits (as defined in section 86(d)) which is 
        not included in gross income under section 86 for the taxable 
        year.''.
    (b) Clerical Amendment.--The table of sections for part I of 
subchapter A of chapter 1 of such Code is amended by inserting after 
the item relating to section 1 the following new item:

``Sec. 1A. Alternative maximum tax for low- and middle-income 
                            individuals.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2025.

SEC. 3. SURCHARGE ON HIGH INCOME INDIVIDUALS.

    (a) In General.--Subchapter A of chapter 1 of the Internal Revenue 
Code of 1986 is amended by adding at the end the following new part:

           ``PART VIII--SURCHARGE ON HIGH INCOME INDIVIDUALS

``Sec. 59B. Surcharge on high income individuals.

``SEC. 59B. SURCHARGE ON HIGH INCOME INDIVIDUALS.

    ``(a) General Rule.--In the case of a taxpayer other than a 
corporation, there is hereby imposed (in addition to any other tax 
imposed by this subtitle) a tax equal to the sum of--
            ``(1) 5 percent of so much of the modified adjusted gross 
        income of the taxpayer as exceeds $1,000,000, but does not 
        exceed $2,000,000,
            ``(2) 10 percent of so much of the modified adjusted gross 
        income of the taxpayer as exceeds $2,000,000, but does not 
        exceed $5,000,000, plus
            ``(3) 12 percent of so much of the modified adjusted gross 
        income of the taxpayer as exceeds $5,000,000.
    ``(b) Inflation Adjustment.--
            ``(1) In general.--In the case of any taxable year 
        beginning after 2026, subsection (a) shall be applied by 
        substituting each dollar amount in such subsection with an 
        amount equal to the product of--
                    ``(A) such dollar amount (as determined without 
                regard to this subsection), multiplied by
                    ``(B) an amount equal to the ratio of--
                            ``(i) the CPI-U for the calendar year 
                        preceding the calendar year in which such 
                        taxable year begins, to
                            ``(ii) the CPI-U for the calendar year 
                        preceding the calendar year of the date of 
                        enactment of the Working Americans' Tax Cut 
                        Act.
            ``(2) CPI-U.--For purposes of this subsection, the term 
        `CPI-U' means, when used with respect to a calendar year, the 
        Consumer Price Index for all urban consumers, as published by 
        the Bureau of Labor Statistics, for September of such year.
    ``(c) Taxpayers Making a Joint Return.--In the case of any taxpayer 
filing a joint return under section 6013, subsection (a) shall be 
applied (after the application of subsection (b)) by increasing each of 
the dollar amounts by an amount equal to 50 percent of such dollar 
amount.
    ``(d) Modified Adjusted Gross Income.--For purposes of this 
section, the term `modified adjusted gross income' means adjusted gross 
income reduced by any deduction (not taken into account in determining 
adjusted gross income) allowed for investment interest (as defined in 
section 163(d)). In the case of an estate or trust, adjusted gross 
income shall be determined as provided in section 67(e).
    ``(e) Special Rules.--
            ``(1) Citizens and residents living abroad.--The dollar 
        amount in effect under subsection (a) (after the application of 
        subsections (b) and (c)) shall be decreased by the excess of--
                    ``(A) the amounts excluded from the taxpayer's 
                gross income under section 911, over
                    ``(B) the amounts of any deductions or exclusions 
                disallowed under section 911(d)(6) with respect to the 
                amounts described in subparagraph (A).
            ``(2) Charitable trusts.--Subsection (a) shall not apply to 
        a trust all the unexpired interests in which are devoted to one 
        or more of the purposes described in section 170(c)(2)(B).
            ``(3) Not treated as tax imposed by this chapter for 
        certain purposes.--The tax imposed under this section shall not 
        be treated as tax imposed by this chapter for purposes of 
        determining the amount of any credit under this chapter or for 
        purposes of section 55.''.
    (b) Clerical Amendment.--The table of parts for subchapter A of 
chapter 1 of the Internal Revenue Code of 1986 is amended by adding at 
the end the following new item:

          ``Part VIII--Surcharge on High Income Individuals''.

    (c) Section 15 Not To Apply.--The amendment made by subsection (a) 
shall not be treated as a change in a rate of tax for purposes of 
section 15 of the Internal Revenue Code of 1986.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2025.
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