26 U.S.C. § 1. Tax imposed
- (a)(a)
Married individuals filing joint returns and surviving spouses
There is hereby imposed on the taxable income of—
- (1)(a)(1)every married individual (as defined in section 7703) who makes a single return jointly with his spouse under section 6013, and
- (2)(a)(2)every surviving spouse (as defined in section 2(a)),
a tax determined in accordance with the following table:If taxable income is:The tax is:Not over $36,90015% of taxable income.Over $36,900 but not over $89,150$5,535, plus 28% of the excess over $36,900.Over $89,150 but not over $140,000$20,165, plus 31% of the excess over $89,150.Over $140,000 but not over $250,000$35,928.50, plus 36% of the excess over $140,000.Over $250,000$75,528.50, plus 39.6% of the excess over $250,000. - (b)(b)
Heads of households
There is hereby imposed on the taxable income of every head of a household (as defined in section 2(b)) a tax determined in accordance with the following table:If taxable income is:The tax is:Not over $29,60015% of taxable income.Over $29,600 but not over $76,400$4,440, plus 28% of the excess over $29,600.Over $76,400 but not over $127,500$17,544, plus 31% of the excess over $76,400.Over $127,500 but not over $250,000$33,385, plus 36% of the excess over $127,500.Over $250,000$77,485, plus 39.6% of the excess over $250,000. - (c)(c)
Unmarried individuals (other than surviving spouses and heads of households)
There is hereby imposed on the taxable income of every individual (other than a surviving spouse as defined in section 2(a) or the head of a household as defined in section 2(b)) who is not a married individual (as defined in section 7703) a tax determined in accordance with the following table:If taxable income is:The tax is:Not over $22,10015% of taxable income.Over $22,100 but not over $53,500$3,315, plus 28% of the excess over $22,100.Over $53,500 but not over $115,000$12,107, plus 31% of the excess over $53,500.Over $115,000 but not over $250,000$31,172, plus 36% of the excess over $115,000.Over $250,000$79,772, plus 39.6% of the excess over $250,000. - (d)(d)
Married individuals filing separate returns
There is hereby imposed on the taxable income of every married individual (as defined in section 7703) who does not make a single return jointly with his spouse under section 6013, a tax determined in accordance with the following table:If taxable income is:The tax is:Not over $18,45015% of taxable income.Over $18,450 but not over $44,575$2,767.50, plus 28% of the excess over $18,450.Over $44,575 but not over $70,000$10,082.50, plus 31% of the excess over $44,575.Over $70,000 but not over $125,000$17,964.25, plus 36% of the excess over $70,000.Over $125,000$37,764.25, plus 39.6% of the excess over $125,000. - (e)(e)
Estates and trusts
There is hereby imposed on the taxable income of—
taxable under this subsection a tax determined in accordance with the following table:If taxable income is:The tax is:Not over $1,50015% of taxable income.Over $1,500 but not over $3,500$225, plus 28% of the excess over $1,500.Over $3,500 but not over $5,500$785, plus 31% of the excess over $3,500.Over $5,500 but not over $7,500$1,405, plus 36% of the excess over $5,500.Over $7,500$2,125, plus 39.6% of the excess over $7,500. - (f)(f)
Phaseout of marriage penalty in 15-percent bracket; adjustments in tax tables so that inflation will not result in tax increases
- (1)(f)(1)
In general
Not later than December 15 of 1993, and each subsequent calendar year, the Secretary shall prescribe tables which shall apply in lieu of the tables contained in subsections (a), (b), (c), (d), and (e) with respect to taxable years beginning in the succeeding calendar year. - (2)(f)(2)
Method of prescribing tables
The table which under paragraph (1) is to apply in lieu of the table contained in subsection (a), (b), (c), (d), or (e), as the case may be, with respect to taxable years beginning in any calendar year shall be prescribed—
- (A)(f)(2)(A)
except as provided in paragraph (8), by increasing the minimum and maximum dollar amounts for each bracket for which a tax is imposed under such table by the cost-of-living adjustment for such calendar year, determined—
- (i)(f)(2)(A)(i)except as provided in clause (ii), by substituting “1992” for “2016” in paragraph (3)(A)(ii), and
- (ii)(f)(2)(A)(ii)in the case of adjustments to the dollar amounts at which the 36 percent rate bracket begins or at which the 39.6 percent rate bracket begins, by substituting “1993” for “2016” in paragraph (3)(A)(ii),
- (B)(f)(2)(B)by not changing the rate applicable to any rate bracket as adjusted under subparagraph (A), and
- (C)(f)(2)(C)by adjusting the amounts setting forth the tax to the extent necessary to reflect the adjustments in the rate brackets.
- (3)(f)(3)
Cost-of-living adjustment
For purposes of this subsection—
- (A)(f)(3)(A)
In general
The cost-of-living adjustment for any calendar year is the percentage (if any) by which—
- (i)(f)(3)(A)(i)the C-CPI-U for the preceding calendar year, exceeds
- (ii)(f)(3)(A)(ii)the CPI for calendar year 2016, multiplied by the amount determined under subparagraph (B).
- (B)(f)(3)(B)
Amount determined
The amount determined under this clause is the amount obtained by dividing—
- (i)(f)(3)(B)(i)the C-CPI-U for calendar year 2016, by
- (ii)(f)(3)(B)(ii)the CPI for calendar year 2016.
- (C)(f)(3)(C)
Special rule for adjustments with a base year after 2016
For purposes of any provision of this title which provides for the substitution of a year after 2016 for “2016” in subparagraph (A)(ii), subparagraph (A) shall be applied by substituting “the C-CPI-U for calendar year 2016” for “the CPI for calendar year 2016” and all that follows in clause (ii) thereof.
- (4)(f)(4)
CPI for any calendar year
For purposes of paragraph (3), the CPI for any calendar year is the average of the Consumer Price Index as of the close of the 12-month period ending on August 31 of such calendar year. - (5)(f)(5)
Consumer Price Index
For purposes of paragraph (4), the term “Consumer Price Index” means the last Consumer Price Index for all-urban consumers published by the Department of Labor. For purposes of the preceding sentence, the revision of the Consumer Price Index which is most consistent with the Consumer Price Index for calendar year 1986 shall be used. - (6)(f)(6)
C-CPI-U
For purposes of this subsection—
- (A)(f)(6)(A)
In general
The term “C-CPI-U” means the Chained Consumer Price Index for All Urban Consumers (as published by the Bureau of Labor Statistics of the Department of Labor). The values of the Chained Consumer Price Index for All Urban Consumers taken into account for purposes of determining the cost-of-living adjustment for any calendar year under this subsection shall be the latest values so published as of the date on which such Bureau publishes the initial value of the Chained Consumer Price Index for All Urban Consumers for the month of August for the preceding calendar year. - (B)(f)(6)(B)
Determination for calendar year
The C-CPI-U for any calendar year is the average of the C-CPI-U as of the close of the 12-month period ending on August 31 of such calendar year.
- (7)(f)(7)
Rounding
- (A)(f)(7)(A)
In general
If any increase determined under paragraph (2)(A), section 63(c)(4), section 68(b)(2) or section 151(d)(4) is not a multiple of $50, such increase shall be rounded to the next lowest multiple of $50. - (B)(f)(7)(B)
Table for married individuals filing separately
In the case of a married individual filing a separate return, subparagraph (A) (other than with respect to sections 63(c)(4) and 151(d)(4)(A)) shall be applied by substituting “$25” for “$50” each place it appears.
- (8)(f)(8)
Elimination of marriage penalty in 15-percent bracket
With respect to taxable years beginning after December 31, 2003, in prescribing the tables under paragraph (1)—
- (A)(f)(8)(A)the maximum taxable income in the 15-percent rate bracket in the table contained in subsection (a) (and the minimum taxable income in the next higher taxable income bracket in such table) shall be 200 percent of the maximum taxable income in the 15-percent rate bracket in the table contained in subsection (c) (after any other adjustment under this subsection), and
- (B)(f)(8)(B)the comparable taxable income amounts in the table contained in subsection (d) shall be ½ of the amounts determined under subparagraph (A).
- (g)(g)
Certain unearned income of children taxed as if parent’s income
- (1)(g)(1)
In general
In the case of any child to whom this subsection applies, the tax imposed by this section shall be equal to the greater of—
- (A)(g)(1)(A)the tax imposed by this section without regard to this subsection, or
- (B)(g)(1)(B)
the sum of—
- (i)(g)(1)(B)(i)the tax which would be imposed by this section if the taxable income of such child for the taxable year were reduced by the net unearned income of such child, plus
- (ii)(g)(1)(B)(ii)such child’s share of the allocable parental tax.
- (2)(g)(2)
Child to whom subsection applies
This subsection shall apply to any child for any taxable year if—
- (A)(g)(2)(A)
such child—
- (i)(g)(2)(A)(i)has not attained age 18 before the close of the taxable year, or
- (ii)(g)(2)(A)(ii)
- (I)(g)(2)(A)(ii)(I)has attained age 18 before the close of the taxable year and meets the age requirements of section 152(c)(3) (determined without regard to subparagraph (B) thereof), and
- (II)(g)(2)(A)(ii)(II)whose earned income (as defined in section 911(d)(2)) for such taxable year does not exceed one-half of the amount of the individual’s support (within the meaning of section 152(c)(1)(D) after the application of section 152(f)(5) (without regard to subparagraph (A) thereof)) for such taxable year,
- (B)(g)(2)(B)either parent of such child is alive at the close of the taxable year, and
- (C)(g)(2)(C)such child does not file a joint return for the taxable year.
- (3)(g)(3)
Allocable parental tax
For purposes of this subsection—
- (A)(g)(3)(A)
In general
The term “allocable parental tax” means the excess of—
- (i)(g)(3)(A)(i)the tax which would be imposed by this section on the parent’s taxable income if such income included the net unearned income of all children of the parent to whom this subsection applies, over
- (ii)(g)(3)(A)(ii)the tax imposed by this section on the parent without regard to this subsection.
For purposes of clause (i), net unearned income of all children of the parent shall not be taken into account in computing any exclusion, deduction, or credit of the parent. - (B)(g)(3)(B)
Child’s share
A child’s share of any allocable parental tax of a parent shall be equal to an amount which bears the same ratio to the total allocable parental tax as the child’s net unearned income bears to the aggregate net unearned income of all children of such parent to whom this subsection applies. - (C)(g)(3)(C)
Special rule where parent has different taxable year
Except as provided in regulations, if the parent does not have the same taxable year as the child, the allocable parental tax shall be determined on the basis of the taxable year of the parent ending in the child’s taxable year.
- (4)(g)(4)
Net unearned income
For purposes of this subsection—
- (A)(g)(4)(A)
In general
The term “net unearned income” means the excess of—
- (i)(g)(4)(A)(i)the portion of the adjusted gross income for the taxable year which is not attributable to earned income (as defined in section 911(d)(2)), over
- (ii)(g)(4)(A)(ii)
the sum of—
- (I)(g)(4)(A)(ii)(I)the amount in effect for the taxable year under section 63(c)(5)(A) (relating to limitation on standard deduction in the case of certain dependents), plus
- (II)(g)(4)(A)(ii)(II)the greater of the amount described in subclause (I) or, if the child itemizes his deductions for the taxable year, the amount of the itemized deductions allowed by this chapter for the taxable year which are directly connected with the production of the portion of adjusted gross income referred to in clause (i).
- (B)(g)(4)(B)
Limitation based on taxable income
The amount of the net unearned income for any taxable year shall not exceed the individual’s taxable income for such taxable year. - (C)(g)(4)(C)
Treatment of distributions from qualified disability trusts
For purposes of this subsection, in the case of any child who is a beneficiary of a qualified disability trust (as defined in section 642(b)(2)(C)(ii)), any amount included in the income of such child under sections 652 and 662 during a taxable year shall be considered earned income of such child for such taxable year.
- (5)(g)(5)
Special rules for determining parent to whom subsection applies
For purposes of this subsection, the parent whose taxable income shall be taken into account shall be—
- (A)(g)(5)(A)in the case of parents who are not married (within the meaning of section 7703), the custodial parent (within the meaning of section 152(e)) of the child, and
- (B)(g)(5)(B)in the case of married individuals filing separately, the individual with the greater taxable income.
- (6)(g)(6)
Providing of parent’s TIN
The parent of any child to whom this subsection applies for any taxable year shall provide the TIN of such parent to such child and such child shall include such TIN on the child’s return of tax imposed by this section for such taxable year. - (7)(g)(7)
Election to claim certain unearned income of child on parent’s return
- (A)(g)(7)(A)
In general
If—
- (i)(g)(7)(A)(i)any child to whom this subsection applies has gross income for the taxable year only from interest and dividends (including Alaska Permanent Fund dividends),
- (ii)(g)(7)(A)(ii)such gross income is more than the amount described in paragraph (4)(A)(ii)(I) and less than 10 times the amount so described,
- (iii)(g)(7)(A)(iii)no estimated tax payments for such year are made in the name and TIN of such child, and no amount has been deducted and withheld under section 3406, and
- (iv)(g)(7)(A)(iv)the parent of such child (as determined under paragraph (5)) elects the application of subparagraph (B),
such child shall be treated (other than for purposes of this paragraph) as having no gross income for such year and shall not be required to file a return under section 6012. - (B)(g)(7)(B)
Income included on parent’s return
In the case of a parent making the election under this paragraph—
- (i)(g)(7)(B)(i)the gross income of each child to whom such election applies (to the extent the gross income of such child exceeds twice the amount described in paragraph (4)(A)(ii)(I)) shall be included in such parent’s gross income for the taxable year,
- (ii)(g)(7)(B)(ii)
the tax imposed by this section for such year with respect to such parent shall be the amount equal to the sum of—
- (I)(g)(7)(B)(ii)(I)the amount determined under this section after the application of clause (i), plus
- (II)(g)(7)(B)(ii)(II)for each such child, 10 percent of the lesser of the amount described in paragraph (4)(A)(ii)(I) or the excess of the gross income of such child over the amount so described, and
- (iii)(g)(7)(B)(iii)any interest which is an item of tax preference under section 57(a)(5) of the child shall be treated as an item of tax preference of such parent (and not of such child).
- (C)(g)(7)(C)
Regulations
The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this paragraph.
- (h)(h)
Maximum capital gains rate
- (1)(h)(1)
In general
If a taxpayer has a net capital gain for any taxable year, the tax imposed by this section for such taxable year shall not exceed the sum of—
- (A)(h)(1)(A)
a tax computed at the rates and in the same manner as if this subsection had not been enacted on the greater of—
- (i)(h)(1)(A)(i)taxable income reduced by the net capital gain; or
- (ii)(h)(1)(A)(ii)
the lesser of—
- (I)(h)(1)(A)(ii)(I)the amount of taxable income taxed at a rate below 25 percent; or
- (II)(h)(1)(A)(ii)(II)taxable income reduced by the adjusted net capital gain;
- (B)(h)(1)(B)
0 percent of so much of the adjusted net capital gain (or, if less, taxable income) as does not exceed the excess (if any) of—
- (i)(h)(1)(B)(i)the amount of taxable income which would (without regard to this paragraph) be taxed at a rate below 25 percent, over
- (ii)(h)(1)(B)(ii)the taxable income reduced by the adjusted net capital gain;
- (C)(h)(1)(C)
15 percent of the lesser of—
- (i)(h)(1)(C)(i)so much of the adjusted net capital gain (or, if less, taxable income) as exceeds the amount on which a tax is determined under subparagraph (B), or
- (ii)(h)(1)(C)(ii)
the excess of—
- (I)(h)(1)(C)(ii)(I)the amount of taxable income which would (without regard to this paragraph) be taxed at a rate below 39.6 percent, over
- (II)(h)(1)(C)(ii)(II)the sum of the amounts on which a tax is determined under subparagraphs (A) and (B),
- (D)(h)(1)(D)20 percent of the adjusted net capital gain (or, if less, taxable income) in excess of the sum of the amounts on which tax is determined under subparagraphs (B) and (C),
- (E)(h)(1)(E)
25 percent of the excess (if any) of—
- (i)(h)(1)(E)(i)the unrecaptured section 1250 gain (or, if less, the net capital gain (determined without regard to paragraph (11))), over
- (ii)(h)(1)(E)(ii)
the excess (if any) of—
- (I)(h)(1)(E)(ii)(I)the sum of the amount on which tax is determined under subparagraph (A) plus the net capital gain, over
- (II)(h)(1)(E)(ii)(II)taxable income; and
- (F)(h)(1)(F)28 percent of the amount of taxable income in excess of the sum of the amounts on which tax is determined under the preceding subparagraphs of this paragraph.
- (2)(h)(2)
Net capital gain taken into account as investment income
For purposes of this subsection, the net capital gain for any taxable year shall be reduced (but not below zero) by the amount which the taxpayer takes into account as investment income under section 163(d)(4)(B)(iii). - (3)(h)(3)
Adjusted net capital gain
For purposes of this subsection, the term “adjusted net capital gain” means the sum of—
- (A)(h)(3)(A)
net capital gain (determined without regard to paragraph (11)) reduced (but not below zero) by the sum of—
- (i)(h)(3)(A)(i)unrecaptured section 1250 gain, and
- (ii)(h)(3)(A)(ii)28-percent rate gain, plus
- (B)(h)(3)(B)qualified dividend income (as defined in paragraph (11)).
- (4)(h)(4)
28-percent rate gain
For purposes of this subsection, the term “28-percent rate gain” means the excess (if any) of—
- (A)
- (B)(h)(4)(B)
the sum of—
- (i)(h)(4)(B)(i)collectibles loss;
- (ii)(h)(4)(B)(ii)the net short-term capital loss; and
- (iii)(h)(4)(B)(iii)the amount of long-term capital loss carried under section 1212(b)(1)(B) to the taxable year.
- (5)(h)(5)
Collectibles gain and loss
For purposes of this subsection—
- (A)(h)(5)(A)
In general
The terms “collectibles gain” and “collectibles loss” mean gain or loss (respectively) from the sale or exchange of a collectible (as defined in section 408(m) without regard to paragraph (3) thereof) which is a capital asset held for more than 1 year but only to the extent such gain is taken into account in computing gross income and such loss is taken into account in computing taxable income. - (B)(h)(5)(B)
Partnerships, etc.
For purposes of subparagraph (A), any gain from the sale of an interest in a partnership, S corporation, or trust which is attributable to unrealized appreciation in the value of collectibles shall be treated as gain from the sale or exchange of a collectible. Rules similar to the rules of section 751 shall apply for purposes of the preceding sentence.
- (6)(h)(6)
Unrecaptured section 1250 gain
For purposes of this subsection—
- (A)(h)(6)(A)
In general
The term “unrecaptured section 1250 gain” means the excess (if any) of—
- (i)(h)(6)(A)(i)the amount of long-term capital gain (not otherwise treated as ordinary income) which would be treated as ordinary income if section 1250(b)(1) included all depreciation and the applicable percentage under section 1250(a) were 100 percent, over
- (ii)(h)(6)(A)(ii)
the excess (if any) of—
- (I)(h)(6)(A)(ii)(I)the amount described in paragraph (4)(B); over
- (II)(h)(6)(A)(ii)(II)the amount described in paragraph (4)(A).
- (B)(h)(6)(B)
Limitation with respect to section 1231 property
The amount described in subparagraph (A)(i) from sales, exchanges, and conversions described in section 1231(a)(3)(A) for any taxable year shall not exceed the net section 1231 gain (as defined in section 1231(c)(3)) for such year.
- (7)(h)(7)
Section 1202 gain
For purposes of this subsection, the term “section 1202 gain” means the excess of—
- (A)(h)(7)(A)the gain which would be excluded from gross income under section 1202 but for the percentage limitation in section 1202(a), over
- (B)(h)(7)(B)the gain excluded from gross income under section 1202.
- (8)(h)(8)
Coordination with recapture of net ordinary losses under section 1231
If any amount is treated as ordinary income under section 1231(c), such amount shall be allocated among the separate categories of net section 1231 gain (as defined in section 1231(c)(3)) in such manner as the Secretary may by forms or regulations prescribe. - (9)(h)(9)
Regulations
The Secretary may prescribe such regulations as are appropriate (including regulations requiring reporting) to apply this subsection in the case of sales and exchanges by pass-thru entities and of interests in such entities. - (10)(h)(10)
Pass-thru entity defined
For purposes of this subsection, the term “pass-thru entity” means—
- (A)(h)(10)(A)a regulated investment company;
- (B)(h)(10)(B)a real estate investment trust;
- (C)(h)(10)(C)an S corporation;
- (D)(h)(10)(D)a partnership;
- (E)(h)(10)(E)an estate or trust;
- (F)(h)(10)(F)a common trust fund; and
- (G)(h)(10)(G)a qualified electing fund (as defined in section 1295).
- (11)(h)(11)
Dividends taxed as net capital gain
- (A)(h)(11)(A)
In general
For purposes of this subsection, the term “net capital gain” means net capital gain (determined without regard to this paragraph) increased by qualified dividend income. - (B)(h)(11)(B)
Qualified dividend income
For purposes of this paragraph—
- (i)(h)(11)(B)(i)
In general
The term “qualified dividend income” means dividends received during the taxable year from—
- (I)(h)(11)(B)(i)(I)domestic corporations, and
- (II)(h)(11)(B)(i)(II)qualified foreign corporations.
- (ii)(h)(11)(B)(ii)
Certain dividends excluded
Such term shall not include—
- (I)(h)(11)(B)(ii)(I)any dividend from a corporation which for the taxable year of the corporation in which the distribution is made, or the preceding taxable year, is a corporation exempt from tax under section 501 or 521,
- (II)(h)(11)(B)(ii)(II)any amount allowed as a deduction under section 591 (relating to deduction for dividends paid by mutual savings banks, etc.), and
- (III)(h)(11)(B)(ii)(III)any dividend described in section 404(k).
- (iii)(h)(11)(B)(iii)
Coordination with section 246(c)
Such term shall not include any dividend on any share of stock—
- (I)(h)(11)(B)(iii)(I)with respect to which the holding period requirements of section 246(c) are not met (determined by substituting in section 246(c) “60 days” for “45 days” each place it appears and by substituting “121-day period” for “91-day period”), or
- (II)(h)(11)(B)(iii)(II)to the extent that the taxpayer is under an obligation (whether pursuant to a short sale or otherwise) to make related payments with respect to positions in substantially similar or related property.
- (C)(h)(11)(C)
Qualified foreign corporations
- (i)(h)(11)(C)(i)
In general
Except as otherwise provided in this paragraph, the term “qualified foreign corporation” means any foreign corporation if—
- (I)(h)(11)(C)(i)(I)such corporation is incorporated in a possession of the United States, or
- (II)(h)(11)(C)(i)(II)such corporation is eligible for benefits of a comprehensive income tax treaty with the United States which the Secretary determines is satisfactory for purposes of this paragraph and which includes an exchange of information program.
- (ii)(h)(11)(C)(ii)
Dividends on stock readily tradable on United States securities market
A foreign corporation not otherwise treated as a qualified foreign corporation under clause (i) shall be so treated with respect to any dividend paid by such corporation if the stock with respect to which such dividend is paid is readily tradable on an established securities market in the United States. - (iii)(h)(11)(C)(iii)
Exclusion of dividends of certain foreign corporations
Such term shall not include—
- (I)(h)(11)(C)(iii)(I)any foreign corporation which for the taxable year of the corporation in which the dividend was paid, or the preceding taxable year, is a passive foreign investment company (as defined in section 1297), and
- (II)(h)(11)(C)(iii)(II)any corporation which first becomes a surrogate foreign corporation (as defined in section 7874(a)(2)(B)) after the date of the enactment of this subclause, other than a foreign corporation which is treated as a domestic corporation under section 7874(b).
- (iv)(h)(11)(C)(iv)
Coordination with foreign tax credit limitation
Rules similar to the rules of section 904(b)(2)(B) shall apply with respect to the dividend rate differential under this paragraph.
- (D)(h)(11)(D)
Special rules
- (i)(h)(11)(D)(i)
Amounts taken into account as investment income
Qualified dividend income shall not include any amount which the taxpayer takes into account as investment income under section 163(d)(4)(B). - (ii)(h)(11)(D)(ii)
Extraordinary dividends
If a taxpayer to whom this section applies receives, with respect to any share of stock, qualified dividend income from 1 or more dividends which are extraordinary dividends (within the meaning of section 1059(c)), any loss on the sale or exchange of such share shall, to the extent of such dividends, be treated as long-term capital loss. - (iii)(h)(11)(D)(iii)
Treatment of dividends from regulated investment companies and real estate investment trusts
A dividend received from a regulated investment company or a real estate investment trust shall be subject to the limitations prescribed in sections 854 and 857.
- (i)(i)
Rate reductions after 2000
- (1)(i)(1)
10-percent rate bracket
- (A)(i)(1)(A)
In general
In the case of taxable years beginning after December 31, 2000—
- (i)(i)(1)(A)(i)the rate of tax under subsections (a), (b), (c), and (d) on taxable income not over the initial bracket amount shall be 10 percent, and
- (ii)(i)(1)(A)(ii)the 15 percent rate of tax shall apply only to taxable income over the initial bracket amount but not over the maximum dollar amount for the 15-percent rate bracket.
- (B)(i)(1)(B)
Initial bracket amount
For purposes of this paragraph, the initial bracket amount is—
- (i)(i)(1)(B)(i)$14,000 in the case of subsection (a),
- (ii)(i)(1)(B)(ii)$10,000 in the case of subsection (b), and
- (iii)(i)(1)(B)(iii)½ the amount applicable under clause (i) (after adjustment, if any, under subparagraph (C)) in the case of subsections (c) and (d).
- (C)(i)(1)(C)
Inflation adjustment
In prescribing the tables under subsection (f) which apply with respect to taxable years beginning in calendar years after 2003—
- (i)(i)(1)(C)(i)the cost-of-living adjustment shall be determined under subsection (f)(3) by substituting “2002” for “2016” in subparagraph (A)(ii) thereof, and
- (ii)(i)(1)(C)(ii)the adjustments under clause (i) shall not apply to the amount referred to in subparagraph (B)(iii).
If any amount after adjustment under the preceding sentence is not a multiple of $50, such amount shall be rounded to the next lowest multiple of $50.
- (2)(i)(2)
25-, 28-, and 33-percent rate brackets
The tables under subsections (a), (b), (c), (d), and (e) shall be applied—
- (3)(i)(3)
Modifications to income tax brackets for high-income taxpayers
- (A)(i)(3)(A)
35-percent rate bracket
In the case of taxable years beginning after December 31, 2012—
- (i)(i)(3)(A)(i)
the rate of tax under subsections (a), (b), (c), and (d) on a taxpayer’s taxable income in the highest rate bracket shall be 35 percent to the extent such income does not exceed an amount equal to the excess of—
- (I)(i)(3)(A)(i)(I)the applicable threshold, over
- (II)(i)(3)(A)(i)(II)the dollar amount at which such bracket begins, and
- (ii)(i)(3)(A)(ii)the 39.6 percent rate of tax under such subsections shall apply only to the taxpayer’s taxable income in such bracket in excess of the amount to which clause (i) applies.
- (B)(i)(3)(B)
Applicable threshold
For purposes of this paragraph, the term “applicable threshold” means—
- (i)(i)(3)(B)(i)$450,000 in the case of subsection (a),
- (ii)(i)(3)(B)(ii)$425,000 in the case of subsection (b),
- (iii)(i)(3)(B)(iii)$400,000 in the case of subsection (c), and
- (iv)(i)(3)(B)(iv)½ the amount applicable under clause (i) (after adjustment, if any, under subparagraph (C)) in the case of subsection (d).
- (C)(i)(3)(C)
Inflation adjustment
For purposes of this paragraph, with respect to taxable years beginning in calendar years after 2013, each of the dollar amounts under clauses (i), (ii), and (iii) of subparagraph (B) shall be adjusted in the same manner as under paragraph (1)(C)(i), except that subsection (f)(3)(A)(ii) shall be applied by substituting “2012” for “2016”.
- (4)(i)(4)
Adjustment of tables
The Secretary shall adjust the tables prescribed under subsection (f) to carry out this subsection.
- (j)(j)
Modifications for taxable years 2018 through 2025
- (1)
- (2)(j)(2)
Rate tables
- (A)(j)(2)(A)
Married individuals filing joint returns and surviving spouses
The following table shall be applied in lieu of the table contained in subsection (a):If taxable income is:The tax is:Not over $19,05010% of taxable income.Over $19,050 but not over $77,400$1,905, plus 12% of the excess over $19,050.Over $77,400 but not over $165,000$8,907, plus 22% of the excess over $77,400.Over $165,000 but not over $315,000$28,179, plus 24% of the excess over $165,000.Over $315,000 but not over $400,000$64,179, plus 32% of the excess over $315,000.Over $400,000 but not over $600,000$91,379, plus 35% of the excess over $400,000.Over $600,000$161,379, plus 37% of the excess over $600,000. - (B)(j)(2)(B)
Heads of households
The following table shall be applied in lieu of the table contained in subsection (b):If taxable income is:The tax is:Not over $13,60010% of taxable income.Over $13,600 but not over $51,800$1,360, plus 12% of the excess over $13,600.Over $51,800 but not over $82,500$5,944, plus 22% of the excess over $51,800.Over $82,500 but not over $157,500$12,698, plus 24% of the excess over $82,500.Over $157,500 but not over $200,000$30,698, plus 32% of the excess over $157,500.Over $200,000 but not over $500,000$44,298, plus 35% of the excess over $200,000.Over $500,000$149,298, plus 37% of the excess over $500,000. - (C)(j)(2)(C)
Unmarried individuals other than surviving spouses and heads of households
The following table shall be applied in lieu of the table contained in subsection (c):If taxable income is:The tax is:Not over $9,52510% of taxable income.Over $9,525 but not over $38,700$952.50, plus 12% of the excess over $9,525.Over $38,700 but not over $82,500$4,453.50, plus 22% of the excess over $38,700.Over $82,500 but not over $157,500$14,089.50, plus 24% of the excess over $82,500.Over $157,500 but not over $200,000$32,089.50, plus 32% of the excess over $157,500.Over $200,000 but not over $500,000$45,689.50, plus 35% of the excess over $200,000.Over $500,000$150,689.50, plus 37% of the excess over $500,000. - (D)(j)(2)(D)
Married individuals filing separate returns
The following table shall be applied in lieu of the table contained in subsection (d):If taxable income is:The tax is:Not over $9,52510% of taxable income.Over $9,525 but not over $38,700$952.50, plus 12% of the excess over $9,525.Over $38,700 but not over $82,500$4,453.50, plus 22% of the excess over $38,700.Over $82,500 but not over $157,500$14,089.50, plus 24% of the excess over $82,500.Over $157,500 but not over $200,000$32,089.50, plus 32% of the excess over $157,500.Over $200,000 but not over $300,000$45,689.50, plus 35% of the excess over $200,000.Over $300,000$80,689.50, plus 37% of the excess over $300,000. - (E)(j)(2)(E)
Estates and trusts
The following table shall be applied in lieu of the table contained in subsection (e):If taxable income is:The tax is:Not over $2,55010% of taxable income.Over $2,550 but not over $9,150$255, plus 24% of the excess over $2,550.Over $9,150 but not over $12,500$1,839, plus 35% of the excess over $9,150.Over $12,500$3,011.50, plus 37% of the excess over $12,500. - (F)(j)(2)(F)
References to rate tables
Any reference in this title to a rate of tax under subsection (c) shall be treated as a reference to the corresponding rate bracket under subparagraph (C) of this paragraph, except that the reference in section 3402(q)(1) to the third lowest rate of tax applicable under subsection (c) shall be treated as a reference to the fourth lowest rate of tax under subparagraph (C).
- (3)(j)(3)
Adjustments
- (A)(j)(3)(A)
No adjustment in 2018
The tables contained in paragraph (2) shall apply without adjustment for taxable years beginning after December 31, 2017, and before January 1, 2019. - (B)(j)(3)(B)
Subsequent years
For taxable years beginning after December 31, 2018, the Secretary shall prescribe tables which shall apply in lieu of the tables contained in paragraph (2) in the same manner as under paragraphs (1) and (2) of subsection (f) (applied without regard to clauses (i) and (ii) of subsection (f)(2)(A)), except that in prescribing such tables—
- (i)(j)(3)(B)(i)subsection (f)(3) shall be applied by substituting “calendar year 2017” for “calendar year 2016” in subparagraph (A)(ii) thereof,
- (ii)(j)(3)(B)(ii)subsection (f)(7)(B) shall apply to any unmarried individual other than a surviving spouse or head of household, and
- (iii)(j)(3)(B)(iii)subsection (f)(8) shall not apply.
- (4)(j)(4)
Special rules for certain children with unearned income
- (A)(j)(4)(A)
In general
In the case of a child to whom subsection (g) applies for the taxable year, the rules of subparagraphs (B) and (C) shall apply in lieu of the rule under subsection (g)(1). - (B)(j)(4)(B)
Modifications to applicable rate brackets
In determining the amount of tax imposed by this section for the taxable year on a child described in subparagraph (A), the income tax table otherwise applicable under this subsection to the child shall be applied with the following modifications:
- (i)(j)(4)(B)(i)
24-percent bracket
The maximum taxable income which is taxed at a rate below 24 percent shall not be more than the sum of—
- (I)(j)(4)(B)(i)(I)the earned taxable income of such child, plus
- (II)(j)(4)(B)(i)(II)the minimum taxable income for the 24-percent bracket in the table under paragraph (2)(E) (as adjusted under paragraph (3)) for the taxable year.
- (ii)(j)(4)(B)(ii)
35-percent bracket
The maximum taxable income which is taxed at a rate below 35 percent shall not be more than the sum of—
- (I)(j)(4)(B)(ii)(I)the earned taxable income of such child, plus
- (II)(j)(4)(B)(ii)(II)the minimum taxable income for the 35-percent bracket in the table under paragraph (2)(E) (as adjusted under paragraph (3)) for the taxable year.
- (iii)(j)(4)(B)(iii)
37-percent bracket
The maximum taxable income which is taxed at a rate below 37 percent shall not be more than the sum of—
- (I)(j)(4)(B)(iii)(I)the earned taxable income of such child, plus
- (II)(j)(4)(B)(iii)(II)the minimum taxable income for the 37-percent bracket in the table under paragraph (2)(E) (as adjusted under paragraph (3)) for the taxable year.
- (C)(j)(4)(C)
Coordination with capital gains rates
For purposes of applying section 1(h) (after the modifications under paragraph (5)(A))—
- (i)(j)(4)(C)(i)
the maximum zero rate amount shall not be more than the sum of—
- (I)(j)(4)(C)(i)(I)the earned taxable income of such child, plus
- (II)(j)(4)(C)(i)(II)the amount in effect under paragraph (5)(B)(i)(IV) for the taxable year, and
- (ii)(j)(4)(C)(ii)
the maximum 15-percent rate amount shall not be more than the sum of—
- (I)(j)(4)(C)(ii)(I)the earned taxable income of such child, plus
- (II)(j)(4)(C)(ii)(II)the amount in effect under paragraph (5)(B)(ii)(IV) for the taxable year.
- (D)(j)(4)(D)
Earned taxable income
For purposes of this paragraph, the term “earned taxable income” means, with respect to any child for any taxable year, the taxable income of such child reduced (but not below zero) by the net unearned income (as defined in subsection (g)(4)) of such child.
- (5)(j)(5)
Application of current income tax brackets to capital gains brackets
- (A)(j)(5)(A)
In general
Section 1(h)(1) shall be applied—
- (i)(j)(5)(A)(i)by substituting “below the maximum zero rate amount” for “which would (without regard to this paragraph) be taxed at a rate below 25 percent” in subparagraph (B)(i), and
- (ii)(j)(5)(A)(ii)by substituting “below the maximum 15-percent rate amount” for “which would (without regard to this paragraph) be taxed at a rate below 39.6 percent” in subparagraph (C)(ii)(I).
- (B)(j)(5)(B)
Maximum amounts defined
For purposes of applying section 1(h) with the modifications described in subparagraph (A)—
- (i)(j)(5)(B)(i)
Maximum zero rate amount
The maximum zero rate amount shall be—
- (I)(j)(5)(B)(i)(I)in the case of a joint return or surviving spouse, $77,200,
- (II)(j)(5)(B)(i)(II)in the case of an individual who is a head of household (as defined in section 2(b)), $51,700,
- (III)(j)(5)(B)(i)(III)in the case of any other individual (other than an estate or trust), an amount equal to ½ of the amount in effect for the taxable year under subclause (I), and
- (IV)(j)(5)(B)(i)(IV)in the case of an estate or trust, $2,600.
- (ii)(j)(5)(B)(ii)
Maximum 15-percent rate amount
The maximum 15-percent rate amount shall be—
- (I)(j)(5)(B)(ii)(I)in the case of a joint return or surviving spouse, $479,000 (½ such amount in the case of a married individual filing a separate return),
- (II)(j)(5)(B)(ii)(II)in the case of an individual who is the head of a household (as defined in section 2(b)), $452,400,
- (III)(j)(5)(B)(ii)(III)in the case of any other individual (other than an estate or trust), $425,800, and
- (IV)(j)(5)(B)(ii)(IV)in the case of an estate or trust, $12,700.
- (C)(j)(5)(C)
Inflation adjustment
In the case of any taxable year beginning after 2018, each of the dollar amounts in clauses (i) and (ii) of subparagraph (B) shall be increased by an amount equal to—
- (i)(j)(5)(C)(i)such dollar amount, multiplied by
- (ii)(j)(5)(C)(ii)the cost-of-living adjustment determined under subsection (f)(3) for the calendar year in which the taxable year begins, determined by substituting “calendar year 2017” for “calendar year 2016” in subparagraph (A)(ii) thereof.
If any increase under this subparagraph is not a multiple of $50, such increase shall be rounded to the next lowest multiple of $50.
- (6)(j)(6)
Section 15 not to apply
Section 15 shall not apply to any change in a rate of tax by reason of this subsection.
“In the case of taxable years beginning during calendar year: | The corresponding percentages shall be substituted for the following percentages: | ||||
---|---|---|---|---|---|
28% | 31% | 36% | 39.6% | ||
2001 | 27.5% | 30.5% | 35.5% | 39.1% | |
2002 and 2003 | 27.0% | 30.0% | 35.0% | 38.6% | |
2004 and 2005 | 26.0% | 29.0% | 34.0% | 37.6% | |
2006 and thereafter | 25.0% | 28.0% | 33.0% | 35.0%” |
- “(1)
General rule.—
Except as otherwise provided in subsection (a) [see Tables for classification] or paragraph (2) of this subsection, the amendments made by this section [see Tables for classification] shall take effect on the date of enactment of this Act [Dec. 19, 2014]. - “(2)
Savings provision.—
If—
- “(A)
any provision amended or repealed by the amendments made by this section applied to—
- “(i)any transaction occurring before the date of the enactment of this Act,
- “(ii)any property acquired before such date of enactment, or
- “(iii)any item of income, loss, deduction, or credit taken into account before such date of enactment, and
- “(B)the treatment of such transaction, property, or item under such provision would (without regard to the amendments or repeals made by this section) affect the liability for tax for periods ending after [such] date of enactment, nothing in the amendments or repeals made by this section shall be construed to affect the treatment of such transaction, property, or item for purposes of determining liability for tax for periods ending after such date of enactment.”
- “(1)
In general.—
Except as otherwise provided, the amendments made by subsections (b) and (c) [amending this section, sections 55, 531, 541, 1445, and 7518 of this title, and section 53511 of Title 46, Shipping] shall apply to taxable years beginning after December 31, 2012. - “(2)
Withholding.—
The amendments made by paragraphs (1)(C) and (3) of subsection (c) [amending section 1445 of this title] shall apply to amounts paid on or after January 1, 2013.”
- “(1)
In general.—
Except as provided in paragraph (2), the amendments made by this section [amending this section and sections 170, 171, 245, 312, 443, 465, 508, 542, 543, 562, 563, 751, 864, 898, 904, 951, 954, 989, 1014, 1016, 1212, 1223, 1248, 1260, 1291, 1294, 4947, 4948, 6103, 6501, and 6679 of this title and repealing sections 551 to 558, 1246, 1247, and 6035 of this title] shall apply to taxable years of foreign corporations beginning after December 31, 2004, and to taxable years of United States shareholders with or within which such taxable years of foreign corporations end. - “(2)
Subsection (c)(27).—
The amendments made by subsection (c)(27) [amending section 6103 of this title] shall apply to disclosures of return or return information with respect to taxable years beginning after December 31, 2004.”
- “(1)
In general.—
The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 2002. - “(2)
Tables for 2003.—
The Secretary of the Treasury shall modify each table which has been prescribed under section 1(f) of the Internal Revenue Code of 1986 for taxable years beginning in 2003 and which relates to the amendment made by subsection (a) to reflect such amendment.”
- “(1)
In general.—
Except as otherwise provided by this subsection, the amendments made by this section [amending this section, sections 55, 57, 1445, and 7518 of this title, and section 1177 of Title 46, Appendix, Shipping] shall apply to taxable years ending on or after May 6, 2003. - “(2)
Withholding.—
The amendment made by subsection (a)(2)(C) [amending section 1445 of this title] shall apply to amounts paid after the date of the enactment of this Act [May 28, 2003]. - “(3)
Small business stock.—
The amendments made by subsection (b)(3) [amending section 57 of this title] shall apply to dispositions on or after May 6, 2003.”
- “(1)
In general.—
Except as provided in paragraph (2), the amendments made by this section [amending this section and sections 163, 301, 306, 338, 467, 531, 541, 584, 702, 854, 857, 1255, and 1257 of this title and repealing section 341 of this title] shall apply to taxable years beginning after December 31, 2002. - “(2)
Pass-thru entities.—
In the case of a pass-thru entity described in subparagraph (A), (B), (C), (D), (E), or (F) of section 1(h)(10) of the Internal Revenue Code of 1986, as amended by this Act, the amendments made by this section shall apply to taxable years ending after December 31, 2002; except that dividends received by such an entity on or before such date shall not be treated as qualified dividend income (as defined in section 1(h)(11)(B) of such Code, as added by this Act).”
- “(1)
In general.—
Except as provided in paragraph (2), the amendments made by this section [enacting section 6428 of this title and amending this section and sections 15, 531, 541, 3402, and 3406 of this title] shall apply to taxable years beginning after December 31, 2000. - “(2)
Amendments to withholding provisions.—
The amendments made by paragraphs (6), (7), (8), (9), (10), and (11) of subsection (c) [amending sections 3402 and 3406 of this title] shall apply to amounts paid after the 60th day after the date of the enactment of this Act [June 7, 2001]. References to income brackets and rates of tax in such paragraphs shall be applied without regard to [former] section 1(i)(1)(D) of the Internal Revenue Code of 1986.”
- “(1)
In general.—
Except as provided in paragraph (2), the amendments made by this section [amending this section and sections 1223 and 1235 of this title] shall apply to taxable years ending after December 31, 1997. - “(2)
Subsection (a)(5).—
The amendments made by subsection (a)(5) [amending sections 1223 and 1235 of this title] shall take effect on January 1, 1998.”
- “(1)
In general.—
Except as provided in paragraph (2), the amendments made by this section [amending this section, sections 55, 57, 904, 1445, and 7518 of this title, and section 1177 of Title 46, Appendix, Shipping] shall apply to taxable years ending after May 6, 1997. - “(2)
Withholding.—
The amendment made by subsection (c)(1) [amending section 1445 of this title] shall apply only to amounts paid after the date of the enactment of this Act [Aug. 5, 1997].”
- “(a)
General Rule.—
Except as otherwise provided in this title, any amendment made by this title [see Tables for classification], shall take effect as if included in the provision of the Reform Act [Pub. L. 99–514] to which such amendment relates. - “(b)
Waiver of Estimated Tax Penalties.—
No addition to tax shall be made under section 6654 or 6655 of the 1986 Code for any period before April 16, 1989 (March 16, 1989 in the case of a taxpayer subject to section 6655 of the 1986 Code) with respect to any underpayment to the extent such underpayment was created or increased by any provision of this title or title II [see Tables for classification].”
- “(a)
General Rule.—
Except as otherwise provided in this section, the amendments made by this title [enacting section 67 of this title, amending this section, sections 3, 5, 15, 21, 32, 62, 63, 74, 85, 86, 102, 108, 117, 129, 151, 152, 164, 170, 172, 183, 213, 265, 274, 280A, 402, 441, 443, 527, 541, 613A, 642, 667, 861, 862, 901, 904, 1398, 1441, 2032A, 3121, 3231, 3306, 3401, 3402, 3507, 4941, 4945, 6012 to 6014, 6212, 6504, 6511, and 7871 of this title, and section 409 of Title 42, The Public Health and Welfare, renumbering section 223 of this title as section 220 of this title, repealing sections 24, 221, 222, and 1301 to 1305 of this title, and enacting provisions set out as a note under section 32 of this title] shall apply to taxable years beginning after December 31, 1986. - “(b)
Unemployment Compensation.—
The amendment made by section 121 [amending section 85 of this title] shall apply to amounts received after December 31, 1986, in taxable years ending after such date. - “(c)
Prizes and Awards.—
The amendments made by section 122 [amending sections 74, 102, 274, 3121, 3231, 3306, 3401, 4941, and 4945 of this title and section 409 of Title 42, The Public Health and Welfare] shall apply to prizes and awards granted after December 31, 1986. - “(d)
Scholarships.—
The amendments made by section 123 [amending sections 74, 117, 1441, and 7871 of this title] shall apply to taxable years beginning after December 31, 1986, but only in the case of scholarships and fellowships granted after August 16, 1986. - “(e)
Parsonage and Military Housing Allowances.—
The amendment made by section 144 [amending section 265 of this title] shall apply to taxable years beginning before, on, or after, December 31, 1986.”
- “(1)The amendments made by this section (other than the amendments made by subsections (h), (i), and (k)) [enacting section 877 of this title, amending this section and sections 116, 154, 871, 872, 873, 874, 875, 932, 6015, and 7701 of this title, renumbering section 877 as 878, and repealing section 1493 of this title] shall apply with respect to taxable years beginning after December 31, 1966.
- “(2)The amendments made by subsection (h) [amending section 1441 of this title] shall apply with respect to payments made in taxable years of recipients beginning after December 31, 1966.
- “(3)The amendments made by subsection (i) [amending section 1461 of this title] shall apply with respect to payments occurring after December 31, 1966.
- “(4)The amendments made by subsection (k) [amending section 3401 of this title] shall apply with respect to remuneration paid after December 31, 1966.”
- “(a)
Statement of Purposes.—
The purposes of this Act [see Tables for classification] include the following:
- “(1)To preserve and create jobs and promote economic recovery.
- “(2)To assist those most impacted by the recession.
- “(3)To provide investments needed to increase economic efficiency by spurring technological advances in science and health.
- “(4)To invest in transportation, environmental protection, and other infrastructure that will provide long-term economic benefits.
- “(5)To stabilize State and local government budgets, in order to minimize and avoid reductions in essential services and counterproductive state and local tax increases.
- “(b)
General Principles Concerning Use of Funds.—
The President and the heads of Federal departments and agencies shall manage and expend the funds made available in this Act so as to achieve the purposes specified in subsection (a), including commencing expenditures and activities as quickly as possible consistent with prudent management.”
- “(1)
The amount of tax determined under subparagraph (B) of section 1(h)(1) of such Code shall be the sum of—
- “(A)
5 percent of the lesser of—
- “(i)the net capital gain determined by taking into account only gain or loss properly taken into account for the portion of the taxable year on or after May 6, 2003 (determined without regard to collectibles gain or loss, gain described in section 1(h)(6)(A)(i) of such Code, and section 1202 gain), or
- “(ii)the amount on which a tax is determined under such subparagraph (without regard to this subsection),
- “(B)
8 percent of the lesser of—
- “(i)the qualified 5-year gain (as defined in section 1(h)(9) of the Internal Revenue Code of 1986, as in effect on the day before the date of the enactment of this Act [May 28, 2003]) properly taken into account for the portion of the taxable year before May 6, 2003, or
- “(ii)
the excess (if any) of—
- “(I)the amount on which a tax is determined under such subparagraph (without regard to this subsection), over
- “(II)the amount on which a tax is determined under subparagraph (A), plus
- “(C)
10 percent of the excess (if any) of—
- “(i)the amount on which a tax is determined under such subparagraph (without regard to this subsection), over
- “(ii)the sum of the amounts on which a tax is determined under subparagraphs (A) and (B).
- “(2)
The amount of tax determined under [former] subparagraph (C) of section (1)(h)(1) of such Code shall be the sum of—
- “(A)
15 percent of the lesser of—
- “(i)the excess (if any) of the amount of net capital gain determined under subparagraph (A)(i) of paragraph (1) of this subsection over the amount on which a tax is determined under subparagraph (A) of paragraph (1) of this subsection, or
- “(ii)the amount on which a tax is determined under such subparagraph (C) (without regard to this subsection), plus
- “(B)
20 percent of the excess (if any) of—
- “(i)the amount on which a tax is determined under such subparagraph (C) (without regard to this subsection), over
- “(ii)the amount on which a tax is determined under subparagraph (A) of this paragraph.
- “(3)For purposes of applying section 55(b)(3) of such Code, rules similar to the rules of paragraphs (1) and (2) of this subsection shall apply.
- “(4)In applying this subsection with respect to any pass-thru entity, the determination of when gains and losses are properly taken into account shall be made at the entity level.
- “(5)For purposes of applying section 1(h)(11) of such Code, as added by section 302 of this Act, to this subsection, dividends which are qualified dividend income shall be treated as gain properly taken into account for the portion of the taxable year on or after May 6, 2003.
- “(6)Terms used in this subsection which are also used in section 1(h) of such Code shall have the respective meanings that such terms have in such section.”
- “(a)
Determinations by OMB.—
As soon as practicable after the date of the enactment of this Act [Dec. 21, 2000], the Director of the Office of Management and Budget shall determine with respect to each applicable Federal benefit program whether the CPI computation error for 1999 has or will result in a shortfall in payments to beneficiaries under such program (as compared to payments that would have been made if the error had not occurred). As soon as practicable after the date of the enactment of this Act, but not later than 60 days after such date, the Director shall direct the head of the Federal agency which administers such program to make a payment or payments that, insofar as the Director finds practicable and feasible—
- “(1)are targeted to the amount of the shortfall experienced by individual beneficiaries, and
- “(2)compensate for the shortfall.
- “(b)
Coordination with Federal Agencies.—
As soon as practicable after the date of the enactment of this Act [Dec. 21, 2000], each Federal agency that administers an applicable Federal benefit program shall, in accordance with such guidelines as are issued by the Director pursuant to this section, make an initial determination of whether, and the extent to which, the CPI computation error for 1999 has or will result in a shortfall in payments to beneficiaries of an applicable Federal benefit program administered by such agency. Not later than 30 days after such date, the head of such agency shall submit a report to the Director and to each House of the Congress of such determination, together with a complete description of the nature of the shortfall. - “(c)
Implementation Pursuant to Agency Reports.—
Upon receipt of the report submitted by a Federal agency pursuant to subsection (b), the Director shall review the initial determination of the agency, the agency’s description of the nature of the shortfall, and the compensation payments proposed by the agency. Prior to directing payment of such payments pursuant to subsection (a), the Director shall make appropriate adjustments (if any) in the compensation payments proposed by the agency that the Director determines are necessary to comply with the requirements of subsection (a) and transmit to the agency a summary report of the review, indicating any adjustments made by the Director. The agency shall make the compensation payments as directed by the Director pursuant to subsection (a) in accordance with the Director’s summary report. - “(d)
Income Disregard Under Federal Means-Tested Benefit Programs.—
A payment made under this section to compensate for a shortfall in benefits shall, in accordance with guidelines issued by the Director pursuant to this section, be disregarded in determining income under title VIII of the Social Security Act [42 U.S.C. 1001 et seq.] or any applicable Federal benefit program that is means-tested. - “(e)
Funding.—
Funds otherwise available under each applicable Federal benefit program for making benefit payments under such program are hereby made available for making compensation payments under this section in connection with such program. - “(f)
No Judicial Review.—
No action taken pursuant to this section shall be subject to judicial review. - “(g)
Director’s Report.—
Not later than April 1, 2001, the Director shall submit to each House of the Congress a report on the activities performed by the Director pursuant to this section. - “(h)
Definitions.—
For purposes of this section:
- “(1)
Applicable federal benefit program.—
The term ‘applicable Federal benefit program’ means any program of the Government of the United States providing for regular or periodic payments or cash assistance paid directly to individual beneficiaries, as determined by the Director of the Office of Management and Budget. - “(2)
Federal agency.—
The term ‘Federal agency’ means a department, agency, or instrumentality of the Government of the United States. - “(3)
CPI computation error for 1999.—
The term ‘CPI computation error for 1999’ means the error in the computation of the Consumer Price Index announced by the Bureau of Labor Statistics on September 28, 2000.
- “(i)
Tax Provisions.—
In the case of taxable years (and other periods) beginning after December 31, 2000, if any Consumer Price Index (as defined in section 1(f)(5) of the Internal Revenue Code of 1986) reflects the CPI computation error for 1999—
- “(1)the correct amount of such Index shall (in such manner and to such extent as the Secretary of the Treasury determines to be appropriate) be taken into account for purposes of such Code, and
- “(2)tables prescribed under section 1(f) of such Code to reflect such correct amount shall apply in lieu of any tables that were prescribed based on the erroneous amount.”
- “(2)
- (A)
Subparagraphs (A)(i)(II), (A)(ii)(II), and (B)(ii) of section 1(h)(13) of the 1986 Code shall not apply to any distribution after December 31, 1997, by a regulated investment company or a real estate investment trust with respect to—
- “(i)gains and losses recognized directly by such company or trust, and
- “(ii)amounts properly taken into account by such company or trust by reason of holding (directly or indirectly) an interest in another such company or trust to the extent that such subparagraphs did not apply to such other company or trust with respect to such amounts.
- “(B)Subparagraph (A) shall not apply to any distribution which is treated under section 852(b)(7) or 857(b)(8) of the 1986 Code as received on December 31, 1997.
- “(C)For purposes of subparagraph (A), any amount which is includible in gross income of its shareholders under section 852(b)(3)(D) or 857(b)(3)(D) of the 1986 Code after December 31, 1997, shall be treated as distributed after such date.
- “(D)
- (i)
For purposes of subparagraph (A), in the case of a qualified partnership with respect to which a regulated investment company meets the holding requirement of clause (iii)—
- “(I)the subparagraphs referred to in subparagraph (A) shall not apply to gains and losses recognized directly by such partnership for purposes of determining such company’s distributive share of such gains and losses, and
- “(II)such company’s distributive share of such gains and losses (as so determined) shall be treated as recognized directly by such company.
The preceding sentence shall apply only if the qualified partnership provides the company with written documentation of such distributive share as so determined. - “(ii)
For purposes of clause (i), the term ‘qualified partnership’ means, with respect to a regulated investment company, any partnership if—
- “(I)the partnership is an investment company registered under the Investment Company Act of 1940 [15 U.S.C. 80a–1 et seq.],
- “(II)the regulated investment company is permitted to invest in such partnership by reason of section 12(d)(1)(E) of such Act [15 U.S.C. 80a–12(d)(1)(E)] or an exemptive order of the Securities and Exchange Commission under such section, and
- “(III)the regulated investment company and the partnership have the same taxable year.
- “(iii)
A regulated investment company meets the holding requirement of this clause with respect to a qualified partnership if (as of January 1, 1998)—
- “(I)the value of the interests of the regulated investment company in such partnership is 35 percent or more of the value of such company’s total assets, or
- “(II)the value of the interests of the regulated investment company in such partnership and all other qualified partnerships is 90 percent or more of the value of such company’s total assets.”
- “(1)
In general.—
A taxpayer other than a corporation may elect to treat—
- “(A)any readily tradable stock (which is a capital asset) held by such taxpayer on January 1, 2001, and not sold before the next business day after such date, as having been sold on such next business day for an amount equal to its closing market price on such next business day (and as having been reacquired on such next business day for an amount equal to such closing market price), and
- “(B)any other capital asset or property used in the trade or business (as defined in section 1231(b) of the Internal Revenue Code of 1986) held by the taxpayer on January 1, 2001, as having been sold on such date for an amount equal to its fair market value on such date (and as having been reacquired on such date for an amount equal to such fair market value).
- “(2)
Treatment of gain or loss.—
- “(A)Any gain resulting from an election under paragraph (1) shall be treated as received or accrued on the date the asset is treated as sold under paragraph (1) and shall be included in gross income notwithstanding any provision of the Internal Revenue Code of 1986.
- “(B)Any loss resulting from an election under paragraph (1) shall not be allowed for any taxable year.
- “(3)
Election.—
An election under paragraph (1) shall be made in such manner as the Secretary of the Treasury or his delegate may prescribe and shall specify the assets for which such election is made. Such an election, once made with respect to any asset, shall be irrevocable. Such an election shall not apply to any asset which is disposed of (in a transaction in which gain or loss is recognized in whole or in part) before the close of the 1-year period beginning on the date that the asset would have been treated as sold under such election. - “(4)
Readily tradable stock.—
For purposes of this subsection, the term ‘readily tradable stock’ means any stock which, as of January 1, 2001, is readily tradable on an established securities market or otherwise. - “(5)
Disposition of interest in passive activity.—
Section 469(g)(1)(A) of the Internal Revenue Code of 1986 shall not apply by reason of an election made under paragraph (1).”
- “(1)
In general.—
At the election of the taxpayer, the additional 1993 taxes may be paid in 3 equal installments. - “(2)
Dates for paying installments.—
In the case of any tax payable in installments by reason of paragraph (1)—
- “(A)the first installment shall be paid on or before the due date for the taxpayer’s taxable year beginning in calendar year 1993,
- “(B)the second installment shall be paid on or before the date 1 year after the date determined under subparagraph (A), and
- “(C)the third installment shall be paid on or before the date 2 years after the date determined under subparagraph (A).
For purposes of the preceding sentence, the term ‘due date’ means the date prescribed for filing the taxpayer’s return determined without regard to extensions. - “(3)
Extension without interest.—
For purposes of section 6601 of the Internal Revenue Code of 1986, the date prescribed for the payment of any tax payable in installments under paragraph (1) shall be determined with regard to the extension under paragraph (1). - “(4)
Additional 1993 taxes.—
- “(A)
In general.—
For purposes of this subsection, the term ‘additional 1993 taxes’ means the excess of—
- “(i)the taxpayer’s net chapter 1 liability as shown on the taxpayer’s return for the taxpayer’s taxable year beginning in calendar year 1993, over
- “(ii)the amount which would have been the taxpayer’s net chapter 1 liability for such taxable year if such liability had been determined using the rates which would have been in effect under section 1 of the Internal Revenue Code of 1986 for taxable years beginning in calendar year 1993 but for the amendments made by this section [amending this section and sections 41, 63, 68, 132, 151, 453A, 513, 531, and 541 of this title] and section 13202 [amending this section and sections 531 and 541 of this title] and such liability had otherwise been determined on the basis of the amounts shown on the taxpayer’s return.
- “(B)
Net chapter 1 liability.—
For purposes of subparagraph (A), the term ‘net chapter 1 liability’ means the liability for tax under chapter 1 of the Internal Revenue Code of 1986 determined—
- “(i)after the application of any credit against such tax other than the credits under sections 31 and 34, and
- “(ii)before crediting any payment of estimated tax for the taxable year.
- “(5)
Acceleration of payments.—
If the taxpayer does not pay any installment under this section on or before the date prescribed for its payment or if the Secretary of the Treasury or his delegate believes that the collection of any amount payable in installments under this section is in jeopardy, the Secretary shall immediately terminate the extension under paragraph (1) and the whole of the unpaid tax shall be paid on notice and demand from the Secretary. - “(6)
Election on return.—
An election under paragraph (1) shall be made on the taxpayer’s return for the taxpayer’s taxable year beginning in calendar year 1993. - “(7)
Exception for estates and trusts.—
This subsection shall not apply in the case of an estate or trust.”
- “(1)imposing any tax (or exempting any person or property from any tax),
- “(2)establishing any trust fund, or
- “(3)authorizing amounts to be expended from any trust fund.”
“Notwithstanding any provision of this Act [see Tables for classifications] not contained in this title [see Short Title of 1986 Amendment note above], any provision of this Act (not contained in this title) which—
- “(1)imposes any tax, premium, or fee,
- “(2)establishes any trust fund, or
- “(3)authorizes amounts to be expended from any trust fund,
“If any figure in any table—
- “(A)which is set forth in section 1 of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] (as amended by section 101 of the Economic Recovery Tax Act of 1981 [Pub. L. 97–34, title I, § 101, Aug. 13, 1981, 95 Stat. 176], and
- “(B)which applies to married individuals filing separately or to estates and trusts,
“For purposes of any amendment made by any provision of this Act [see Tables for classification] (other than this title)—
- “(1)which contains a term the meaning of which is defined in or modified by any provision of this title, and
- “(2)which has an effective date earlier than the effective date of the provision of this title defining or modifying such term,
- “(a)Congress is determined to continue the tax reduction for the first 6 months of 1976 in order to assure continued economic recovery.
- “(b)Congress is also determined to continue to control spending levels in order to reduce the national deficit.
- “(c)Congress reaffirms its commitments to the procedures established by the Congressional Budget and Impoundment Control Act of 1974 [see Tables for classification of Pub. L. 93–344, July 12, 1974, 88 Stat. 297] under which it has already established a binding spending ceiling for the fiscal year 1976.
- “(d)If the Congress adopts a continuation of the tax reduction provided by this Act [see Short Title of 1975 Amendment note above] beyond June 30, 1976, and if economic conditions warrant doing so, Congress shall provide, through the procedures in the Budget Act [Pub. L. 93–344], for reductions in the level of spending in the fiscal year 1977 below what would otherwise occur, equal to any additional reduction in taxes (from the 1974 tax rate levels) provided for the fiscal year 1977: Provided, however, That nothing shall preclude the right of the Congress to pass a budget resolution containing a higher or lower expenditure figure if the Congress concludes that this is warranted by economic conditions or unforeseen circumstances.”
- “(1)
1986 code.—
The term ‘1986 Code’ means the Internal Revenue Code of 1986. - “(2)
1998 act.—
The term ‘1998 Act’ means the Internal Revenue Service Restructuring and Reform Act of 1998 (Public Law 105–206) [see Tables for classification]. - “(3)
1997 act.—
The term ‘1997 Act’ means the Taxpayer Relief Act of 1997 (Public Law 105–34) [see Tables for classification].”