A bill to amend the Internal Revenue Code of 1986 to provide tax relief to middle-class families.

Summary: Middle Class Tax Cut Act - Title I: Temporary Extension of Tax Relief - (Sec. 101) Extends through 2013 for an individual taxpayer whose adjusted gross income is less than the applicable threshold amount (i.e., $200,000 for individual taxpayers, $225,000 for heads of household, and $250,000 for married couples filing a joint tax return) the tax rate reductions and other tax benefits of the Economic Growth and Tax Relief Reconciliation Act of 2001.

Modifies individual income tax brackets for 2013 to reduce income tax for taxpayers whose adjusted gross income is less than the applicable threshold amount and to increase the income tax rate for taxpayers above such threshold amount. Provides for an inflation adjustment to the applicable threshold amounts for calendar years beginning after 2012. Exempts taxpayers whose adjusted gross income is less than the applicable threshold amount from the phase-out of personal exemptions and itemized deductions.

(Sec. 102) Extends through 2013 for an individual taxpayer whose adjusted gross income is less than the applicable threshold amount the reduction in the tax rate for dividend and capital gain income enacted by the Jobs and Growth Tax Relief Reconciliation Act of 2003.

Increases to 20% the tax rate for capital gains income for taxpayers whose adjusted gross income exceeds the applicable threshold amount.

(Sec. 103) Extends through 2013: (1) the increased American Opportunity tax credit, (2) the increase in the refundable portion of the child tax credit, (3) the increased earned income tax credit percentage for three or more qualifying children, and (4) the disregard of tax credits and refunds in determining eligibility for federal and federally-assisted programs (i.e., means tested programs).

(Sec. 104) Extends to taxable years beginning in 2013 a $250,000 expensing allowance for depreciable business assets, including computer software. Increases to $800,000 the threshold for a phase-out of the amount of such expensing allowance.

Title II: Alternative Minimum Tax Relief - (Sec. 201) Extends to taxable years beginning in 2012 the increased exemption from the alternative minimum tax (AMT) for individual taxpayers.

(Sec. 202) Extends to taxable years beginning in 2012 the offset against the AMT for certain nonrefundable personal tax credits.

Title III: Budgetary Effects - Provides that the budgetary effects of this Act shall not be entered on either PAYGO scorecard maintained pursuant to the Statutory Pay-As-You-Go Act of 2010 or any Senate PAYGO scorecard.

SECTION 1. SHORT TITLE; ETC.

    (a) Short Title.--This Act may be cited as the ``Middle Class Tax 
Cut Act''.
    (b) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this Act an amendment or repeal is expressed in 
terms of an amendment to, or repeal of, a section or other provision, 
the reference shall be considered to be made to a section or other 
provision of the Internal Revenue Code of 1986.
    (c) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; etc.
               TITLE I--TEMPORARY EXTENSION OF TAX RELIEF

Sec. 101. Temporary extension of 2001 tax relief.
Sec. 102. Temporary extension of 2003 tax relief.
Sec. 103. Temporary extension of 2010 tax relief.
Sec. 104. Temporary extension of election to expense certain 
                            depreciable business assets.
                TITLE II--ALTERNATIVE MINIMUM TAX RELIEF

Sec. 201. Temporary extension of increased alternative minimum tax 
                            exemption amount.
Sec. 202. Temporary extension of alternative minimum tax relief for 
                            nonrefundable personal credits.
                      TITLE III--BUDGETARY EFFECTS

Sec. 301. Budgetary effects.

               TITLE I--TEMPORARY EXTENSION OF TAX RELIEF

SEC. 101. TEMPORARY EXTENSION OF 2001 TAX RELIEF.

    (a) Temporary Extension.--
            (1) In general.--Section 901(a)(1) of the Economic Growth 
        and Tax Relief Reconciliation Act of 2001 is amended by 
        striking ``December 31, 2012'' and inserting ``December 31, 
        2013''.
            (2) Effective date.--The amendment made by this subsection 
        shall take effect as if included in the enactment of the 
        Economic Growth and Tax Relief Reconciliation Act of 2001.
    (b) Application to Certain High-Income Taxpayers.--
            (1) Income tax rates.--
                    (A) Treatment of 25- and 28-percent rate 
                brackets.--Paragraph (2) of section 1(i) is amended to 
                read as follows:
            ``(2) 25- and 28-percent rate brackets.--The tables under 
        subsections (a), (b), (c), (d), and (e) shall be applied--
                    ``(A) by substituting `25%' for `28%' each place it 
                appears (before the application of subparagraph (B)), 
                and
                    ``(B) by substituting `28%' for `31%' each place it 
                appears.''.
                    (B) 33-percent rate bracket.--Subsection (i) of 
                section 1 is amended by redesignating paragraph (3) as 
                paragraph (4) and by inserting after paragraph (2) the 
                following new paragraph:
            ``(3) 33-percent rate bracket.--
                    ``(A) In general.--In the case of taxable years 
                beginning after December 31, 2012--
                            ``(i) the rate of tax under subsections 
                        (a), (b), (c), and (d) on a taxpayer's taxable 
                        income in the fourth rate bracket shall be 33 
                        percent to the extent such income does not 
                        exceed an amount equal to the excess of--
                                    ``(I) the applicable amount, over
                                    ``(II) the dollar amount at which 
                                such bracket begins, and
                            ``(ii) the 36 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) Applicable amount.--For purposes of this 
                paragraph, the term `applicable amount' means the 
                excess of--
                            ``(i) the applicable threshold, over
                            ``(ii) the sum of the following amounts in 
                        effect for the taxable year:
                                    ``(I) the basic standard deduction 
                                (within the meaning of section 
                                63(c)(2)), and
                                    ``(II) the exemption amount (within 
                                the meaning of section 151(d)(1) (or, 
                                in the case of subsection (a), 2 such 
                                exemption amounts).
                    ``(C) Applicable threshold.--For purposes of this 
                paragraph, the term `applicable threshold' means--
                            ``(i) $250,000 in the case of subsection 
                        (a),
                            ``(ii) $225,000 in the case of subsection 
                        (b),
                            ``(iii) $200,000 in the case of subsections 
                        (c), and
                            ``(iv) \1/2\ the amount applicable under 
                        clause (i) (after adjustment, if any, under 
                        subparagraph (E)) in the case of subsection 
                        (d).
                    ``(D) Fourth rate bracket.--For purposes of this 
                paragraph, the term `fourth rate bracket' means the 
                bracket which would (determined without regard to this 
                paragraph) be the 36-percent rate bracket.
                    ``(E) Inflation adjustment.--For purposes of this 
                paragraph, with respect to taxable years beginning in 
                calendar years after 2012, each of the dollar amounts 
                under clauses (i), (ii), and (iii) of subparagraph (C) 
                shall be adjusted in the same manner as under paragraph 
                (1)(C), except that subsection (f)(3)(B) shall be 
                applied by substituting `2008' for `1992'.''.
            (2) Phaseout of personal exemptions and itemized 
        deductions.--
                    (A) Overall limitation on itemized deductions.--
                Section 68 is amended--
                            (i) by striking ``the applicable amount'' 
                        the first place it appears in subsection (a) 
                        and inserting ``the applicable threshold in 
                        effect under section 1(i)(3)'',
                            (ii) by striking ``the applicable amount'' 
                        in subsection (a)(1) and inserting ``such 
                        applicable threshold'',
                            (iii) by striking subsection (b) and 
                        redesignating subsections (c), (d), and (e) as 
                        subsections (b), (c), and (d), respectively, 
                        and
                            (iv) by striking subsections (f) and (g).
                    (B) Phaseout of deductions for personal 
                exemptions.--
                            (i) In general.--Paragraph (3) of section 
                        151(d) is amended--
                                    (I) by striking ``the threshold 
                                amount'' in subparagraphs (A) and (B) 
                                and inserting ``the applicable 
                                threshold in effect under section 
                                1(i)(3)'',
                                    (II) by striking subparagraph (C) 
                                and redesignating subparagraph (D) as 
                                subparagraph (C), and
                                    (III) by striking subparagraphs (E) 
                                and (F).
                            (ii) Conforming amendments.--Paragraph (4) 
                        of section 151(d) is amended--
                                    (I) by striking subparagraph (B),
                                    (II) by redesignating clauses (i) 
                                and (ii) of subparagraph (A) as 
                                subparagraphs (A) and (B), 
                                respectively, and by indenting such 
                                subparagraphs (as so redesignated) 
                                accordingly, and
                                    (III) by striking all that precedes 
                                ``in a calendar year after 1989,'' and 
                                inserting the following:
            ``(4) Inflation adjustment.--In the case of any taxable 
        year beginning''.
    (c) Effective Date.--Except as otherwise provided, the amendments 
made by this section shall apply to taxable years beginning after 
December 31, 2012.
    (d) Application of EGTRRA Sunset.--Each amendment made by 
subsection (b) shall be subject to title IX of the Economic Growth and 
Tax Relief Reconciliation Act of 2001 to the same extent and in the 
same manner as if such amendment was included in title I of such Act.

SEC. 102. TEMPORARY EXTENSION OF 2003 TAX RELIEF.

    (a) Extension.--
            (1) In general.--Section 303 of the Jobs and Growth Tax 
        Relief Reconciliation Act of 2003 is amended by striking 
        ``December 31, 2012'' and inserting ``December 31, 2013''.
            (2) Effective date.--The amendment made by this subsection 
        shall take effect as if included in the enactment of the Jobs 
        and Growth Tax Relief Reconciliation Act of 2003.
    (b) 20-Percent Capital Gains Rate for Certain High Income 
Individuals.--
            (1) In general.--Paragraph (1) of section 1(h) is amended 
        by striking subparagraph (C), by redesignating subparagraphs 
        (D) and (E) as subparagraphs (E) and (F) and by inserting after 
        subparagraph (B) the following new subparagraphs:
                    ``(C) 15 percent of the lesser of--
                            ``(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) the excess (if any) of--
                                    ``(I) the amount of taxable income 
                                which would (without regard to this 
                                paragraph) be taxed at a rate below 36 
                                percent, over
                                    ``(II) the sum of the amounts on 
                                which a tax is determined under 
                                subparagraphs (A) and (B),
                    ``(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),''.
            (2) Minimum tax.--Paragraph (3) of section 55(b) is amended 
        by striking subparagraph (C), by redesignating subparagraph (D) 
        as subparagraph (E), and by inserting after subparagraph (B) 
        the following new subparagraphs:
                    ``(C) 15 percent of the lesser of--
                            ``(i) so much of the adjusted net capital 
                        gain (or, if less, taxable excess) as exceeds 
                        the amount on which tax is determined under 
                        subparagraph (B), or
                            ``(ii) the excess described in section 
                        1(h)(1)(C)(ii), plus
                    ``(D) 20 percent of the adjusted net capital gain 
                (or, if less, taxable excess) in excess of the sum of 
                the amounts on which tax is determined under 
                subparagraphs (B) and (C), plus''.
    (c) Conforming Amendments.--
            (1) The following provisions are each amended by striking 
        ``15 percent'' and inserting ``20 percent'':
                    (A) Section 531.
                    (B) Section 541.
                    (C) Section 1445(e)(1).
                    (D) The second sentence of section 7518(g)(6)(A).
                    (E) Section 53511(f)(2) of title 46, United States 
                Code.
            (2) Sections 1(h)(1)(B) and 55(b)(3)(B) are each amended by 
        striking ``5 percent (0 percent in the case of taxable years 
        beginning after 2007)'' and inserting ``0 percent''.
            (3) Section 1445(e)(6) is amended by striking ``15 percent 
        (20 percent in the case of taxable years beginning after 
        December 31, 2010)'' and inserting ``20 percent''.
    (d) Effective Dates.--
            (1) In general.--Except as otherwise provided, the 
        amendments made by subsections (b) and (c) shall apply to 
        taxable years beginning after December 31, 2012.
            (2) Withholding.--The amendments made by paragraphs (1)(C) 
        and (3) of subsection (c) shall apply to amounts paid on or 
        after January 1, 2013.
    (e) Application of JGTRRA Sunset.--Each amendment made by 
subsections (b) and (c) shall be subject to section 303 of the Jobs and 
Growth Tax Relief Reconciliation Act of 2003 to the same extent and in 
the same manner as if such amendment was included in title III of such 
Act.

SEC. 103. TEMPORARY EXTENSION OF 2010 TAX RELIEF.

    (a) American Opportunity Tax Credit.--
            (1) In general.--Section 25A(i) is amended by striking ``or 
        2012'' and inserting ``2012, or 2013''.
            (2) Treatment of possessions.--Section 1004(c)(1) of 
        division B of the American Recovery and Reinvestment Tax Act of 
        2009 is amended by striking ``and 2012'' each place it appears 
        and inserting ``2012, and 2013''.
    (b) Child Tax Credit.--Section 24(d)(4) is amended--
            (1) by striking ``and 2012'' in the heading and inserting 
        ``2012, and 2013'', and
            (2) by striking ``or 2012'' and inserting ``2012, or 
        2013''.
    (c) Earned Income Tax Credit.--Section 32(b)(3) is amended--
            (1) by striking ``and 2012'' in the heading and inserting 
        ``2012, and 2013'', and
            (2) by striking ``or 2012'' and inserting ``2012, or 
        2013''.
    (d) Temporary Extension of Rule Disregarding Refunds in the 
Administration of Federal Programs and Federally Assisted Programs.--
Subsection (b) of section 6409 is amended by striking ``December 31, 
2012'' and inserting ``December 31, 2013''.
    (e) Effective Dates.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to taxable years 
        beginning after December 31, 2012.
            (2) Rule disregarding refunds in the administration of 
        certain programs.--The amendment made by subsection (d) shall 
        apply to amounts received after December 31, 2012.

SEC. 104. TEMPORARY EXTENSION OF ELECTION TO EXPENSE CERTAIN 
              DEPRECIABLE BUSINESS ASSETS.

    (a) In General.--
            (1) Dollar limitation.--Section 179(b)(1) is amended--
                    (A) by striking ``and'' at the end of subparagraph 
                (C),
                    (B) by redesignating subparagraph (D) as 
                subparagraph (E),
                    (C) by inserting after subparagraph (C) the 
                following new subparagraph:
                    ``(D) $250,000 in the case of taxable years 
                beginning in 2013, and'', and
                    (D) in subparagraph (E), as so redesignated, by 
                striking ``2012'' and inserting ``2013''.
            (2) Reduction in limitation.--Section 179(b)(2) is 
        amended--
                    (A) by striking ``and'' at the end of subparagraph 
                (C),
                    (B) by redesignating subparagraph (D) as 
                subparagraph (E),
                    (C) by inserting after subparagraph (C) the 
                following new subparagraph:
                    ``(D) $800,000 in the case of taxable years 
                beginning in 2013, and'', and
                    (D) in subparagraph (E), as so redesignated, by 
                striking ``2012'' and inserting ``2013''.
    (b) Computer Software.--Section 179(d)(1)(A)(ii) is amended by 
striking ``2013'' and inserting ``2014''.
    (c) Election.--Section 179(c)(2) is amended by striking ``2013'' 
and inserting ``2014''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2012.

                TITLE II--ALTERNATIVE MINIMUM TAX RELIEF

SEC. 201. TEMPORARY EXTENSION OF INCREASED ALTERNATIVE MINIMUM TAX 
              EXEMPTION AMOUNT.

    (a) In General.--Paragraph (1) of section 55(d) is amended--
            (1) by striking ``$72,450'' and all that follows through 
        ``2011'' in subparagraph (A) and inserting ``$78,750 in the 
        case of taxable years beginning in 2012'', and
            (2) by striking ``$47,450'' and all that follows through 
        ``2011'' in subparagraph (B) and inserting ``$50,600 in the 
        case of taxable years beginning in 2012''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2011.

SEC. 202. TEMPORARY EXTENSION OF ALTERNATIVE MINIMUM TAX RELIEF FOR 
              NONREFUNDABLE PERSONAL CREDITS.

    (a) In General.--Paragraph (2) of section 26(a) is amended--
            (1) by striking ``or 2011'' and inserting ``2011, or 
        2012'', and
            (2) by striking ``2011'' in the heading thereof and 
        inserting ``2012''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2011.

                      TITLE III--BUDGETARY EFFECTS

SEC. 301. BUDGETARY EFFECTS.

    (a) PAYGO Scorecard.--The budgetary effects of this Act shall not 
be entered on either PAYGO scorecard maintained pursuant to section 
4(d) of the Statutory Pay-As-You-Go Act of 2010.
    (b) Senate PAYGO Scorecard.--The budgetary effects of this Act 
shall not be entered on any PAYGO scorecard maintained for purposes of 
section 201 of S. Con. Res. 21 (110th Congress).

            Passed the Senate July 25, 2012.

            Attest:

                                                             Secretary.
112th CONGRESS

  2d Session

                                S. 3412

_______________________________________________________________________

                                 AN ACT

  To amend the Internal Revenue Code of 1986 to provide tax relief to 
                         middle-class families.