Working Families Tax Relief Act of 2017

Summary: Working Families Tax Relief Act of 2017  This bill amends the Internal Revenue Code, with respect to the earned income tax credit, to: (1) increase the credit and reduce the phaseout percentage for taxpayers with no qualifying children, (2) reduce from 25 to 21 the qualifying age for individuals with no children, (3) revise eligibility rules relating to married individuals living apart and qualifying children claimed by another family member, and (4) repeal the denial of such credit for taxpayers with excess investment income. This bill modifies the child tax credit to: (1) increase the amount of the credit and the portion of the credit that is refundable for taxpayers with children under the age of six, and (2) require the dollar amounts of the credit to be adjusted for inflation after 2017.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Working Families Tax Relief Act of 
2017''.

SEC. 2. STRENGTHENING THE EARNED INCOME TAX CREDIT.

    (a) Increased Credit for Individuals With No Qualifying Children.--
            (1) In general.--The table in subparagraph (A) of section 
        32(b)(2) of the Internal Revenue Code of 1986 is amended--
                    (A) by striking ``$4,220'' in the second column and 
                inserting ``$9,230''; and
                    (B) by striking ``$5,280'' in the last column and 
                inserting ``$10,900''.
            (2) Inflation adjustments.--Subparagraph (B) of section 
        32(j)(1) of the Internal Revenue Code of 1986 is amended--
                    (A) in clause (i)--
                            (i) by inserting ``(except as provided in 
                        clause (iii))'' after ``(b)(2)(A)''; and
                            (ii) by striking ``and'' at the end;
                    (B) in clause (ii), by striking the period at the 
                end and inserting ``, and''; and
                    (C) by adding at the end the following new clause:
                            ``(iii) in the case of the $9,230 and 
                        $10,900 amounts in the table in subsection 
                        (b)(2)(A), by substituting `calendar year 2016' 
                        for `calendar year 1992' in subparagraph (B) of 
                        such section 1.''.
    (b) Credit Increase and Reduction in Phaseout for Individuals With 
No Children.--The table contained in section 32(b)(1) of the Internal 
Revenue Code of 1986 is amended--
            (1) by striking ``7.65'' in the second column of the fourth 
        row and inserting ``15.3''; and
            (2) by striking ``7.65'' in the third column of the fourth 
        row and inserting ``15.3''.
    (c) Credit Allowed for Certain Childless Individuals Over Age 21.--
Subclause (II) of section 32(c)(1)(A)(ii) of the Internal Revenue Code 
of 1986 is amended by striking ``age 25'' and inserting ``age 21''.
    (d) Effective Dates.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2016.

SEC. 3. STRENGTHENING THE CHILD TAX CREDIT.

    (a) Increase in Amount of Credit for Taxpayers With Young 
Children.--Subsection (a) of section 24 of the Internal Revenue Code of 
1986 is amended to read as follows:
    ``(a) Allowance of Credit.--There shall be allowed as a credit 
against the tax imposed by this chapter for the taxable year an amount 
equal to the sum of--
            ``(1) with respect to each qualifying child of the taxpayer 
        who has not attained 6 years of age before the close of such 
        taxable year and for which the taxpayer is allowed a deduction 
        under section 151, an amount equal to $3,000, and
            ``(2) with respect to each qualifying child of the taxpayer 
        who has attained 6 years of age before the close of such 
        taxable year and for which the taxpayer is allowed a deduction 
        under section 151, an amount equal to $1,000.''.
    (b) Increase in Portion of Credit Refundable for Taxpayers With 
Young Children.--Clause (i) of section 24(d)(1)(B) of the Internal 
Revenue Code of 1986 is amended to read as follows:
                            ``(i)(I) in the case of a taxpayer with a 
                        qualifying child who has not attained 6 years 
                        of age before the close of the taxable year, 45 
                        percent of so much of the taxpayer's earned 
                        income (within the meaning of section 32) which 
                        is taken into account in computing taxable 
                        income for the taxable year, or
                            ``(II) in the case of a taxpayer not 
                        described in subclause (I), 15 percent of so 
                        much of the taxpayer's earned income (within 
                        the meaning of section 32) which is taken into 
                        account in computing taxable income for the 
                        taxable year as exceeds $3,000, or''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2016.

SEC. 4. INDEXING THE CHILD TAX CREDIT FOR INFLATION.

    (a) Inflation Adjustments.--Section 24 of the Internal Revenue Code 
of 1986, as amended by section 3, is amended by adding at the end the 
following new subsection:
    ``(h) Inflation Adjustments.--
            ``(1) In general.--In the case of any taxable year 
        beginning in a calendar year after 2017, each of the dollar 
        amounts in subsections (a) and (b)(2) shall each be increased 
        by an amount equal to--
                    ``(A) such dollar amount, multiplied by
                    ``(B) the cost-of-living adjustment determined 
                under section 1(f)(3) for the calendar year in which 
                the taxable year begins, determined by substituting 
                `calendar year 2016' for `calendar year 1992' in 
                subparagraph (B) thereof.
            ``(2) Rounding.--Any increase determined under the 
        preceding sentence shall be rounded to the nearest multiple of 
        $50.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2017.

SEC. 5. SIMPLIFYING THE EARNED INCOME TAX CREDIT.

    (a) Modification of Abandoned Spouse Rule.--
            (1) In general.--Section 32(c)(1) of the Internal Revenue 
        Code of 1986 is amended by adding at the end the following new 
        paragraph:
                    ``(G) Certain married individuals living apart.--
                For purposes of this section, an individual who--
                            ``(i) is married (within the meaning of 
                        section 7703(a)) and files a separate return 
                        for the taxable year,
                            ``(ii) lives with a qualifying child of the 
                        individual for more than one-half of such 
                        taxable year, and
                            ``(iii)(I) during the last 6 months of such 
                        taxable year, does not have the same principal 
                        place of abode as the individual's spouse, or
                            ``(II) has a legally binding separation 
                        agreement with the individual's spouse and is 
                        not a member of the same household with the 
                        individual's spouse by the end of the taxable 
                        year,
                shall not be considered as married.''.
            (2) Conforming amendments.--
                    (A) The last sentence of section 32(c)(1)(A) of the 
                Internal Revenue Code of 1986 is amended by striking 
                ``section 7703'' and inserting ``section 7703(a)''.
                    (B) Section 32(d) of such Code is amended by 
                striking ``In the case of an individual who is married 
                (within the meaning of section 7703)'' and inserting 
                ``In the case of an individual who is married (within 
                the meaning of section 7703(a)) and is not described in 
                subsection (c)(1)(G)''.
    (b) Elimination of Disqualified Investment Income Test.--
            (1) In general.--Section 32 of the Internal Revenue Code of 
        1986 is amended by striking subsection (i).
            (2) Conforming amendments.--
                    (A) Section 32(j)(1)(B)(i) of such Code, as amended 
                by this Act, is amended by striking ``subsections 
                (b)(2)(A) and (i)(1)'' and inserting ``subsection 
                (b)(2)(A)''.
                    (B) Section 32(j)(2) of such Code is amended to 
                read as follows:
            ``(2) Rounding.--If any dollar amount in subsection 
        (b)(2)(A) (after being increased under subparagraph (B) 
        thereof), after being increased under paragraph (1), is not a 
        multiple of $10, such amount shall be rounded to the next 
        nearest multiple of $10.''.
    (c) Simplification of Rules Regarding Presence of Qualifying 
Child.--
            (1) Taxpayer eligible for credit for worker without 
        qualifying child if qualifying child claimed by another member 
        of family.--Section 32(c)(1) of the Internal Revenue Code of 
        1986, as amended by this Act, is amended by adding at the end 
        the following new paragraph:
                    ``(H) Taxpayer eligible for credit for worker 
                without qualifying child if qualifying child claimed by 
                another member of family.--
                            ``(i) General rule.--Except as provided in 
                        clause (ii), in the case of 2 or more eligible 
                        individuals who may claim for such taxable year 
                        the same individual as a qualifying child, if 
                        such individual is claimed as a qualifying 
                        child by such an eligible individual, then any 
                        other such eligible individual who does not 
                        make such a claim of such child or of any other 
                        qualifying child may be considered an eligible 
                        individual without a qualifying child for 
                        purposes of the credit allowed under this 
                        section for such taxable year.
                            ``(ii) Exception if qualifying child 
                        claimed by parent.--If an individual is claimed 
                        as a qualifying child for any taxable year by 
                        an eligible individual who is a parent of such 
                        child, then no other custodial parent of such 
                        child who does not make such a claim of such 
                        child may be considered an eligible individual 
                        without a qualifying child for purposes of the 
                        credit allowed under this section for such 
                        taxable year.''.
            (2) Taxpayer eligible for credit for worker without 
        qualifying child if qualifying children do not have valid 
        social security number.--Subparagraph (F) of section 32(c)(1) 
        of the Internal Revenue Code of 1986 is amended to read as 
        follows:
                    ``(F) Individuals who do not include tin, etc., of 
                any qualifying child.--In the case of any eligible 
                individual who has one or more qualifying children, if 
                no qualifying child of such individual is taken into 
                account under subsection (b) by reason of paragraph 
                (3)(D), for purposes of the credit allowed under this 
                section, such individual may be considered an eligible 
                individual without a qualifying child.''.
    (d) Effective Dates.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2016.