II 

117TH CONGRESS 

2D SESSION S. 4393 

To amend the Internal Revenue Code of 1986 to modify the maximum 

capital gains tax rate, to modify the tax on net investment income, 

and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JUNE 14, 2022 

Mr. GRASSLEY (for himself, Mr. BARRASSO, Mr. DAINES, Mr. LANKFORD, Mr. 

YOUNG, and Mr. CASSIDY) introduced the following bill; which was read 

twice and referred to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to modify 

the maximum capital gains tax rate, to modify the tax 

on net investment income, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Middle-Class Savings 

5 and Investment Act’’. 

6 SEC. 2. MODIFICATION OF CAPITAL GAIN RATES. 

7 (a) EXPANSION OF ZERO PERCENT RATE.— 

8 (1) IN GENERAL.—Section 1(h)(1)(B)(i) of the 

9 Internal Revenue Code of 1986 is amended by strikVerDate Sep 11 2014 01:47 Jun 17, 2022 Jkt 029200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S4393.IS S4393

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1 ing ‘‘which would (without regard to this paragraph) 

2 be taxed at a rate below 25 percent’’ and inserting 

3 ‘‘below the maximum zero rate amount’’. 

4 (2) MAXIMUM ZERO RATE AMOUNT.—Section 

5 1(h) of the Internal Revenue Code of 1986 is 

6 amended by adding at the end the following new 

7 paragraph: 

8 ‘‘(12) MAXIMUM ZERO RATE AMOUNT.— 

9 ‘‘(A) IN GENERAL.—The maximum zero 

10 rate amount shall be— 

11 ‘‘(i) in the case of a joint return or 

12 surviving spouse, $165,000, 

13 ‘‘(ii) in the case of any other indi14 vidual (other than an estate or trust), an 

amount equal to 1 15 ⁄2 of the amount in effect 

16 for the taxable year under clause (i), and 

17 ‘‘(iii) in the case of an estate or trust, 

18 $2,600. 

19 ‘‘(B) INFLATION ADJUSTMENT.—In the 

20 case of any taxable year beginning after 2021, 

21 each of the dollar amounts in subparagraph (A) 

22 shall be increased by an amount equal to— 

23 ‘‘(i) such dollar amount, multiplied by 

24 ‘‘(ii) the cost-of-living adjustment de25 termined under subsection (f)(3) for the 


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1 calendar year in which the taxable year be2 gins, determined by substituting ‘calendar 

3 year 2017’ for ‘calendar year 2016’ in sub4 paragraph (A)(ii) thereof. 

5 If any increase under this subparagraph is not 

6 a multiple of $50, such increase shall be round7 ed to the next lowest multiple of $50.’’. 

8 (3) CONFORMING AMENDMENTS.—Paragraph 

9 (5) of section 1(j) of such Code is amended— 

10 (A) in subparagraph (A), by striking ‘‘shall 

11 be applied’’ and all that follows through ‘‘by 

12 substituting ‘below the maximum 15-percent 

13 rate amount’ ’’ and inserting ‘‘shall be applied 

14 by substituting ‘below the maximum 15-percent 

15 rate amount’ ’’, 

16 (B) in subparagraph (B)— 

17 (i) by striking all that preceding 

18 clause (ii), 

19 (ii) by redesignating clause (ii) as 

20 subparagraph (B), 

21 (iii) by redesignating subclauses (I) 

22 through (IV) of subparagraph (B) (as so 

23 redesignated) as clauses (i) through (iv), 

24 respectively, and 


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1 (iv) by moving subparagraph (B) and 

2 each of clauses (i) through (iv) (as so re3 designated) 2 ems to the left, and 

4 (C) in subparagraph (C), by striking 

5 ‘‘clauses (i) and (ii) of’’. 

6 (b) EFFECTIVE DATE.—The amendments made by 

7 this section shall apply to taxable years beginning after 

8 December 31, 2021. 

9 SEC. 3. PARTIAL EXCLUSION OF CERTAIN INTEREST RE10 CEIVED BY INDIVIDUALS. 

11 (a) IN GENERAL.—Part III of subchapter B of chap12 ter 1 of the Internal Revenue Code of 1986 (relating to 

13 amounts specifically excluded from gross income) is 

14 amended by inserting after section 115 the following new 

15 section: 

16 ‘‘SEC. 116. PARTIAL EXCLUSION OF CERTAIN INTEREST RE17 CEIVED BY INDIVIDUALS. 

18 ‘‘(a) EXCLUSION FROM GROSS INCOME.—Gross in19 come does not include the sum of the amounts received 

20 during the taxable year by an individual as qualified inter21 est. 

22 ‘‘(b) LIMITATIONS.—The aggregate amount excluded 

23 under subsection (a) for any taxable year shall not exceed 

24 $300 ($600 in the case of a joint return). 


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1 ‘‘(c) QUALIFIED INTEREST.—For purposes of this 

2 section— 

3 ‘‘(1) IN GENERAL.—The term ‘qualified inter4 est’ means any interest other than interest excluded 

5 from gross income under any other provision of this 

6 chapter. 

7 ‘‘(2) SPECIAL RULES FOR DIVIDENDS RECEIVED

8 FROM CERTAIN MONEY MARKET MUTUAL FUNDS.— 

9 ‘‘(A) IN GENERAL.—The term ‘qualified 

10 interest’ shall include qualified interest-related 

11 dividends. 

12 ‘‘(i) IN GENERAL.—Except as pro13 vided in clause (ii), a qualified interest-re14 lated dividend is any dividend or part 

15 thereof (other than a capital gain dividend 

16 or exempt interest dividend)— 

17 ‘‘(I) paid by a regulated invest18 ment company regulated as a money 

19 market fund under section 270.2a–7 

20 of title 17, Code of Federal Regula21 tions, and 

22 ‘‘(II) reported by the company as 

23 a qualified interest-related dividend in 

24 written statements furnished to its 

25 shareholders. 


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1 ‘‘(ii) EXCESS REPORTED AMOUNTS.— 

2 If the aggregate reported amount with re3 spect to the company for any taxable year 

4 exceeds the applicable qualified interest of 

5 the company for such taxable year, a quali6 fied interest-related dividend is the excess 

7 of— 

8 ‘‘(I) the reported qualified inter9 est-related dividend amount, over 

10 ‘‘(II) the excess reported amount 

11 which is allocable to such reported 

12 qualified interest-related dividend 

13 amount. 

14 ‘‘(iii) ALLOCATION OF EXCESS RE15 PORTED AMOUNT.— 

16 ‘‘(I) IN GENERAL.—Except as 

17 provided in subclause (II), the excess 

18 reported amount (if any) which is al19 locable to the reported qualified inter20 est-related dividend amount is that 

21 portion of the excess reported amount 

22 which bears the same ratio to the ex23 cess reported amount as the reported 

24 qualified interest-related dividend 


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1 amount bears to the aggregate re2 ported amount. 

3 ‘‘(II) SPECIAL RULE FOR NON4 CALENDAR YEAR TAXPAYERS.—In the 

5 case of any taxable year which does 

6 not begin and end in the same cal7 endar year, if the post-December re8 ported amount equals or exceeds the 

9 excess reported amount for such tax10 able year, subclause (I) shall be ap11 plied by substituting ‘post-December 

12 reported amount’ for ‘aggregate re13 ported amount’ and no excess re14 ported amount shall be allocated to 

15 any dividend paid on or before De16 cember 31 of such taxable year. 

17 ‘‘(iv) DEFINITIONS.—For purposes of 

18 this subparagraph— 

19 ‘‘(I) REPORTED QUALIFIED IN20 TEREST-RELATED DIVIDEND

21 AMOUNT.—The term ‘reported quali22 fied interest-related dividend amount’ 

23 means the amount reported to its 

24 shareholders under clause (i) as a 

25 qualified interest-related dividend. 


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1 ‘‘(II) EXCESS REPORTED

2 AMOUNT.—The term ‘excess reported 

3 amount’ means the excess of the ag4 gregate reported amount over the ap5 plicable qualified interest of the com6 pany for the taxable year. 

7 ‘‘(III) AGGREGATE REPORTED

8 AMOUNT.—The term ‘aggregate re9 ported amount’ means the aggregate 

10 amount of dividends reported by the 

11 company under clause (i) as qualified 

12 interest-related dividends for the tax13 able year (including qualified interest14 related dividends paid after the close 

15 of the taxable year described in sec16 tion 855). 

17 ‘‘(IV) POST-DECEMBER RE18 PORTED AMOUNT.—The term ‘post19 December reported amount’ means 

20 the aggregate reported amount deter21 mined by taking into account only 

22 dividends paid after December 31 of 

23 the taxable year. 

24 ‘‘(V) APPLICABLE QUALIFIED IN25 TEREST.—The term ‘applicable qualiVerDate Sep 11 2014 01:47 Jun 17, 2022 Jkt 029200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S4393.IS S4393

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1 fied interest’ means interest described 

2 in paragraph (1). 

3 ‘‘(d) NONRESIDENT ALIENS INELIGIBLE FOR EX4 CLUSION.—Subsection (a) shall not apply to any non5 resident alien individual. 

6 ‘‘(e) REGULATIONS.—The Secretary may prescribe 

7 such regulations as are appropriate (including regulations 

8 requiring reporting) to apply this section in the case of 

9 interest received— 

10 ‘‘(1) from partnerships and S corporations, and 

11 ‘‘(2) from a trade or business of the taxpayer.’’. 

12 (b) CONFORMING AMENDMENTS.— 

13 (1) The table of sections for part III of sub14 chapter B of chapter 1 of such Code is amended by 

15 inserting after the item relating to section 115 the 

16 following new item: 

‘‘Sec. 116. Partial exclusion of certain interest received by individuals.’’. 

17 (2) Paragraph (2) of section 265(a) of such 

18 Code is amended by inserting before the period at 

19 the end the following: ‘‘, or to purchase or carry ob20 ligations or shares, or to make deposits, to the ex21 tent the interest thereon is excludable from gross in22 come under section 116’’. 

23 (3) Subsection (c) of section 584 of such Code 

24 is amended by adding at the end the following: ‘‘The 

25 proportionate share of each participant in the 


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1 amount of qualified interest (as defined in section 

2 116) received by the common trust fund shall be 

3 considered for purposes of such section as having 

4 been received by such participant.’’. 

5 (4) Subsection (a) of section 643 of such Code 

6 is amended by redesignating paragraph (7) as para7 graph (8) and by inserting after paragraph (6) the 

8 following new paragraph: 

9 ‘‘(7) QUALIFIED INTEREST.—There shall be in10 cluded the amount of any qualified interest (as de11 fined in section 116) excluded from gross income 

12 pursuant to section 116 (reduced by amounts which 

13 would be deductible in respect of disbursements allo14 cable to such income but for the provisions of sec15 tion 265).’’. 

16 (c) EFFECTIVE DATE.—The amendments made by 

17 this section shall apply to taxable years beginning after 

18 December 31, 2021. 

19 SEC. 4. MODIFICATION OF THRESHOLD AMOUNT UNDER 

20 NET INVESTMENT INCOME TAX. 

21 (a) IN GENERAL.—Section 1411(b) of the Internal 

22 Revenue Code of 1986 is amended to read as follows: 

23 ‘‘(b) THRESHOLD AMOUNT.—For purposes of this 

24 chapter— 


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1 ‘‘(1) IN GENERAL.—The term ‘threshold 

2 amount’ means— 

3 ‘‘(A) in the case of a taxpayer making a 

4 joint return under section 6013 or a surviving 

5 spouse (as defined in section 2(a)), $400,000, 

6 and 

‘‘(B) in any other case, 1 7 ⁄2 of the dollar 

8 amount determined under paragraph (1). 

9 ‘‘(2) INFLATION ADJUSTMENT.—In the case of 

10 any taxable year beginning in a calendar year after 

11 2022, the dollar amount in paragraph (1)(A) shall 

12 be increased by an amount equal to— 

13 ‘‘(A) such dollar amount, multiplied by 

14 ‘‘(B) the cost-of-living adjustment deter15 mined under section 1(f)(3) for the calendar 

16 year in which the taxable year begins, deter17 mined by substituting ‘calendar year 2021’ for 

18 ‘calendar year 2016’ in subparagraph (A)(ii) 

19 thereof. 

20 Any increase determined under the preceding sen21 tence shall be rounded to the nearest multiple of 

22 $1,000.’’. 

23 (b) EFFECTIVE DATE.—The amendment made by 

24 this section shall apply to taxable years beginning after 

25 December 31, 2021. 


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1 SEC. 5. ENHANCEMENT OF SAVER’S CREDIT. 

2 (a) MAXIMUM CONTRIBUTION AMOUNT.—Section 

3 25B(a) of the Internal Revenue Code of 1986 is amended 

4 by striking ‘‘$2,000’’ and inserting ‘‘$2,500’’. 

5 (b) MODIFICATION OF CREDIT RATE.— 

6 (1) 50 PERCENT CREDIT RATE.—Section 

7 25B(a) of the Internal Revenue Code of 1986 is 

8 amended by striking ‘‘the applicable percentage’’ 

9 and inserting ‘‘50 percent’’. 

10 (2) ADJUSTED GROSS INCOME PHASEOUTS.— 

11 Section 25B(b) of such Code is amended to read as 

12 follows: 

13 ‘‘(b) LIMITATION.—For purposes of this section— 

14 ‘‘(1) IN GENERAL.—The amount of credit al15 lowable under subsection (a) (determined without re16 gard to this subsection) shall be reduced (but not 

17 below zero) by an amount which bears the same 

18 ratio to the credit otherwise so allowable as— 

19 ‘‘(A) the excess (if any) of— 

20 ‘‘(i) adjusted gross income of the tax21 payer, over 

22 ‘‘(ii) the threshold amount, bears to 

23 ‘‘(B) the phaseout amount. 

24 ‘‘(2) THRESHOLD AMOUNT.—The term ‘thresh25 old amount’ means— 


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1 ‘‘(A) in the case of a joint return or a sur2 viving spouse (as defined in section 2(a)), 

3 $45,000, 

4 ‘‘(B) in the case of a head of household, 75 

5 percent of the amount in effect for the taxable 

6 year under subparagraph (A), and 

7 ‘‘(C) in the case of any other individual, 50 

8 percent of the amount in effect for the taxable 

9 year under subparagraph (A). 

10 ‘‘(3) PHASEOUT AMOUNT.—The term ‘phaseout 

11 amount’ means— 

12 ‘‘(A) in the case of a joint return or a sur13 viving spouse (as defined in 2(a)), $40,000, 

14 ‘‘(B) in the case of a head of household (as 

15 defined in section 2(b)), 75 percent of the 

16 amount in effect for the taxable year under sub17 paragraph (A), and 

18 ‘‘(C) in the case of any other individual, 50 

19 percent of the amount in effect for the taxable 

20 year under subparagraph (A). 

21 ‘‘(4) INFLATION ADJUSTMENT.— 

22 ‘‘(A) IN GENERAL.—In the case of any 

23 taxable year beginning in a calendar year after 

24 2022, the $45,000 dollar amount in paragraph 


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1 (2) and the $40,000 in paragraph (3) shall 

2 each be increased by an amount equal to— 

3 ‘‘(i) such dollar amount, multiplied by 

4 ‘‘(ii) the cost-of-living adjustment de5 termined under section 1(f)(3) for the cal6 endar year in which the taxable year be7 gins, determined by substituting ‘calendar 

8 year 2021’ for ‘calendar year 2016’ in sub9 paragraph (A)(ii) thereof. 

10 ‘‘(B) ROUNDING.—Any increase deter11 mined under subparagraph (A) that is not a 

12 multiple of $500 shall be rounded to the near13 est multiple of $500.’’. 

14 (c) EFFECTIVE DATE.—The amendments made by 

15 this section shall apply to taxable years beginning after 

16 December 31, 2021. 

17 SEC. 6. EXTENSION OF LIMITATION ON DEDUCTION FOR 

18 STATE AND LOCAL TAXES. 

19 (a) IN GENERAL.—Section 164(b)(6) of the Internal 

20 Revenue Code of 1986 is amended— 

21 (1) by striking ‘‘January 1, 2026’’ and insert22 ing ‘‘January 1, 2029’’, and 

23 (2) by striking ‘‘2025’’ in the heading thereof 

24 and inserting ‘‘2028’’. 


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1 (b) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to taxable years beginning after 

3 December 31, 2022. 

Æ 


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