1590 
‘‘(f) GUIDANCE.—Not later than January 1, 2027, 
the Secretary shall issue guidance regarding implementa-
tion of this section, including calculation of greenhouse 
gas emission rates for qualified facilities and determina-
tion of clean electricity production credits under this sec-
tion. 
‘‘(g) SPECIAL RULES.— 
‘‘(1) ONLY
PRODUCTION
IN
THE
UNITED 
STATES
TAKEN
INTO
ACCOUNT.—Consumption or 
sales shall be taken into account under this section 
only with respect to electricity the production of 
which is within— 
‘‘(A) the United States (within the mean-
ing of section 638(1)), or 
‘‘(B) a possession of the United States 
(within the meaning of section 638(2)). 
‘‘(2) COMBINED
HEAT
AND
POWER
SYSTEM 
PROPERTY.— 
‘‘(A) IN GENERAL.—For purposes of sub-
section (a)— 
‘‘(i) the kilowatt hours of electricity 
produced by a taxpayer at a qualified facil-
ity shall include any production in the 
form of useful thermal energy by any com-
1591 
bined heat and power system property 
within such facility, and 
‘‘(ii) the amount of greenhouse gases 
emitted into the atmosphere by such facil-
ity in the production of such useful ther-
mal energy shall be included for purposes 
of determining the greenhouse gas emis-
sions rate for such facility. 
‘‘(B) COMBINED HEAT AND POWER SYS-
TEM
PROPERTY.—For purposes of this para-
graph, the term ‘combined heat and power sys-
tem property’ has the same meaning given such 
term by section 48(c)(3) (without regard to 
subparagraphs (A)(iv), (B), and (D) thereof). 
‘‘(C) CONVERSION FROM BTU TO KWH.— 
‘‘(i) IN
GENERAL.—For purposes of 
subparagraph (A)(i), the amount of kilo-
watt hours of electricity produced in the 
form of useful thermal energy shall be 
equal to the quotient of— 
‘‘(I) the total useful thermal en-
ergy produced by the combined heat 
and power system property within the 
qualified facility, divided by
1592 
‘‘(II) the heat rate for such facil-
ity. 
‘‘(ii) HEAT
RATE.—For purposes of 
this subparagraph, the term ‘heat rate’ 
means the amount of energy used by the 
qualified facility to generate 1 kilowatt 
hour of electricity, expressed as British 
thermal units per net kilowatt hour gen-
erated. 
‘‘(3) PRODUCTION ATTRIBUTABLE TO THE TAX-
PAYER.—In the case of a qualified facility in which 
more than 1 person has an ownership interest, ex-
cept to the extent provided in regulations prescribed 
by the Secretary, production from the facility shall 
be allocated among such persons in proportion to 
their respective ownership interests in the gross 
sales from such facility. 
‘‘(4) RELATED
PERSONS.—Persons shall be 
treated as related to each other if such persons 
would be treated as a single employer under the reg-
ulations prescribed under section 52(b). In the case 
of a corporation which is a member of an affiliated 
group of corporations filing a consolidated return, 
such corporation shall be treated as selling electricity
1593 
to an unrelated person if such electricity is sold to 
such a person by another member of such group. 
‘‘(5) PASS-THRU IN THE CASE OF ESTATES AND 
TRUSTS.—Under regulations prescribed by the Sec-
retary, rules similar to the rules of subsection (d) of 
section 52 shall apply. 
‘‘(6) ALLOCATION OF CREDIT TO PATRONS OF 
AGRICULTURAL COOPERATIVE.— 
‘‘(A) ELECTION TO ALLOCATE.— 
‘‘(i) IN GENERAL.—In the case of an 
eligible cooperative organization, any por-
tion of the credit determined under sub-
section (a) for the taxable year may, at the 
election of the organization, be apportioned 
among patrons of the organization on the 
basis of the amount of business done by 
the patrons during the taxable year. 
‘‘(ii) FORM
AND
EFFECT
OF
ELEC-
TION.—An election under clause (i) for any 
taxable year shall be made on a timely 
filed return for such year. Such election, 
once made, shall be irrevocable for such 
taxable year. Such election shall not take 
effect unless the organization designates 
the apportionment as such in a written no-
1594 
tice mailed to its patrons during the pay-
ment period described in section 1382(d). 
‘‘(B) TREATMENT OF ORGANIZATIONS AND 
PATRONS.—The amount of the credit appor-
tioned to any patrons under subparagraph 
(A)— 
‘‘(i) shall not be included in the 
amount determined under subsection (a) 
with respect to the organization for the 
taxable year, and 
‘‘(ii) shall be included in the amount 
determined under subsection (a) for the 
first taxable year of each patron ending on 
or after the last day of the payment period 
(as defined in section 1382(d)) for the tax-
able year of the organization or, if earlier, 
for the taxable year of each patron ending 
on or after the date on which the patron 
receives notice from the cooperative of the 
apportionment. 
‘‘(C) SPECIAL RULES FOR DECREASE IN 
CREDITS FOR TAXABLE YEAR.—If the amount 
of the credit of a cooperative organization de-
termined under subsection (a) for a taxable 
year is less than the amount of such credit
1595 
shown on the return of the cooperative organi-
zation for such year, an amount equal to the 
excess of— 
‘‘(i) such reduction, over 
‘‘(ii) the amount not apportioned to 
such patrons under subparagraph (A) for 
the taxable year, 
shall be treated as an increase in tax imposed 
by this chapter on the organization. Such in-
crease shall not be treated as tax imposed by 
this chapter for purposes of determining the 
amount of any credit under this chapter. 
‘‘(D) ELIGIBLE COOPERATIVE DEFINED.— 
For purposes of this section, the term ‘eligible 
cooperative’ means a cooperative organization 
described in section 1381(a) which is owned 
more than 50 percent by agricultural producers 
or by entities owned by agricultural producers. 
For this purpose an entity owned by an agricul-
tural producer is one that is more than 50 per-
cent owned by agricultural producers. 
‘‘(7) 
INCREASE
IN
CREDIT
IN
CERTAIN 
CASES.— 
‘‘(A) ENERGY COMMUNITIES.—In the case 
of any qualified facility which is located in an
1596 
energy community (as defined in section 
45(b)(11)(B)), for purposes of determining the 
amount of the credit under subsection (a) with 
respect to any electricity produced by the tax-
payer at such facility during the taxable year, 
the applicable amount under paragraph (2) of 
such subsection shall be increased by an 
amount equal to 10 percent of the amount oth-
erwise in effect under such paragraph (without 
application of subparagraph (B)). 
‘‘(B) DOMESTIC CONTENT.—Rules similar 
to the rules of section 45(b)(9) shall apply. 
‘‘(8) CREDIT
REDUCED
FOR
TAX-EXEMPT 
BONDS.—Rules similar to the rules of section 
45(b)(3) shall apply. 
‘‘(9) WAGE REQUIREMENTS.—Rules similar to 
the rules of section 45(b)(7)(A) and clauses (i) 
through (iv) of section 45(b)(7)(B) shall apply. 
‘‘(10) 
APPRENTICESHIP
REQUIREMENTS.— 
Rules similar to the rules of section 45(b)(8) shall 
apply. 
‘‘(11) DOMESTIC CONTENT REQUIREMENT FOR 
ELECTIVE PAYMENT.—Rules similar to the rules of 
section 45(b)(10) shall apply.’’.
1597 
(b) ELECTIVE
PAYMENT
OF
CREDIT.—Section 
6417(b), as amended by preceding provisions of this Act, 
is amended by adding at the end the following new para-
graph: 
‘‘(12) The clean electricity production credit de-
termined under section 45BB(a).’’. 
(c) ELECTION.—Section 6417(c)(3), as amended by 
the preceding provisions of this Act, is amended by adding 
at the end the following new subparagraph: 
‘‘(D) CLEAN
ELECTRICITY
PRODUCTION 
CREDIT.—In the case of the credit described in 
subsection (b)(10), any election under this sub-
section shall— 
‘‘(i) apply separately with respect to 
each qualified facility, 
‘‘(ii) be made for the taxable year in 
which the facility is placed in service, and 
‘‘(iii) shall apply to such taxable year 
and all subsequent taxable years with re-
spect to such facility.’’. 
(d) CONFORMING AMENDMENTS.— 
(1) Section 38(b) is amended— 
(A) in paragraph (38), by striking ‘‘plus’’ 
at the end,
1598 
(B) in paragraph (39), by striking the pe-
riod at the end and inserting ‘‘, plus’’, and 
(C) by adding at the end the following new 
paragraph: 
‘‘(40) the clean electricity production credit de-
termined under section 45BB(a).’’. 
(2) The table of sections for subpart D of part 
IV of subchapter A of chapter 1 is amended by add-
ing at the end the following new item: 
‘‘Sec. 45BB. Clean electricity production credit.’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to facilities placed in service after 
December 31, 2022. 
SEC. 136802. CLEAN ELECTRICITY INVESTMENT CREDIT. 
(a) IN GENERAL.—Subpart E of part IV of sub-
chapter A of chapter 1 is amended by inserting after sec-
tion 48E the following new section: 
‘‘SEC. 48F. CLEAN ELECTRICITY INVESTMENT CREDIT. 
‘‘(a) INVESTMENT CREDIT FOR QUALIFIED PROP-
ERTY.— 
‘‘(1) IN GENERAL.—For purposes of section 46, 
the clean electricity investment credit for any taxable 
year is an amount equal to the applicable percentage 
of the qualified investment for such taxable year 
with respect to— 
‘‘(A) any qualified facility, and
1599 
‘‘(B) any grid improvement property. 
‘‘(2) APPLICABLE PERCENTAGE.— 
‘‘(A) QUALIFIED FACILITIES.—Subject to 
paragraph (3)— 
‘‘(i) BASE RATE.—In the case of any 
qualified facility which is not described in 
subclause (I) of clause (ii) and does not 
satisfy the requirements described in sub-
clause (II) of such clause, the applicable 
percentage shall be 6 percent. 
‘‘(ii) ALTERNATIVE
RATE.—In the 
case of any qualified facility— 
‘‘(I) with a maximum net output 
of less than 1 megawatt, or 
‘‘(II) which— 
‘‘(aa) satisfies the require-
ments of subsection (d)(3), and 
‘‘(bb) with respect to the 
construction of such facility, sat-
isfies the requirements of sub-
section (d)(4), 
the applicable percentage shall be 30 per-
cent. 
‘‘(B) GRID
IMPROVEMENT
PROPERTY.— 
Subject to paragraph (3)—
1600 
‘‘(i) BASE RATE.—In the case of any 
grid improvement property which is not de-
scribed in subclause (I) of clause (ii) and 
does not satisfy the requirements described 
in subclause (II) of such clause, the appli-
cable percentage shall be 6 percent. 
‘‘(ii) ALTERNATIVE
RATE.—In the 
case of any grid improvement property— 
‘‘(I) which is energy storage 
property with a capacity of less than 
1 megawatt, or 
‘‘(II) which— 
‘‘(aa) satisfies the require-
ments of subsection (d)(3), and 
‘‘(bb) with respect to the 
construction of such property, 
satisfies rules similar to the rules 
of section 45(b)(8), 
the applicable percentage shall be 30 per-
cent. 
‘‘(3) INCREASE IN CREDIT RATE IN CERTAIN 
CASES.— 
‘‘(A) ENERGY COMMUNITIES.— 
‘‘(i) IN GENERAL.—In the case of any 
qualified investment with respect to a
1601 
qualified facility or with respect to grid im-
provement property which is placed in 
service within an energy community (as de-
fined in section 45(b)(11)(B)), for pur-
poses applying paragraph (2) with respect 
to such property or investment, the appli-
cable percentage shall be increased by the 
applicable credit rate increase. 
‘‘(ii) APPLICABLE
CREDIT
RATE
IN-
CREASE.—For purposes of clause (i), the 
applicable credit rate increase shall be an 
amount equal to— 
‘‘(I) in the case of any qualified 
investment with respect to a qualified 
facility 
described 
in 
paragraph 
(2)(A)(i) or with respect to grid im-
provement property described in para-
graph (2)(B)(i), 2 percentage points, 
and 
‘‘(II) in the case of any qualified 
investment with respect to a qualified 
facility 
described 
in 
paragraph 
(2)(A)(ii) or with respect to grid im-
provement property described in para-
1602 
graph 
(2)(B)(ii), 
percentage 
points. 
‘‘(B) DOMESTIC CONTENT.—Rules similar 
to the rules of section 48(a)(12) shall apply. 
‘‘(b) QUALIFIED INVESTMENT WITH RESPECT TO A 
QUALIFIED FACILITY.— 
‘‘(1) IN GENERAL.—For purposes of subsection 
(a), the qualified investment with respect to any 
qualified facility for any taxable year is the sum 
of— 
‘‘(A) the basis of any qualified property 
placed in service by the taxpayer during such 
taxable year which is part of a qualified facility, 
plus 
‘‘(B) the amount of any expenditures 
which are— 
‘‘(i) paid or incurred by the taxpayer 
for qualified interconnection property— 
‘‘(I) in connection with a quali-
fied facility which has a maximum net 
output 
of 
not 
greater 
than 
megawatts, and 
‘‘(II) placed in service during the 
taxable year of the taxpayer, and
1603 
‘‘(ii) properly chargeable to capital ac-
count of the taxpayer. 
‘‘(2) QUALIFIED PROPERTY.—The term ‘quali-
fied property’ means property— 
‘‘(A) which is— 
‘‘(i) tangible personal property, or 
‘‘(ii) other tangible property (not in-
cluding a building or its structural compo-
nents), but only if such property is used as 
an integral part of the qualified facility, 
‘‘(B) with respect to which depreciation (or 
amortization in lieu of depreciation) is allow-
able, and 
‘‘(C)(i) the construction, reconstruction, or 
erection of which is completed by the taxpayer, 
or 
‘‘(ii) which is acquired by the taxpayer if 
the original use of such property commences 
with the taxpayer. 
‘‘(3) QUALIFIED FACILITY.— 
‘‘(A) IN GENERAL.—For purposes of this 
section, the term ‘qualified facility’ means a fa-
cility— 
‘‘(i) which is used for the generation 
of electricity,
1604 
‘‘(ii) the construction of which begins 
after December 31, 2026, and 
‘‘(iii) for which the anticipated green-
house gas emissions rate (as determined 
under subparagraph (B)(ii)) is not greater 
than zero. 
‘‘(B) ADDITIONAL RULES.— 
‘‘(i) EXPANSION OF FACILITY; INCRE-
MENTAL
PRODUCTION.—Rules similar to 
the rules of section 45BB(b)(1)(C) shall 
apply for purposes of this paragraph. 
‘‘(ii) GREENHOUSE
GAS
EMISSIONS 
RATE.—Rules similar to the rules of sec-
tion 45BB(b)(2) shall apply for purposes 
of this paragraph. 
‘‘(C) EXCLUSION.—The term ‘qualified fa-
cility’ shall not include any facility for which— 
‘‘(i) a renewable electricity production 
credit determined under section 45, 
‘‘(ii) an advanced nuclear power facil-
ity production credit determined under sec-
tion 45J, 
‘‘(iii) a carbon oxide sequestration 
credit determined under section 45Q,
1605 
‘‘(iv) a clean electricity production 
credit determined under section 45BB, 
‘‘(v) an energy credit determined 
under section 48, 
‘‘(vi) a qualifying advanced coal 
project credit under section 48A, or 
‘‘(vii) a qualifying electric trans-
mission property credit under section 48D, 
is allowed under section 38 for the taxable year 
or any prior taxable year. 
‘‘(4) 
QUALIFIED
INTERCONNECTION
PROP-
ERTY.—For purposes of this paragraph, the term 
‘qualified interconnection property’ has the meaning 
given such term in section 48(a)(8)(B). 
‘‘(5) COORDINATION
WITH
REHABILITATION 
CREDIT.—The qualified investment with respect to 
any qualified facility for any taxable year shall not 
include that portion of the basis of any property 
which is attributable to qualified rehabilitation ex-
penditures (as defined in section 47(c)(2)). 
‘‘(6) DEFINITIONS.—For purposes of this sub-
section, the terms ‘CO2e per KWh’ and ‘greenhouse 
gas emissions rate’ have the same meaning given 
such terms under section 45BB(b).
1606 
‘‘(c) QUALIFIED INVESTMENT WITH RESPECT TO 
GRID IMPROVEMENT PROPERTY.— 
‘‘(1) IN GENERAL.— 
‘‘(A) QUALIFIED INVESTMENT.—For pur-
poses of subsection (a), the qualified investment 
with respect to grid improvement property for 
any taxable year is the basis of any grid im-
provement property placed in service by the tax-
payer during such taxable year. 
‘‘(B) GRID
IMPROVEMENT
PROPERTY.— 
For purposes of this section, the term ‘grid im-
provement property’ means any energy storage 
property. 
‘‘(2) ENERGY STORAGE PROPERTY.—For pur-
poses of this section, the term ‘energy storage prop-
erty’ has the meaning given such term in section 
48(c)(6). 
‘‘(d) SPECIAL RULES.— 
‘‘(1) CERTAIN PROGRESS EXPENDITURE RULES 
MADE APPLICABLE.—Rules similar to the rules of 
subsections (c)(4) and (d) of section 46 (as in effect 
on the day before the date of the enactment of the 
Revenue Reconciliation Act of 1990) shall apply for 
purposes of subsection (a).
1607 
‘‘(2) SPECIAL RULE FOR PROPERTY FINANCED 
BY SUBSIDIZED ENERGY FINANCING OR PRIVATE AC-
TIVITY BONDS.—Rules similar to the rules of section 
45(b)(3) shall apply. 
‘‘(3) PREVAILING
WAGE
REQUIREMENTS.— 
Rules similar to the rules of section 48(a)(10) shall 
apply. 
‘‘(4) APPRENTICESHIP REQUIREMENTS.—Rules 
similar to the rules of section 45(b)(8) shall apply. 
‘‘(5) DOMESTIC CONTENT REQUIREMENT FOR 
ELECTIVE PAYMENT.—Rules similar to the rules of 
section 45(b)(10) shall apply. 
‘‘(e) CREDIT PHASE-OUT.— 
‘‘(1) IN GENERAL.—The amount of the clean 
electricity investment credit under subsection (a) for 
any qualified investment with respect to any quali-
fied facility or grid improvement property the con-
struction of which begins during a calendar year de-
scribed in paragraph (2) shall be equal to the prod-
uct of— 
‘‘(A) the amount of the credit determined 
under subsection (a) without regard to this sub-
section, multiplied by 
‘‘(B) the phase-out percentage under para-
graph (2).
1608 
‘‘(2) PHASE-OUT PERCENTAGE.—The phase-out 
percentage under this paragraph is equal to— 
‘‘(A) for any qualified investment with re-
spect to any qualified facility or grid improve-
ment property the construction of which begins 
during the first calendar year following the ap-
plicable year, 100 percent, 
‘‘(B) for any qualified investment with re-
spect to any qualified facility or grid improve-
ment property the construction of which begins 
during the second calendar year following the 
applicable year, 75 percent, 
‘‘(C) for any qualified investment with re-
spect to any qualified facility or grid improve-
ment property the construction of which begins 
during the third calendar year following the ap-
plicable year, 50 percent, and 
‘‘(D) for any qualified investment with re-
spect to any qualified facility or grid improve-
ment property the construction of which begins 
during any calendar year subsequent to the cal-
endar year described in subparagraph (C), 0 
percent.
1609 
‘‘(3) APPLICABLE YEAR.—For purposes of this 
subsection, the term ‘applicable year’ has the same 
meaning given such term in section 45BB(d)(3). 
‘‘(f) GREENHOUSE GAS.—In this section, the term 
‘greenhouse gas’ has the same meaning given such term 
under section 45BB(e)(2). 
‘‘(g) RECAPTURE OF CREDIT.—For purposes of sec-
tion 50, if the Secretary determines that the greenhouse 
gas emissions rate for a qualified facility is greater than 
10 grams of CO2e per KWh, any property for which a 
credit was allowed under this section with respect to such 
facility shall cease to be investment credit property in the 
taxable year in which the determination is made. 
‘‘(h) GUIDANCE.—Not later than January 1, 2027, 
the Secretary shall issue guidance regarding implementa-
tion of this section.’’. 
(b) ELECTIVE
PAYMENT
OF
CREDIT.—Section 
6417(b), as amended by preceding provisions of this Act, 
is amended by adding at the end the following new para-
graph: 
‘‘(13) The clean electricity investment credit de-
termined under section 48F.’’. 
(c) CONFORMING AMENDMENTS.— 
(1) Section 46 is amended—
1610 
(A) by striking ‘‘and’’ at the end of para-
graph (5), 
(B) by striking the period at the end of 
paragraph (6) and inserting ‘‘, and’’, and 
(C) by adding at the end the following new 
paragraph: 
‘‘(7) the clean electricity investment credit.’’. 
(2) Section 49(a)(1)(C) is amended— 
(A) by striking ‘‘and’’ at the end of clause 
(iv), 
(B) by striking the period at the end of 
clause (v) and inserting a comma, and 
(C) by adding at the end the following new 
clauses: 
‘‘(vi) the basis of any qualified prop-
erty which is part of a qualified facility 
under section 48F, and 
‘‘(vii) the basis of any energy storage 
property under section 48F.’’. 
(3) Section 50(a)(2)(E) is amended by striking 
‘‘or 48E(c)(1)’’ and inserting ‘‘48E(c)(1), or 
48F(e)’’. 
(4) Section 50(c)(3) is amended by inserting 
‘‘or clean electricity investment credit’’ after ‘‘In the 
case of any energy credit’’.
1611 
(5) The table of sections for subpart E of part 
IV of subchapter A of chapter 1 is amended by in-
serting after the item relating to section 48E the fol-
lowing new item: 
‘‘48F. Clean electricity investment credit.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to property placed in service after 
December 31, 2026, and, for any property the construc-
tion of which begins prior to January 1, 2027, only to 
the extent of the basis thereof attributable to the construc-
tion, reconstruction, or erection after December 31, 2026. 
SEC. 136803. INCREASE IN CLEAN ELECTRICITY INVEST-
MENT CREDIT FOR FACILITIES PLACED IN 
SERVICE IN CONNECTION WITH LOW-INCOME 
COMMUNITIES. 
(a) IN GENERAL.—Section 48F, as added by this 
Act, is amended by adding at the end the following new 
subsection: 
‘‘(i) SPECIAL
RULES
FOR
CERTAIN
FACILITIES 
PLACED IN SERVICE IN CONNECTION WITH LOW-INCOME 
COMMUNITIES.— 
‘‘(1) IN GENERAL.—In the case of any qualified 
facility with respect to which the Secretary makes an 
allocation of environmental justice capacity limita-
tion under paragraph (4)—
1612 
‘‘(A) the applicable percentage otherwise 
determined under subsection (a)(2) with respect 
to any eligible property which is part of such 
facility shall be increased by— 
‘‘(i) in the case of a facility described 
in subclause (I) of paragraph (2)(A)(iii) 
and not described in subclause (II) of such 
paragraph, 10 percentage points, and 
‘‘(ii) in the case of a facility described 
in subclause (II) of paragraph (2)(A)(iii), 
20 percentage points, and 
‘‘(B) the increase in the credit determined 
under subsection (a) by reason of this sub-
section for any taxable year with respect to all 
property which is part of such facility shall not 
exceed the amount which bears the same ratio 
to the amount of such increase (determined 
without regard to this subparagraph) as— 
‘‘(i) the environmental justice capacity 
limitation allocated to such facility, bears 
to 
‘‘(ii) the total megawatt nameplate ca-
pacity of such facility, as measured in di-
rect current.
1613 
‘‘(2) QUALIFIED
FACILITY.—For purposes of 
this subsection— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
facility’ means any facility— 
‘‘(i) which is described in subsection 
(b)(3)(A) and not described in section 
45BB(b)(2)(B), 
‘‘(ii) which has a maximum net output 
of less than 5 megawatts, and 
‘‘(iii) which— 
‘‘(I) is located in a low-income 
community (as defined in section 
45D(e)) or on Indian land (as defined 
in section 2601(2) of the Energy Pol-
icy Act of 1992 (25 U.S.C. 3501(2))), 
or 
‘‘(II) is part of a qualified low-in-
come residential building project or a 
qualified low-income economic benefit 
project. 
‘‘(B) QUALIFIED
LOW-INCOME
RESIDEN-
TIAL BUILDING PROJECT.—A facility shall be 
treated as part of a qualified low-income resi-
dential building project if—
1614 
‘‘(i) such facility is installed on a resi-
dential rental building which participates 
in a covered housing program (as defined 
in section 41411(a) of the Violence Against 
Women 
Act 
of 
1994 
(34 
U.S.C. 
12491(a)(3)), a Housing Development 
Fund Corporation cooperative under Arti-
cle XI of the New York State Private 
Housing Finance Law, a housing assist-
ance program administered by the Depart-
ment of Agriculture under title V of the 
Housing Act of 1949, a housing program 
administered by a tribally designated hous-
ing entity (as defined in section 4(22) of 
the Native American Housing Assistance 
and Self-Determination Act of 1996 (25 
U.S.C. 4103(22))) or such other affordable 
housing programs as the Secretary may 
provide, and 
‘‘(ii) the financial benefits of the elec-
tricity produced by such facility are allo-
cated equitably among the occupants of the 
dwelling units of such building. 
‘‘(C) QUALIFIED
LOW-INCOME
ECONOMIC 
BENEFIT PROJECT.—A facility shall be treated
1615 
as part of a qualified low-income economic ben-
efit project if at least 50 percent of the finan-
cial benefits of the electricity produced by such 
facility are provided to households with income 
of— 
‘‘(i) less than 200 percent of the pov-
erty line applicable to a family of the size 
involved, or 
‘‘(ii) less than 80 percent of area me-
dian gross income (as determined under 
section 142(d)(2)(B)). 
‘‘(D) FINANCIAL BENEFIT.—For purposes 
of subparagraphs (B) and (C), electricity ac-
quired at a below-market rate shall not fail to 
be taken into account as a financial benefit. 
‘‘(3) ELIGIBLE
PROPERTY.—For purposes of 
this section, the term ‘eligible property’ means a 
qualified investment with respect to any qualified fa-
cility which is described in subsection (b). 
‘‘(4) ALLOCATIONS.— 
‘‘(A) IN GENERAL.—Not later than Janu-
ary 1, 2027, the Secretary shall establish a pro-
gram to allocate amounts of environmental jus-
tice capacity limitation to qualified facilities.
1616 
‘‘(B) LIMITATION.—The amount of envi-
ronmental justice capacity limitation allocated 
by the Secretary under subparagraph (A) dur-
ing any calendar year shall not exceed the an-
nual capacity limitation with respect to such 
year. 
‘‘(C) ANNUAL CAPACITY LIMITATION.—For 
purposes of this paragraph, the term ‘annual 
capacity limitation’ means 1.8 gigawatts of di-
rect current capacity for each of calendar years 
2027 through 2031, and zero thereafter. 
‘‘(D) CARRYOVER
OF
UNUSED
LIMITA-
TION.— 
‘‘(i) IN GENERAL.—If the annual ca-
pacity limitation for any calendar year ex-
ceeds the aggregate amount allocated for 
such year under this paragraph, such limi-
tation for the succeeding calendar year 
shall be increased by the amount of such 
excess. No amount may be carried under 
the preceding sentence to any calendar 
year after 2033. 
‘‘(ii) CARRYOVER
FROM
SECTION
FOR CALENDAR YEAR 2027.—If the annual 
capacity limitation for calendar year 2026
1617 
under section 48(e)(4)(D) exceeds the ag-
gregate amount allocated for such year 
under section 48(e)(4)(D), such excess 
amount may be carried over and applied to 
the annual capacity limitation under this 
subsection for calendar year 2027. Such 
limitation shall be increased by the amount 
of such excess. 
‘‘(E) PLACED IN SERVICE DEADLINE.— 
‘‘(i) IN
GENERAL.—Paragraph (1) 
shall not apply with respect to any prop-
erty which is placed in service after the 
date that is 4 years after the date of the 
allocation with respect to the facility of 
which such property is a part. 
‘‘(ii) APPLICATION OF CARRYOVER.— 
Any amount of environmental justice ca-
pacity limitation which expires under 
clause (i) during any calendar year shall be 
taken into account as an excess described 
in subparagraph (D) (or as an increase in 
such excess) for such calendar year, sub-
ject to the limitation imposed by the last 
sentence of such subparagraph.
1618 
‘‘(F) SELECTION
CRITERIA.—In deter-
mining to which qualified facilities to allocate 
environmental justice capacity limitation under 
this paragraph, the Secretary shall take into 
consideration which facilities will result in— 
‘‘(i) the greatest health and economic 
benefits, including the ability to withstand 
extreme weather events, for individuals de-
scribed in section 45D(e)(2), 
‘‘(ii) the greatest employment and 
wages for such individuals, and 
‘‘(iii) the greatest engagement with, 
outreach to, or ownership by, such individ-
uals, including through partnerships with 
local governments, community-based orga-
nizations, an Indian tribal government (as 
defined in section 48(e)(4)(F)(ii)), or any 
Alaska Native Corporation (as defined in 
section 3 of the Alaska Native Claims Set-
tlement Act (43 U.S.C. 1602(m)). 
‘‘(G) DISCLOSURE OF ALLOCATIONS.—The 
Secretary shall, upon making an allocation of 
environmental justice capacity limitation under 
this paragraph, publicly disclose the identity of 
the applicant, the amount of the environmental
1619 
justice capacity limitation allocated to such ap-
plicant, and the location of the facility for 
which such allocation is made. 
‘‘(5) RECAPTURE.—The Secretary shall, by reg-
ulations or other guidance, provide for recapturing 
the benefit of any increase in the credit allowed 
under subsection (a) by reason of this subsection 
with respect to any property which ceases to be 
property eligible for such increase (but which does 
not cease to be investment credit property within the 
meaning of section 50(a)). The period and percent-
age of such recapture shall be determined under 
rules similar to the rules of section 50(a). To the ex-
tent provided by the Secretary, such recapture may 
not apply with respect to any property if, within 12 
months after the date the taxpayer becomes aware 
(or reasonably should have become aware) of such 
property ceasing to be property eligible for such in-
crease, the eligibility of such property for such in-
crease is restored. The preceding sentence shall not 
apply more than once with respect to any facility.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall take effect on January 1, 2027.
1620 
SEC. 136804. COST RECOVERY FOR QUALIFIED FACILITIES, 
QUALIFIED PROPERTY, AND GRID IMPROVE-
MENT PROPERTY. 
(a) IN GENERAL.—Section 168(e)(3)(B) is amend-
ed— 
(1) in clause (vi)(III), by striking ‘‘and’’ at the 
end, 
(2) in clause (vii), by striking the period at the 
end and inserting ‘‘, and’’, and 
(3) by inserting after clause (vii) the following: 
‘‘(viii) any qualified facility (as de-
fined in section 45BB(b)(1)(A)), any quali-
fied property (as defined in subsection 
(b)(2) of section 48F) which is a qualified 
investment (as defined in subsection (b)(1) 
of such section), or any grid improvement 
property 
(as 
defined 
in 
subsection 
(c)(1)(B) of such section).’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to facilities and property placed 
in service after December 31, 2026. 
SEC. 136805. CLEAN FUEL PRODUCTION CREDIT. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 is amended by adding at the end 
the following new section:
1621 
‘‘SEC. 45CC. CLEAN FUEL PRODUCTION CREDIT. 
‘‘(a) AMOUNT OF CREDIT.— 
‘‘(1) IN GENERAL.—For purposes of section 38, 
the clean fuel production credit for any taxable year 
is an amount equal to the product of— 
‘‘(A) the applicable amount per gallon (or 
gallon equivalent) with respect to any transpor-
tation fuel which is— 
‘‘(i) produced by the taxpayer at a 
qualified facility, and 
‘‘(ii) sold by the taxpayer in a manner 
described in paragraph (4) during the tax-
able year, and 
‘‘(B) the emissions factor for such fuel (as 
determined under subsection (b)). 
‘‘(2) APPLICABLE AMOUNT.— 
‘‘(A) BASE AMOUNT.—In the case of any 
transportation fuel produced at a qualified facil-
ity which does not satisfy the requirements de-
scribed in subparagraph (B), the applicable 
amount shall be 20 cents. 
‘‘(B) ALTERNATIVE AMOUNT.—In the case 
of any transportation fuel produced at a quali-
fied facility which satisfies the requirements 
under paragraphs (6) and (7) of subsection (g), 
the applicable amount shall be $1.00.
1622 
‘‘(3) SPECIAL RATE FOR SUSTAINABLE AVIA-
TION FUEL.— 
‘‘(A) IN GENERAL.—In the case of a trans-
portation fuel which is sustainable aviation fuel, 
paragraph (2) shall be applied— 
‘‘(i) in the case of a transportation 
fuel produced at a qualified facility de-
scribed in paragraph (2)(A), by sub-
stituting ‘35 cents’ for ‘20 cents’, and 
‘‘(ii) in the case of a transportation 
fuel produced at a qualified facility de-
scribed in paragraph (2)(B), by sub-
stituting ‘$1.75’ for ‘$1.00’. 
‘‘(B) SUSTAINABLE AVIATION FUEL.—For 
purposes of this subparagraph (A), the term 
‘sustainable aviation fuel’ means liquid fuel 
which is sold for use in an aircraft and which— 
‘‘(i) meets the requirements of— 
‘‘(I) ASTM International Stand-
ard D7566, or 
‘‘(II) the Fischer Tropsch provi-
sions of ASTM International Stand-
ard D1655, Annex A1, and 
‘‘(ii) is not derived from palm fatty 
acid distillates or petroleum.
1623 
‘‘(4) SALE.—For purposes of paragraph (1), 
the transportation fuel is sold in a manner described 
in this paragraph if such fuel is sold by the taxpayer 
to an unrelated person— 
‘‘(A) for use by such person in the produc-
tion of a fuel mixture, 
‘‘(B) for use by such person in a trade or 
business, or 
‘‘(C) who sells such fuel at retail to an-
other person and places such fuel in the fuel 
tank of such other person. 
‘‘(5) ROUNDING.—If any amount determined 
under paragraph (1) is not a multiple of 0.1 cent, 
such amount shall be rounded to the nearest mul-
tiple of 0.1 cent. 
‘‘(b) EMISSIONS FACTORS.— 
‘‘(1) EMISSIONS FACTOR.— 
‘‘(A) CALCULATION.— 
‘‘(i) IN GENERAL.—The emissions fac-
tor of a transportation fuel shall be an 
amount equal to the quotient of— 
‘‘(I) an amount equal to— 
‘‘(aa) 50 kilograms of CO2e 
per mmBTU, minus
1624 
‘‘(bb) the emissions rate for 
such fuel, divided by 
‘‘(II) 50 kilograms of CO2e per 
mmBTU. 
‘‘(B) 
ESTABLISHMENT
OF
EMISSIONS 
RATE.— 
‘‘(i) IN GENERAL.—Subject to clauses 
(ii) and (iii), the Secretary shall annually 
publish a table which sets forth the emis-
sions rate for similar types and categories 
of transportation fuels based on the 
amount of lifecycle greenhouse gas emis-
sions (as described in section 211(o)(1)(H) 
of 
the 
Clean 
Air 
Act 
(42 
U.S.C. 
7545(o)(1)(H)), as in effect on the date of 
the enactment of this section) for such 
fuels, expressed as kilograms of CO2e per 
mmBTU, which a taxpayer shall use for 
purposes of this section. 
‘‘(ii) NON-AVIATION
FUEL.—In the 
case of any transportation fuel which is 
not a sustainable aviation fuel, the lifecycle 
greenhouse gas emissions of such fuel shall 
be based on the most recent determina-
tions under the Greenhouse gases, Regu-
1625 
lated Emissions, and Energy use in Trans-
portation model developed by Argonne Na-
tional Laboratory, or a successor model (as 
determined by the Secretary). 
‘‘(iii) AVIATION FUEL.—In the case of 
any transportation fuel which is a sustain-
able aviation fuel, the lifecycle greenhouse 
gas emissions of such fuel shall be deter-
mined in accordance with— 
‘‘(I) the most recent Carbon Off-
setting and Reduction Scheme for 
International Aviation which has been 
adopted by the International Civil 
Aviation Organization with the agree-
ment of the United States, or 
‘‘(II) any similar methodology 
which satisfies the criteria under sec-
tion 211(o)(1)(H) of the Clean Air 
Act (42 U.S.C. 7545(o)(1)(H)). 
‘‘(C) ROUNDING
OF
EMISSIONS
RATE.— 
The Secretary may round the emissions rates 
under subparagraph (B) to the nearest multiple 
of 5 kilograms of CO2e per mmBTU, except 
that, in the case of an emissions rate that is
1626 
less than 2.5 kilograms of CO2e per mmBTU, 
the Secretary may round such rate to zero. 
‘‘(D) PROVISIONAL EMISSIONS RATE.—In 
the case of any transportation fuel for which an 
emissions rate has not been established under 
subparagraph (B), a taxpayer producing such 
fuel may file a petition with the Secretary for 
determination of the emissions rate with respect 
to such fuel. 
‘‘(2) ROUNDING.—If any amount determined 
under paragraph (1)(A) is not a multiple of 0.1, 
such amount shall be rounded to the nearest mul-
tiple of 0.1. 
‘‘(c) INFLATION ADJUSTMENT.— 
‘‘(1) IN
GENERAL.—In the case of calendar 
years beginning after 2026, the 20 cent amount in 
subsection (a)(2)(A), the $1.00 amount in sub-
section (a)(2)(B), the 35 cent amount in subsection 
(a)(3)(A)(i), and the $1.75 amount in subsection 
(a)(3)(A)(ii) shall each be adjusted by multiplying 
such amount by the inflation adjustment factor for 
the calendar year in which the sale of the transpor-
tation fuel occurs. If any amount as increased under 
the preceding sentence is not a multiple of 1 cent,
1627 
such amount shall be rounded to the nearest mul-
tiple of 1 cent. 
‘‘(2) INFLATION
ADJUSTMENT
FACTOR.—For 
purposes of paragraph (1), the inflation adjustment 
factor shall be the inflation adjustment factor deter-
mined and published by the Secretary pursuant to 
section 45BB(c), determined by substituting ‘cal-
endar year 2021’ for ‘calendar year 1992’ in para-
graph (3) thereof. 
‘‘(d) CREDIT PHASE-OUT.— 
‘‘(1) IN GENERAL.—The amount of the clean 
fuel production credit under subsection (a) for any 
transportation fuel sold during a taxable year de-
scribed in paragraph (2) shall be equal to the prod-
uct of— 
‘‘(A) the amount of the credit determined 
under subsection (a) without regard to this sub-
section, multiplied by 
‘‘(B) the phase-out percentage under para-
graph (2). 
‘‘(2) PHASE-OUT PERCENTAGE.—The phase-out 
percentage under this paragraph is equal to— 
‘‘(A) for any taxable year beginning in the 
first calendar year following the applicable year, 
100 percent,
1628 
‘‘(B) for any taxable year beginning in the 
second calendar year following the applicable 
year, 75 percent, 
‘‘(C) for any taxable year beginning in the 
third calendar year following the applicable 
year, 50 percent, and 
‘‘(D) for any taxable year beginning in any 
calendar year subsequent to the calendar year 
described in subparagraph (C), 0 percent. 
‘‘(3) APPLICABLE YEAR.—For purposes of this 
subsection, the term ‘applicable year’ means the 
later of— 
‘‘(A) the calendar year in which the Sec-
retary determines that the greenhouse gas emis-
sions from the transportation of persons and 
goods annually in the United States are equal 
to or less than 25 percent of the greenhouse gas 
emissions from the transportation of persons 
and goods in the United States during calendar 
year 2021, or 
‘‘(B) 2031. 
‘‘(e) DEFINITIONS.—In this section: 
‘‘(1) mmBTU.—The term ‘mmBTU’ means 
1,000,000 British thermal units.
1629 
‘‘(2) CO2e.—The term ‘CO2e’ means, with re-
spect to any greenhouse gas, the equivalent carbon 
dioxide (as determined based on relative global 
warming potential). 
‘‘(3) GREENHOUSE GAS.—The term ‘greenhouse 
gas’ has the same meaning given that term under 
section 211(o)(1)(G) of the Clean Air Act (42 
U.S.C. 7545(o)(1)(G)), as in effect on the date of 
the enactment of this section. 
‘‘(4) QUALIFIED FACILITY.—The term ‘quali-
fied facility’— 
‘‘(A) means a facility used for the produc-
tion of transportation fuels, and 
‘‘(B) does not include any facility for 
which one of the following credits is allowed 
under section 38 for the taxable year: 
‘‘(i) The credit for production of clean 
hydrogen under section 45X. 
‘‘(ii) The credit for clean hydrogen 
production 
facilities 
under 
section 
48(a)(16). 
‘‘(iii) The credit for carbon oxide se-
questration under section 45Q. 
‘‘(5) 
TRANSPORTATION
FUEL.—The 
term 
‘transportation fuel’ means a fuel which—
1630 
‘‘(A) is suitable for use as a fuel in a high-
way vehicle or aircraft, 
‘‘(B) has an emissions rate which is not 
greater than— 
‘‘(i) in the case of a fuel which is not 
a sustainable aviation fuel— 
‘‘(I) for any such fuel sold during 
calendar years 2027 through 2030, 50 
kilograms of CO2e per mmBTU, and 
‘‘(II) for any such fuel sold dur-
ing any calendar year beginning after 
December 31, 2030, 25 kilograms of 
CO2e per mmBTU, or 
‘‘(ii) in the case of a fuel which is a 
sustainable aviation fuel— 
‘‘(I) for any such fuel sold during 
any period before January 1, 2031, 
35 kilograms of CO2e per mmBTU, 
and 
‘‘(II) for any such fuel sold dur-
ing any period after December 31, 
2030, 25 kilograms of CO2e per 
mmBTU, 
‘‘(C) is not hydrogen fuel, and
1631 
‘‘(D) in the case of fuel which is not avia-
tion fuel, is not derived from coprocessing bio-
mass with a feedstock which is not biomass. 
For purposes of this paragraph, the term ‘bio-
mass’ has the meaning given such term in sec-
tion 45K(c)(3). 
‘‘(f) GUIDANCE.—Not later than January 1, 2027, 
the Secretary shall issue guidance regarding implementa-
tion of this section, including calculation of emissions fac-
tors for transportation fuel, the table described in sub-
section (b)(1)(B)(i), and the determination of clean fuel 
production credits under this section. 
‘‘(g) SPECIAL RULES.— 
‘‘(1) ONLY REGISTERED PRODUCTION IN THE 
UNITED STATES TAKEN INTO ACCOUNT.— 
‘‘(A) IN GENERAL.—No clean fuel produc-
tion credit shall be determined under subsection 
(a) with respect to any transportation fuel un-
less— 
‘‘(i) the taxpayer is registered as a 
producer of clean fuel under section 4101 
at the time of production, and 
‘‘(ii) such fuel is produced in the 
United States.
1632 
‘‘(B) UNITED
STATES.—For purposes of 
this paragraph, the term ‘United States’ in-
cludes any possession of the United States. 
‘‘(2) PRODUCTION ATTRIBUTABLE TO THE TAX-
PAYER.—In the case of a facility in which more than 
1 person has an ownership interest, except to the ex-
tent provided in regulations prescribed by the Sec-
retary, production from the facility shall be allocated 
among such persons in proportion to their respective 
ownership interests in the gross sales from such fa-
cility. 
‘‘(3) RELATED
PERSONS.—Persons shall be 
treated as related to each other if such persons 
would be treated as a single employer under the reg-
ulations prescribed under section 52(b). In the case 
of a corporation which is a member of an affiliated 
group of corporations filing a consolidated return, 
such corporation shall be treated as selling fuel to 
an unrelated person if such fuel is sold to such a 
person by another member of such group. 
‘‘(4) PASS-THRU IN THE CASE OF ESTATES AND 
TRUSTS.—Under regulations prescribed by the Sec-
retary, rules similar to the rules of subsection (d) of 
section 52 shall apply.
1633 
‘‘(5) ALLOCATION OF CREDIT TO PATRONS OF 
AGRICULTURAL COOPERATIVE.— 
‘‘(A) ELECTION TO ALLOCATE.— 
‘‘(i) IN GENERAL.—In the case of an 
eligible cooperative organization, any por-
tion of the credit determined under sub-
section (a) for the taxable year may, at the 
election of the organization, be apportioned 
among patrons of the organization on the 
basis of the amount of business done by 
the patrons during the taxable year. 
‘‘(ii) FORM
AND
EFFECT
OF
ELEC-
TION.—An election under clause (i) for any 
taxable year shall be made on a timely 
filed return for such year. Such election, 
once made, shall be irrevocable for such 
taxable year. Such election shall not take 
effect unless the organization designates 
the apportionment as such in a written no-
tice mailed to its patrons during the pay-
ment period described in section 1382(d). 
‘‘(B) TREATMENT OF ORGANIZATIONS AND 
PATRONS.—The amount of the credit appor-
tioned to any patrons under subparagraph 
(A)—
1634 
‘‘(i) shall not be included in the 
amount determined under subsection (a) 
with respect to the organization for the 
taxable year, and 
‘‘(ii) shall be included in the amount 
determined under subsection (a) for the 
first taxable year of each patron ending on 
or after the last day of the payment period 
(as defined in section 1382(d)) for the tax-
able year of the organization or, if earlier, 
for the taxable year of each patron ending 
on or after the date on which the patron 
receives notice from the cooperative of the 
apportionment. 
‘‘(C) SPECIAL RULES FOR DECREASE IN 
CREDITS FOR TAXABLE YEAR.—If the amount 
of the credit of a cooperative organization de-
termined under subsection (a) for a taxable 
year is less than the amount of such credit 
shown on the return of the cooperative organi-
zation for such year, an amount equal to the 
excess of— 
‘‘(i) such reduction, over
1635 
‘‘(ii) the amount not apportioned to 
such patrons under subparagraph (A) for 
the taxable year, 
shall be treated as an increase in tax imposed 
by this chapter on the organization. Such in-
crease shall not be treated as tax imposed by 
this chapter for purposes of determining the 
amount of any credit under this chapter. 
‘‘(D) ELIGIBLE COOPERATIVE DEFINED.— 
For purposes of this section the term ‘eligible 
cooperative’ means a cooperative organization 
described in section 1381(a) which is owned 
more than 50 percent by agricultural producers 
or by entities owned by agricultural producers. 
For this purpose an entity owned by an agricul-
tural producer is one that is more than 50 per-
cent owned by agricultural producers. 
‘‘(6) PREVAILING WAGE REQUIREMENTS.— 
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), rules similar to the rules of section 
45(b)(7)(A) and clauses (i) through (iv) of sec-
tion 45(b)(7)(B) shall apply. 
‘‘(B) SPECIAL
RULE
FOR
FACILITIES 
PLACED
IN
SERVICE
BEFORE
JANUARY
1,
1636 
2027.—In the case of any qualified facility 
placed in service before January 1, 2027— 
‘‘(i) the rules of clause (i) of section 
45(b)(7)(A) shall not apply, and 
‘‘(ii) clause (ii) of such section shall 
be applied by substituting ‘for any period 
of the taxable year beginning after Decem-
ber 31, 2026 for which the credit is 
claimed under this section with respect to 
production of transportation fuel, the alter-
ation or repair of such facility’ for ‘for the 
period of the taxable year which is within 
the 10-year period beginning on the date 
the facility was originally placed in service, 
the alteration or repair of such facility’. 
‘‘(7) APPRENTICESHIP REQUIREMENTS.—Rules 
similar to the rules of section 45(b)(8) shall apply.’’. 
(b) ELECTIVE
PAYMENT
OF
CREDIT.—Section 
6417(b), as amended by preceding provisions of this Act, 
is amended by adding at the end the following new para-
graph: 
‘‘(14) The clean fuel production credit deter-
mined under section 45CC(a).’’. 
(c) CONFORMING AMENDMENTS.—
1637 
(1) Section 38(b), as amended by section 101, 
is amended— 
(A) in paragraph (39), by striking ‘‘plus’’ 
at the end, 
(B) in paragraph (40), by striking the pe-
riod at the end and inserting ‘‘, plus’’, and 
(C) by adding at the end the following new 
paragraph: 
‘‘(41) the clean fuel production credit deter-
mined under section 45CC(a).’’. 
(2) The table of sections for subpart D of part 
IV of subchapter A of chapter 1, as amended by sec-
tion 101, is amended by adding at the end the fol-
lowing new item: 
‘‘Sec. 45CC. Clean fuel production credit.’’. 
(3) Section 4101(a)(1) is amended by inserting 
‘‘every person producing a fuel eligible for the clean 
fuel production credit (pursuant to section 45CC),’’ 
after ‘‘section 6426(b)(4)(A)),’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to transportation fuel produced 
after December 31, 2026. 
PART 9—APPROPRIATIONS 
SEC. 136901. APPROPRIATIONS. 
Immediately upon the enactment of this Act, in addi-
tion to amounts otherwise available, there are appro-
1638 
priated for fiscal year 2022, out of any money in the 
Treasury not otherwise appropriated, $4,073,433,000 to 
remain available until September 30, 2031, for necessary 
expenses for the Internal Revenue Service to carry out this 
subtitle (and the amendments made by this subtitle), 
which shall supplement and not supplant any other appro-
priations that may be available for this purpose. 
Subtitle G—Social Safety Net 
SEC. 137001. AMENDMENT OF 1986 CODE. 
Except as otherwise expressly provided, whenever in 
this subtitle an amendment or repeal is expressed in terms 
of an amendment to, or repeal of, a section or other provi-
sion, the reference shall be considered to be made to a 
section or other provision of the Internal Revenue Code 
of 1986. 
PART 1—CHILD TAX CREDIT 
SEC. 137101. MODIFICATIONS APPLICABLE BEGINNING IN 
2021. 
(a) SAFE HARBOR EXCEPTION FOR FRAUD AND IN-
TENTIONAL DISREGARD OF RULES AND REGULATIONS.— 
Section 24(j)(2)(B) is amended— 
(1) by striking ‘‘qualified’’ each place it appears 
in clause (iv)(II) and inserting ‘‘qualifying’’, and 
(2) by adding at the end the following new 
clause:
1639 
‘‘(v) EXCEPTION FOR FRAUD AND IN-
TENTIONAL
DISREGARD
OF
RULES
AND 
REGULATIONS.— 
‘‘(I) IN GENERAL.—For purposes 
of 
determining 
the 
safe 
harbor 
amount under clause (iv) with respect 
to any taxpayer, an individual shall 
not be treated as taken into account 
in determining the annual advance 
amount of such taxpayer if the Sec-
retary determines that such individual 
was so taken into account due to 
fraud by the taxpayer or intentional 
disregard of rules and regulations by 
the taxpayer. 
‘‘(II) ARRANGEMENTS
TO
TAKE 
INDIVIDUAL
INTO
ACCOUNT
MORE 
THAN
ONCE.—For purposes of sub-
clause (I), a taxpayer shall not fail to 
be 
treated 
as 
intentionally 
dis-
regarding rules and regulations with 
respect to any individual taken into 
account in determining the annual ad-
vance amount of such taxpayer if such 
taxpayer entered into a plan or other
1640 
arrangement with, or expected, an-
other taxpayer to take such individual 
into account in determining the credit 
allowed under this section for the tax-
able year.’’. 
(b) RULES RELATING TO RECONCILIATION OF CRED-
IT AND ADVANCE CREDIT.—Section 24(j) is amended by 
adding at the end the following new paragraphs: 
‘‘(3) JOINT
RETURNS.—Except as otherwise 
provided by the Secretary, in the case of an advance 
payment made under section 7527A with respect to 
a joint return, half of such payment shall be treated 
as having been made to each individual filing such 
return. 
‘‘(4) COORDINATION
WITH
POSSESSIONS
OF 
THE UNITED STATES.—For purposes of this sub-
section, payments made under section 7527A include 
payments made by any jurisdiction other than the 
United States under section 7527A of the income 
tax law of such jurisdiction, and advance payments 
made by American Samoa pursuant to a plan de-
scribed in subsection (k)(3)(B). In carrying out this 
section, the Secretary shall coordinate with each pos-
session of the United States to prevent any applica-
1641 
tion of this paragraph that is inconsistent with the 
purposes of this subsection.’’. 
(c) ANNUAL ADVANCE AMOUNT.—Section 7527A(b) 
is amended— 
(1) in paragraph (1)— 
(A) in subparagraph (A), by inserting ‘‘or 
based on any other information known to the 
Secretary’’ after ‘‘reference taxable year’’, 
(B) in subparagraph (C), by inserting ‘‘un-
less determined by the Secretary based on any 
information known to the Secretary,’’ before 
‘‘the only children’’, and 
(C) in subparagraph (D), by inserting ‘‘un-
less determined by the Secretary based on any 
information known to the Secretary,’’ before 
‘‘the ages of’’, and 
(2) in paragraph (3)(A)(ii), by striking ‘‘ pro-
vided by the taxpayer’’ and inserting ‘‘provided, or 
known,’’. 
(d) DISCLOSURE
OF INFORMATION RELATING
TO 
JOINT FILERS AND ADVANCE PAYMENT OF CHILD TAX 
CREDIT.—Section 6103(e) is amended by adding at the 
end the following new paragraph: 
‘‘(12) DISCLOSURE OF INFORMATION RELATING 
TO JOINT FILERS AND ADVANCE PAYMENT OF CHILD
1642 
TAX CREDIT.—In the case of an individual to whom 
the Secretary makes payments under section 7527A, 
if the reference taxable year (as defined in section 
7527A(b)(2)) that the Secretary uses to calculate 
such payments is a year for which the individual 
filed an income tax return jointly with another indi-
vidual, the Secretary may disclose to such individual 
any return information of such other individual 
which is relevant in determining the payment under 
section 7527A and the individual’s eligibility for 
such payment, including information regarding any 
of the following: 
‘‘(A) The number of specified children, in-
cluding by reason of the birth of a child. 
‘‘(B) The name and TIN of specified chil-
dren. 
‘‘(C) Marital status. 
‘‘(D) Modified adjusted gross income. 
‘‘(E) Principal place of abode. 
‘‘(F) Any other factor which the Secretary 
may provide pursuant to section 7527A(c).’’. 
(e) EFFECTIVE DATE.— 
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by
1643 
this section shall apply to taxable years beginning, 
and payments made, after December 31, 2020. 
(2) DISCLOSURE
OF
INFORMATION
RELATING 
TO JOINT FILERS AND ADVANCE PAYMENT OF CHILD 
TAX CREDIT.—The amendment made by subsection 
(d) shall take effect on the date of the enactment of 
this Act. 
SEC. 137102. EXTENSIONS AND MODIFICATIONS APPLICA-
BLE BEGINNING IN 2022. 
(a) EXTENSIONS.— 
(1) EXTENSION OF CHILD TAX CREDIT.—Sec-
tion 24(i) is amended— 
(A) by striking ‘‘January 1, 2022’’ in the 
matter preceding paragraph (1) and inserting 
‘‘January 1, 2023’’, and 
(B) by inserting ‘‘AND 2022’’ after ‘‘2021’’ 
in the heading thereof. 
(2) EXTENSION OF PROVISIONS RELATED TO 
POSSESSIONS OF THE UNITED STATES.— 
(A) Section 24(k)(2)(B) is amended— 
(i) by striking ‘‘December 31, 2021’’ 
in the matter preceding clause (i) and in-
serting ‘‘December 31, 2022’’, and
1644 
(ii) by striking ‘‘AFTER 2021’’ in the 
heading thereof and inserting ‘‘AFTER 
2022’’. 
(B) Section 24(k)(3)(C)(ii) is amended— 
(i) in subclause (I), by inserting ‘‘or 
2022’’ after ‘‘2021’’, and 
(ii) in subclause (II), by striking ‘‘De-
cember 31, 2021’’ and inserting ‘‘Decem-
ber 31, 2022’’. 
(C) The heading of section 24(k)(2)(A) is 
amended by inserting ‘‘AND
2022’’ after 
‘‘2021’’. 
(b) EXTENSION AND MODIFICATION OF ADVANCE 
PAYMENT.— 
(1) IN
GENERAL.—Section 7527A is amend-
ed— 
(A) in subsection (b)(1), by striking ‘‘50 
percent of’’, 
(B) in clauses (i) and (ii) of subsection 
(e)(4)(C), by inserting ‘‘or 2022’’ after ‘‘in 
2021’’, and 
(C) in subsection (f), by striking ‘‘Decem-
ber 31, 2021’’ and inserting ‘‘December 31, 
2022’’. 
(2) MONTHLY PAYMENTS.—
1645 
(A) IN
GENERAL.—Section 7527A(a) is 
amended to read as follows: 
‘‘(a) IN GENERAL.—The Secretary shall establish a 
program for making monthly payments to taxpayers in 
amounts equal to 1/12 of the annual advance amount with 
respect to such taxpayer.’’. 
(B) MODIFICATIONS
DURING
CALENDAR 
YEAR.—Section 7527A(b)(3), as amended by 
the preceding provisions of this Act, is amend-
ed— 
(i) by amending subparagraph (A)(ii) 
to read as follows: 
‘‘(ii) any other information provided, 
or known, to the Secretary which allows 
the Secretary to more accurately estimate 
the amount treated as allowed under sub-
part C of part IV of subchapter A of chap-
ter 1 by reason of section 24(i)(1) with re-
spect to the taxpayer for the reference tax-
able year.’’, and 
(ii) in subparagraph (B), by striking 
‘‘periodic payment’’ both places it appears 
and inserting ‘‘monthly payment’’.
1646 
(C) CONFORMING
AMENDMENT.—Section 
7527A(c)(2) is amended by striking ‘‘subsection 
(b)(3)(B)’’ and inserting ‘‘subsection (b)(3)’’. 
(3) ELIGIBILITY FOR ADVANCE PAYMENTS LIM-
ITED
BASED
ON
MODIFIED
ADJUSTED
GROSS
IN-
COME.—Section 7527A(b) is amended by adding at 
the end the following new paragraph: 
‘‘(6) LIMITATION
BASED
ON
MODIFIED
AD-
JUSTED GROSS INCOME.— 
‘‘(A) IN
GENERAL.—If the modified ad-
justed gross income of the taxpayer for the ref-
erence taxable year exceeds the applicable 
threshold amount with respect to such taxpayer 
(as defined in section 24(i)(4)(B)), the annual 
advance amount with respect to such taxpayer 
shall be zero. 
‘‘(B) EXCEPTION
FOR
MODIFICATIONS 
MADE
DURING
THE
CALENDAR
YEAR.—Sub-
paragraph (A) shall not apply to a reference 
taxable year taken into account by reason of 
paragraph (3)(A)(i) or subsection (c) if the tax-
payer received one or more payments under 
subsection (a) for months in the calendar year 
which precede the month for which such ref-
erence taxable year will be taken into account.’’.
1647 
(4) ADVANCE
PAYMENTS
TO
PUERTO
RICO 
RESIDENTS
FOR
2022.—Section 7527A(e)(4) is 
amended— 
(A) in subparagraph (A), by striking ‘‘The 
advance’’ and inserting ‘‘Except as provided in 
subparagraph (D), the advance’’, and 
(B) by adding at the end the following new 
subparagraph: 
‘‘(D) ADVANCE
PAYMENTS
TO
PUERTO 
RICO
RESIDENTS
FOR 2022.—For the period 
beginning on July 1, 2022, and ending on De-
cember 31, 2022, the Secretary may apply this 
section 
without 
regard 
to 
subparagraph 
(A)(i).’’. 
(c) ELECTION
TO APPLY INCOME PHASEOUT
ON 
BASIS
OF INCOME FROM
THE PRECEDING TAXABLE 
YEAR.—Section 24(i) is amended by adding at the end 
the following new paragraph: 
‘‘(5) ELECTION TO APPLY INCOME PHASEOUT 
ON BASIS OF INCOME FROM THE PRECEDING TAX-
ABLE YEAR.—In the case of a taxpayer who elects 
(at such time and in such manner as the Secretary 
may provide) the application of this paragraph for 
any taxable year, paragraph (4) and subsection 
(b)(1) shall both be applied with respect to the modi-
1648 
fied adjusted gross income (as defined in subsection 
(b)) for the taxpayer’s preceding taxable year.’’. 
(d) MODIFICATION OF RECAPTURE SAFE HARBOR 
FOR 2022.—Section 24(j)(2)(B)(iv), as amended by the 
preceding provisions of this Act, is amended to read as 
follows: 
‘‘(iv) SAFE
HARBOR
AMOUNT.—For 
purposes of this subparagraph, the term 
‘safe harbor amount’ means, with respect 
to any taxpayer for any taxable year, the 
sum of— 
‘‘(I) an amount equal to the 
product of $3,600 multiplied by the 
excess (if any) of the number of quali-
fying children who have not attained 
age 6 as of the close of the calendar 
year in which the taxable year of the 
taxpayer begins, and who are taken 
into account in determining the an-
nual advance amount with respect to 
the taxpayer under section 7527A 
with respect to months beginning in 
such taxable year, over the number of 
such qualifying children taken into ac-
count in determining the credit al-
1649 
lowed under this section for such tax-
able year, plus 
‘‘(II) an amount equal to the 
product of $3,000 multiplied by the 
excess (if any) of the number of quali-
fying children not described in clause 
(I), and who are taken into account in 
determining 
the 
annual 
advance 
amount with respect to the taxpayer 
under section 7527A with respect to 
months beginning in such taxable 
year, over the number of such quali-
fying children taken into account in 
determining the credit allowed under 
this section for such taxable year.’’. 
(e) REPEAL
OF SOCIAL SECURITY NUMBER RE-
QUIREMENT.— 
(1) IN GENERAL.—Section 24(h) is amended by 
striking paragraph (7). 
(2) CONFORMING AMENDMENTS.— 
(A) Section 24(h)(1) is amended by strik-
ing ‘‘paragraphs (2) through (7)’’ and inserting 
‘‘paragraphs (2) through (6)’’. 
(B) Section 24(h)(4) is amended by strik-
ing subparagraph (C).
1650 
(f) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning, and 
payments made, after December 31, 2021. 
SEC. 137103. REFUNDABLE CHILD TAX CREDIT AFTER 2022. 
(a) IN GENERAL.—Section 24 is amended by adding 
at the end the following new subsection: 
‘‘(l) REFUNDABLE CREDIT AFTER 2022.—In the 
case of any taxable year beginning after December 31, 
2022, if the taxpayer (in the case of a joint return, either 
spouse) has a principal place of abode in the United States 
(determined as provided in section 32) for more than one- 
half of the taxable year or is a bona fide resident of Puerto 
Rico (within the meaning of section 937(a)) for such tax-
able year— 
‘‘(1) subsection (d) shall not apply, and 
‘‘(2) so much of the credit determined under 
subsection (a) (after application of paragraph (1)) 
as does not exceed the amount of such credit which 
would be so determined without regard to subsection 
(h)(4) shall be allowed under subpart C (and not al-
lowed under this subpart)’’. 
(b) CONFORMING AMENDMENTS RELATED TO POS-
SESSIONS OF THE UNITED STATES.—
1651 
(1) PUERTO
RICO.—Section 24(k)(2)(B), as 
amended by the preceding provisions of this Act, is 
amended to read as follows: 
‘‘(B) APPLICATION
TO
TAXABLE
YEARS 
AFTER
2022.—For application of refundable 
credit to residents of Puerto Rico for taxable 
years after 2022, see subsection (l).’’. 
(2) 
AMERICAN
SAMOA.—Section 
24(k)(3)(C)(ii)(II), as amended by the preceding 
provisions of this Act, is amended to read as follows: 
‘‘(II) if such taxable year begins 
after December 31, 2022, subsection 
(l) shall be applied by substituting 
‘Puerto Rico or American Samoa’ for 
‘Puerto Rico’.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2022. 
SEC. 137104. APPROPRIATIONS. 
Immediately upon the enactment of this Act, in addi-
tion to amounts otherwise available, there are appro-
priated out of any money in the Treasury not otherwise 
appropriated: 
(1) $3,963,300,000 to remain available until 
September 30, 2026, for necessary expenses for the
1652 
Internal Revenue Service to administer the Child 
Tax Credit, and advance payments of the Child Tax 
Credit, including the costs of disbursing such pay-
ments, which shall supplement and not supplant any 
other appropriations that may be available for this 
purpose, and 
(2) $1,000,000,000 is appropriated to the De-
partment of the Treasury, to remain available until 
September 30, 2026, to support efforts to increase 
enrollment of eligible families in the Child Tax Cred-
it, for advance payments of the Child Tax Credit, 
and for other tax benefits, including but not limited 
to program outreach, costs of data sharing arrange-
ments, systems changes, forms changes, and related 
efforts, and efforts to support the cross-enrollment 
of beneficiaries of other programs in the Child Tax 
Credit, and for advance payments of the Child Tax 
Credit, including by establishing intergovernmental 
cooperative agreements with states and local govern-
ments, the District of Columbia, tribal governments, 
and possessions of the United States: Provided, that 
such amount shall be available in addition to any 
amounts otherwise available: Provided further, that 
these funds may be awarded by federal agencies to 
state and local governments, the District of Colum-
1653 
bia, tribal governments, and possessions of the 
United States, and private entities, including organi-
zations dedicated to free tax return preparation and 
low income taxpayer clinics funded under section 
7526 of the Internal Revenue Code of 1986. 
PART 2—EARNED INCOME TAX CREDIT 
SEC. 137201. CERTAIN IMPROVEMENTS TO THE EARNED IN-
COME TAX CREDIT EXTENDED THROUGH 
2022. 
(a) IN GENERAL.—Section 32(n) is amended by 
striking ‘‘January 1, 2022’’ and inserting ‘‘January 1, 
2023’’. 
(b) INFLATION ADJUSTMENT.—Section 32(n)(4)(B) 
is amended to read as follows: 
‘‘(B) INFLATION
ADJUSTMENT.—In the 
case of any taxable year beginning after 2021, 
the $9,820 and $11,610 dollar amounts in sub-
paragraph (A) shall be increased by an amount 
equal to— 
‘‘(i) such dollar amount, multiplied by 
‘‘(ii) the cost-of-living adjustment de-
termined under section 1(f)(3) for the cal-
endar year in which the taxable year be-
gins, determined by substituting ‘calendar
1654 
year 2020’ for ‘calendar year 2016’ in sub-
paragraph (A)(ii) thereof.’’. 
(c) ELECTION
TO DETERMINE EARNED INCOME 
BASED
ON PRIOR TAXABLE YEAR.—Section 32, as 
amended by subsection (f), is amended by adding at the 
end the following new subsection: 
‘‘(o) ELECTION TO DETERMINE EARNED INCOME 
BASED ON PRIOR TAXABLE YEAR.— 
‘‘(1) IN GENERAL.—In the case of a taxpayer 
whose earned income for any taxable year beginning 
after December 31, 2021, and before January 1, 
2023, is less than the earned income of such tax-
payer for the preceding taxable year, if such tax-
payer elects (at such time and in such manner as 
the Secretary may provide) the application of this 
subsection for such taxable year, the earned income 
of such taxpayer for such taxable year shall be treat-
ed for purposes of this section as being equal to the 
earned income of such taxpayer for such preceding 
taxable year. 
‘‘(2) JOINT
RETURNS.—For purposes of this 
subsection, in the case of a joint return, the earned 
income of the taxpayer for the preceding taxable 
year shall be the sum of the earned income of each 
spouse for the preceding taxable year.
1655 
‘‘(3) TREATMENT AS MATHEMATICAL OR CLER-
ICAL ERROR.—In the case of a taxpayer described in 
paragraph (1) who makes the election described in 
such paragraph, the use on the return for purposes 
of this section of an amount of earned income for 
the preceding taxable year which differs from the 
amount of such earned income as shown in the elec-
tronic files of the Internal Revenue Service shall be 
treated as a mathematical or clerical error for pur-
poses of section 6213. 
‘‘(4) TREATMENT OF REFERENCES.—Any pro-
vision of this title which defines or determines 
earned income by reference to this section shall be 
applied without regard to this subsection unless such 
provision specifically provides otherwise.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2021. 
SEC. 137202. FUNDS FOR ADMINISTRATION OF EARNED IN-
COME TAX CREDITS IN THE TERRITORIES. 
(a) PUERTO RICO.—Section 7530(a)(1) is amended 
by striking ‘‘plus’’ at the end of subparagraph (A), by 
striking the period at the end of subparagraph (B) and 
inserting ‘‘, plus’’, and by adding at the end the following 
new subparagraph:
1656 
‘‘(C) reasonable administrative costs asso-
ciated with the provision of the earned income 
tax credit not in excess of $4,000,000.’’. 
(b) POSSESSIONS WITH MIRROR CODE TAX SYS-
TEMS.—Section 7530(b)(1) is amended by striking ‘‘plus’’ 
at the end of subparagraph (A), by striking the period 
at the end of subparagraph (B) and inserting ‘‘, plus’’, 
and by adding at the end the following new subparagraph: 
‘‘(C) reasonable administrative costs asso-
ciated with the provision of the earned income 
tax credit not in excess of $200,000.’’. 
(c) 
AMERICAN
SAMOA.—Section 
7530(c)(1) 
is 
amended by striking ‘‘plus’’ at the end of subparagraph 
(A), by striking the period at the end of subparagraph 
(B) and inserting ‘‘, plus’’, and by adding at the end the 
following new subparagraph: 
‘‘(C) reasonable administrative costs asso-
ciated with the provision of the earned income 
tax credit not in excess of $200,000.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to payments made for calendar 
years beginning after December 31, 2021.
1657 
PART 3—EXPANDING ACCESS TO HEALTH 
COVERAGE AND LOWERING COSTS 
SEC. 137301. IMPROVE AFFORDABILITY AND REDUCE PRE-
MIUM COSTS OF HEALTH INSURANCE FOR 
CONSUMERS. 
(a) IN
GENERAL.—Section 36B(b)(3)(A)(iii) is 
amended— 
(1) by striking all that precedes the table con-
tained therein and inserting the following: 
‘‘(iii) DETERMINING
PERCENTAGES 
FOR 2021 THROUGH 2026.— 
‘‘(I) IN GENERAL.—In the case 
of a taxable year beginning after De-
cember 31, 2020, and before January 
1, 2026, the following table shall be 
applied in lieu of the table contained 
in clause (i):’’, and 
(2) by adding at the end the following new sub-
clause: 
‘‘(II) INDEXING.—In the case of 
a taxable year beginning after Decem-
ber 31, 2020, and before January 1, 
2027, clause (ii) shall not apply for 
purposes of adjusting premium per-
centages under this subparagraph.’’.
1658 
(b) EXTENSION THROUGH 2025 OF RULE TO ALLOW 
CREDIT
TO TAXPAYERS WHOSE HOUSEHOLD INCOME 
EXCEEDS 400 PERCENT OF THE POVERTY LINE.—Sec-
tion 36B(c)(1)(E) is amended— 
(1) by striking ‘‘in 2021 or 2022’’ and inserting 
‘‘after December 31, 2020, and before January 1, 
2026’’, and 
(2) by striking ‘‘AND 2022’’ in the heading 
thereof and inserting ‘‘THROUGH 2025’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2021. 
SEC. 137302. MODIFICATION OF EMPLOYER-SPONSORED 
COVERAGE AFFORDABILITY TEST IN HEALTH 
INSURANCE PREMIUM TAX CREDIT. 
(a) IN GENERAL.—Section 36B(c)(2)(C)(i)(II) is 
amended by inserting ‘‘(8.5 percent in the case of any tax-
able year beginning after December 31, 2021, and before 
January 1, 2026)’’ after ‘‘9.5 percent’’. 
(b) QUALIFIED SMALL EMPLOYER HEALTH REIM-
BURSEMENT ARRANGEMENTS.—Section 36B(c)(4)(C)(ii) 
is amended by inserting ‘‘(8.5 percent in the case of any 
taxable year beginning after December 31, 2021, and be-
fore January 1, 2026)’’ after ‘‘9.5 percent’’.
1659 
(c) 
PERCENTAGES
TEMPORARILY
DETERMINED 
WITHOUT REGARD TO ADJUSTMENTS.— 
(1) Section 36B(c)(2)(C)(iv) is amended by 
adding at the end the following: ‘‘The preceding sen-
tence shall not apply in the case of any plan year 
beginning after December 31, 2021, and before Jan-
uary 1, 2027.’’. 
(2) Section 36B(c)(4)(F) is amended by adding 
at the end the following: ‘‘The preceding sentence 
shall not apply in the case of any plan year begin-
ning after December 31, 2021, and before January 
1, 2027.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2021. 
SEC. 137303. TREATMENT OF LUMP-SUM SOCIAL SECURITY 
BENEFITS IN DETERMINING HOUSEHOLD IN-
COME. 
(a) IN GENERAL.—Section 36B(d)(2) is amended by 
adding at the end the following new subparagraph: 
‘‘(C) EXCLUSION OF PORTION OF LUMP- 
SUM SOCIAL SECURITY BENEFITS.— 
‘‘(i) IN GENERAL.—The term ‘modi-
fied adjusted gross income’ shall not in-
clude so much of any lump-sum social se-
1660 
curity benefit payment as is attributable to 
months ending before the beginning of the 
taxable year. 
‘‘(ii) LUMP-SUM
SOCIAL
SECURITY 
BENEFIT PAYMENT.—For purposes of this 
subparagraph, the term ‘lump-sum social 
security benefit payment’ means any pay-
ment of social security benefits (as defined 
in section 86(d)(1)) which constitutes more 
than 1 month of such benefits. 
‘‘(iii) ELECTION
TO
INCLUDE
EX-
CLUDABLE AMOUNT.—With respect to any 
taxable year beginning after December 31, 
2025, a taxpayer may elect (at such time 
and in such manner as the Secretary may 
provide) to have this subparagraph not 
apply for such taxable year.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2021.
1661 
SEC. 137304. TEMPORARY EXPANSION OF HEALTH INSUR-
ANCE PREMIUM TAX CREDITS FOR CERTAIN 
LOW-INCOME POPULATIONS. 
(a) IN GENERAL.—Section 36B is amended by redes-
ignating subsection (h) as subsection (i) and by inserting 
after subsection (g) the following new subsection: 
‘‘(h) CERTAIN TEMPORARY RULES BEGINNING IN 
2022.—With respect to any taxable year beginning after 
December 31, 2021, and before January 1, 2026— 
‘‘(1) ELIGIBILITY
FOR
CREDIT
NOT
LIMITED 
BASED ON INCOME.—Section 36B(c)(1)(A) shall be 
disregarded in determining whether a taxpayer is an 
applicable taxpayer. 
‘‘(2) CREDIT ALLOWED TO CERTAIN LOW-IN-
COME
EMPLOYEES
OFFERED
EMPLOYER-PROVIDED 
COVERAGE.—Subclause 
(II) 
of 
subsection 
(c)(2)(C)(i) shall not apply if the taxpayer’s house-
hold income does not exceed 138 percent of the pov-
erty line for a family of the size involved. Subclause 
(II) of subsection (c)(2)(C)(i) shall also not apply to 
an individual described in the last sentence of such 
subsection if the taxpayer’s household income does 
not exceed 138 percent of the poverty line for a fam-
ily of the size involved. 
‘‘(3) CREDIT ALLOWED TO CERTAIN LOW-IN-
COME EMPLOYEES OFFERED QUALIFIED SMALL EM-
1662 
PLOYER
HEALTH
REIMBURSEMENT
ARRANGE-
MENTS.—A qualified small employer health reim-
bursement arrangement shall not be treated as con-
stituting affordable coverage for an employee (or any 
spouse or dependent of such employee) for any 
months of a taxable year if the employee’s household 
income for such taxable year does not exceed 138 
percent of the poverty line for a family of the size 
involved. 
‘‘(4) LIMITATIONS ON RECAPTURE.— 
‘‘(A) IN GENERAL.—In the case of a tax-
payer whose household income is less than 200 
percent of the poverty line for the size of the 
family involved for the taxable year, the amount 
of the increase under subsection (f)(2)(A) shall 
in no event exceed $300 (one-half of such 
amount in the case of a taxpayer whose tax is 
determined under section 1(c) for the taxable 
year). 
‘‘(B) LIMITATION ON INCREASE FOR CER-
TAIN NON-FILERS.—In the case of any taxpayer 
who would not be required to file a return of 
tax for the taxable year but for any require-
ment to reconcile advance credit payments 
under subsection (f), if an Exchange established
1663 
under title I of the Patient Protection and Af-
fordable Care Act has determined that— 
‘‘(i) such taxpayer is eligible for ad-
vance payments under section 1412 of 
such Act for any portion of such taxable 
year, and 
‘‘(ii) such taxpayer’s household in-
come for such taxable year is projected to 
not exceed 138 percent of the poverty line 
for a family of the size involved, 
subsection (f)(2)(A) shall not apply to such tax-
payer for such taxable year and such taxpayer 
shall not be required to file such return of tax. 
‘‘(C) INFORMATION
PROVIDED
BY
EX-
CHANGE.—The information required to be pro-
vided by an Exchange to the Secretary and to 
the taxpayer under subsection (f)(3) shall in-
clude such information as is necessary to deter-
mine whether such Exchange has made the de-
terminations described in clauses (i) and (ii) of 
subparagraph (B) with respect to such tax-
payer.’’. 
(b) EMPLOYER SHARED RESPONSIBILITY PROVISION 
NOT APPLICABLE WITH RESPECT TO CERTAIN LOW-IN-
1664 
COME TAXPAYERS RECEIVING PREMIUM ASSISTANCE.— 
Section 4980H(c)(3) is amended to read as follows: 
‘‘(3) APPLICABLE PREMIUM TAX CREDIT AND 
COST-SHARING REDUCTION.— 
‘‘(A) IN GENERAL.—The term ‘applicable 
premium tax credit and cost-sharing reduction’ 
means— 
‘‘(i) any premium tax credit allowed 
under section 36B, 
‘‘(ii) any cost-sharing reduction under 
section 1402 of the Patient Protection and 
Affordable Care Act, and 
‘‘(iii) any advance payment of such 
credit or reduction under section 1412 of 
such Act. 
‘‘(B) EXCEPTION WITH RESPECT TO CER-
TAIN
LOW-INCOME
TAXPAYERS.—Such term 
shall not include any premium tax credit, cost- 
sharing reduction, or advance payment other-
wise described in subparagraph (A) if such 
credit, reduction, or payment is allowed or paid 
for a taxable year of an employee (beginning 
after December 31, 2021, and before January 
1, 2026) with respect to which—
1665 
‘‘(i) an Exchange established under 
title I of the Patient Protection and Af-
fordable Care Act has determined that 
such employee’s household income for such 
taxable year is projected to not exceed 138 
percent of the poverty line for a family of 
the size involved, or 
‘‘(ii) such employee’s household in-
come for such taxable year does not exceed 
138 percent of the poverty line for a family 
of the size involved.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2021. 
SEC. 137305. SPECIAL RULE FOR INDIVIDUALS RECEIVING 
UNEMPLOYMENT COMPENSATION. 
(a) EXTENSION.—Section 36B(g)(1) is amended by 
striking ‘‘during 2021,’’ and inserting ‘‘after December 
31, 2020, and before January 1, 2023,’’. 
(b) MODIFICATION OF INCOME NOT TAKEN INTO AC-
COUNT.—Section 36B(g)(1)(B) is amended by striking 
‘‘133 percent’’ and inserting ‘‘150 percent (133 percent 
in the case of any week beginning during 2021)’’.
1666 
(c) CONFORMING AMENDMENT.—Section 36B(g) by 
inserting ‘‘THROUGH 2022’’ after ‘‘2021’’ in the heading 
thereof. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2021. 
SEC. 137306. PERMANENT CREDIT FOR HEALTH INSURANCE 
COSTS. 
(a) IN GENERAL.—Subparagraph (B) of section 
35(b)(1) of the Internal Revenue Code of 1986 is amended 
by striking ‘‘, and before January 1, 2022’’ and inserting 
a period. 
(b) INCREASE IN CREDIT PERCENTAGE.—Subsection 
(a) of section 35 of the Internal Revenue Code of 1986 
is amended by striking ‘‘72.5 percent’’ and inserting ‘‘80 
percent’’. 
(c) CONFORMING AMENDMENTS.—Subsections (b) 
and (e)(1) of section 7527 of the Internal Revenue Code 
of 1986 are each amended by striking ‘‘72.5 percent’’ and 
inserting ‘‘80 percent’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to coverage months beginning after 
December 31, 2021.
1667 
SEC. 137307. EXCLUSION OF CERTAIN DEPENDENT INCOME 
FOR PURPOSES OF PREMIUM TAX CREDIT. 
(a) IN GENERAL.—Paragraph (2) of section 36B(d) 
of the Internal Revenue Code of 1986, as amended by this 
Act, is further amended by adding at the end the following 
new subparagraph: 
‘‘(D) EXCEPTION FOR CERTAIN DEPEND-
ENT INCOME.— 
‘‘(i) IN
GENERAL.—Solely for pur-
poses of determining the credit under this 
section and eligibility for cost sharing re-
ductions under section 1402 of the Patient 
Protection and Affordable Care Act, and 
not for any other purpose (including any 
determination of income for purposes of 
the programs established under titles XIX 
and XXI of the Social Security Act and 
section 1331 of the Patient Protection and 
Affordable Care Act), there shall not be 
taken into account under subparagraph 
(A)(ii) the modified adjusted gross income 
of any dependent of the taxpayer who has 
not attained age 24 as of the last day of 
the calendar year in which the taxable year 
of the taxpayer begins.
1668 
‘‘(ii) LIMITATION.—Clause (i) shall 
not apply to so much of the aggregate of 
the modified adjusted gross income of all 
dependents of the taxpayer who have not 
attained the age described in such clause 
as exceeds $3,500. 
‘‘(iii) ELECTION TO HAVE SUBPARA-
GRAPH NOT APPLY.—In the case of any 
taxable year beginning after December 31, 
2025, a taxpayer may elect (at such time 
and in such manner as the Secretary may 
provide) to have this subparagraph not 
apply with respect to the income of any de-
pendent of the taxpayer for such taxable 
year. 
‘‘(iv) ADJUSTMENT FOR INFLATION.— 
In the case of any taxable year beginning 
after December 31, 2023, the $3,500 
amount in clause (ii) shall be increased by 
an amount equal to— 
‘‘(I) such amount, multiplied by 
‘‘(II) the cost-of-living adjust-
ment determined under section 1(f)(3) 
for the calendar year in which the tax-
able year begins, determined by sub-
1669 
stituting ‘calendar year 2022’ for ‘cal-
endar year 2016’ in subparagraph 
(A)(ii) thereof. 
If any increase determined under the pre-
ceding sentence is not a multiple of $100, 
such increase shall be rounded to the next 
lowest multiple of $100. 
‘‘(v) TERMINATION.—This subpara-
graph shall not apply to taxable years be-
ginning after December 31, 2026.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Clause (ii) of section 36B(d)(2)(A) of the 
Internal Revenue Code of 1986 is amended by in-
serting ‘‘, except as provided in subparagraph (D),’’ 
after ‘‘individuals’’. 
(2) Paragraph (3) of section 1411(b) of the Pa-
tient Protection and Affordable Care Act (42 U.S.C. 
18081) is amended by adding at the end the fol-
lowing new subparagraph: 
‘‘(D) INFORMATION REGARDING CERTAIN 
DEPENDENTS.—In the case of taxable years be-
ginning before January 1, 2027, information 
regarding whether section 36B(d)(2)(D) will 
apply to any individuals taken into account as 
members of the household of the enrollee, and
1670 
the amount of income of each such individual 
for the taxable year described in subparagraph 
(A).’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2022. 
SEC. 137308. REQUIREMENTS WITH RESPECT TO COST- 
SHARING FOR CERTAIN INSULIN PRODUCTS. 
(a) IN GENERAL.—Subchapter B of chapter 100 is 
amended by adding at the end the following new section: 
‘‘SEC. 9826. REQUIREMENTS WITH RESPECT TO COST-SHAR-
ING FOR CERTAIN INSULIN PRODUCTS. 
‘‘(a) IN GENERAL.—For plan years beginning on or 
after January 1, 2023, a group health plan shall provide 
coverage of selected insulin products, and with respect to 
such products, shall not— 
‘‘(1) apply any deductible; or 
‘‘(2) impose any cost-sharing in excess of the 
lesser of, per 30-day supply— 
‘‘(A) $35; or 
‘‘(B) the amount equal to 25 percent of 
the negotiated price of the selected insulin prod-
uct net of all price concessions received by or on 
behalf of the plan, including price concessions 
received by or on behalf of third-party entities
1671 
providing services to the plan, such as phar-
macy benefit management services. 
‘‘(b) DEFINITIONS.—In this section: 
‘‘(1) SELECTED INSULIN PRODUCTS.—The term 
‘selected insulin products’ means at least one of each 
dosage form (such as vial, pump, or inhaler dosage 
forms) of each different type (such as rapid-acting, 
short-acting, intermediate-acting, long-acting, ultra 
long-acting, and premixed) of insulin (as defined 
below), when available, as selected by the group 
health plan. 
‘‘(2) INSULIN
DEFINED.—The term ‘insulin’ 
means insulin that is licensed under subsection (a) 
or (k) of section 351 of the Public Health Service 
Act (42 U.S.C. 262) and continues to be marketed 
under such section, including any insulin product 
that has been deemed to be licensed under section 
351(a) of such Act pursuant to section 7002(e)(4) 
of the Biologics Price Competition and Innovation 
Act of 2009 (Public Law 111–148) and continues to 
be marketed pursuant to such licensure. 
‘‘(c) OUT-OF-NETWORK
PROVIDERS.—Nothing in 
this section requires a plan that has a network of providers 
to provide benefits for selected insulin products described 
in this section that are delivered by an out-of-network pro-
1672 
vider, or precludes a plan that has a network of providers 
from imposing higher cost-sharing than the levels specified 
in subsection (a) for selected insulin products described 
in this section that are delivered by an out-of-network pro-
vider. 
‘‘(d) RULE OF CONSTRUCTION.—Subsection (a) shall 
not be construed to require coverage of, or prevent a group 
health plan from imposing cost-sharing other than the lev-
els specified in subsection (a) on, insulin products that are 
not selected insulin products, to the extent that such cov-
erage is not otherwise required and such cost-sharing is 
otherwise permitted under Federal and applicable State 
law. 
‘‘(e) APPLICATION
OF
COST-SHARING
TOWARDS 
DEDUCTIBLES
AND OUT-OF-POCKET MAXIMUMS.—Any 
cost-sharing payments made pursuant to subsection (a)(2) 
shall be counted toward any deductible or out-of-pocket 
maximum that applies under the plan.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for subchapter B of chapter 100 is amended by adding 
at the end the following new item: 
‘‘Sec. 9826. Requirements with respect to cost-sharing for certain insulin prod-
ucts.’’.
1673 
SEC. 137309. OVERSIGHT OF PHARMACY BENEFIT MAN-
AGER SERVICES. 
(a) IN GENERAL.—Subchapter B of chapter 100 of 
the Internal Revenue Code of 1986, as amended by the 
preceding provisions of this Act, is further amended by 
adding at the end the following: 
‘‘SEC. 9827. OVERSIGHT OF PHARMACY BENEFIT MANAGER 
SERVICES. 
‘‘(a) IN GENERAL.—For plan years beginning on or 
after January 1, 2023, a group health plan or an entity 
or subsidiary providing pharmacy benefits management 
services on behalf of such a plan shall not enter into a 
contract with a drug manufacturer, distributor, whole-
saler, subcontractor, rebate aggregator, or any associated 
third party that limits the disclosure of information to 
plan sponsors in such a manner that prevents the plan, 
or an entity or subsidiary providing pharmacy benefits 
management services on behalf of a plan, from making 
the reports described in subsection (b). 
‘‘(b) REPORTS.— 
‘‘(1) IN GENERAL.—For plan years beginning 
on or after January 1, 2023, not less frequently 
than once every 6 months, an entity providing phar-
macy benefits management services on behalf of a 
group health plan shall submit to the plan sponsor 
(as defined in section 3(16)(B) of the Employee Re-
1674 
tirement Income Security Act of 1974) of such 
group health plan a report in accordance with this 
subsection and make such report available to the 
plan sponsor in a machine-readable format. Each 
such report shall include, with respect to the applica-
ble group health plan— 
‘‘(A) as applicable, information collected 
from drug manufacturers by such entity on the 
total amount of copayment assistance dollars 
paid, or copayment cards applied, that were 
funded by the drug manufacturer with respect 
to the participants and beneficiaries in such 
plan; 
‘‘(B) a list of each drug covered by such 
plan or entity providing pharmacy benefit man-
agement services that was dispensed during the 
reporting period, including, with respect to each 
such drug during the reporting period— 
‘‘(i) the brand name, chemical entity, 
and National Drug Code; 
‘‘(ii) the number of participants and 
beneficiaries for whom the drug was filled 
during the plan year, the total number of 
prescription fills for the drug (including 
original prescriptions and refills), and the
1675 
total number of dosage units of the drug 
dispensed across the plan year, including 
whether the dispensing channel was by re-
tail, mail order, or specialty pharmacy; 
‘‘(iii) the wholesale acquisition cost, 
listed as cost per days supply and cost per 
pill, or in the case of a drug in another 
form, per dose; 
‘‘(iv) the total out-of-pocket spending 
by participants and beneficiaries on such 
drug, including participant and beneficiary 
spending through copayments, coinsurance, 
and deductibles; and 
‘‘(v) for any drug for which gross 
spending of the group health plan exceeded 
$10,000 during the reporting period— 
‘‘(I) a list of all other drugs in 
the same therapeutic category or 
class, including brand name drugs 
and biological products and generic 
drugs or biosimilar biological products 
that are in the same therapeutic cat-
egory or class as such drug; and
1676 
‘‘(II) the rationale for preferred 
formulary placement of such drug in 
that therapeutic category or class; 
‘‘(C) a list of each therapeutic category or 
class of drugs that were dispensed under the 
health plan during the reporting period, and, 
with respect to each such therapeutic category 
or class of drugs, during the reporting period— 
‘‘(i) total gross spending by the plan, 
before manufacturer rebates, fees, or other 
manufacturer remuneration; 
‘‘(ii) the number of participants and 
beneficiaries who filled a prescription for a 
drug in that category or class; 
‘‘(iii) if applicable to that category or 
class, a description of the formulary tiers 
and utilization mechanisms (such as prior 
authorization or step therapy) employed 
for drugs in that category or class; 
‘‘(iv) the total out-of-pocket spending 
by participants and beneficiaries, including 
participant 
and 
beneficiary 
spending 
through copayments, coinsurance, and 
deductibles; and
1677 
‘‘(v) for each therapeutic category or 
class under which 3 or more drugs are in-
cluded on the formulary of such plan— 
‘‘(I) the amount received, or ex-
pected to be received, from drug man-
ufacturers in rebates, fees, alternative 
discounts, or other remuneration— 
‘‘(aa) to be paid by drug 
manufacturers for claims in-
curred during the reporting pe-
riod; or 
‘‘(bb) that is related to utili-
zation of drugs, in such thera-
peutic category or class; 
‘‘(II) the total net spending, after 
deducting rebates, price concessions, 
alternative discounts or other remu-
neration from drug manufacturers, by 
the health plan on that category or 
class of drugs; and 
‘‘(III) the net price per course of 
treatment or single fill, such as a 30- 
day supply or 90-day supply, incurred 
by the health plan and its participants 
and beneficiaries, after manufacturer
1678 
rebates, fees, and other remuneration 
for drugs dispensed within such thera-
peutic category or class during the re-
porting period; 
‘‘(D) total gross spending on prescription 
drugs by the plan during the reporting period, 
before rebates and other manufacturer fees or 
remuneration; 
‘‘(E) total amount received, or expected to 
be received, by the health plan in drug manu-
facturer rebates, fees, alternative discounts, and 
all other remuneration received from the manu-
facturer or any third party, other than the plan 
sponsor, related to utilization of drug or drug 
spending under that health plan during the re-
porting period; 
‘‘(F) the total net spending on prescription 
drugs by the health plan during the reporting 
period; and 
‘‘(G) amounts paid directly or indirectly in 
rebates, fees, or any other type of remuneration 
to brokers, consultants, advisors, or any other 
individual or firm who referred the group health 
plan’s business to the pharmacy benefit man-
ager.
1679 
‘‘(2) PRIVACY
REQUIREMENTS.—Entities pro-
viding pharmacy benefits management services on 
behalf of a group health plan shall provide informa-
tion under paragraph (1) in a manner consistent 
with the privacy, security, and breach notification 
regulations promulgated under section 264(c) of the 
Health Insurance Portability and Accountability Act 
of 1996, and shall restrict the use and disclosure of 
such information according to such privacy regula-
tions. 
‘‘(3) DISCLOSURE AND REDISCLOSURE.— 
‘‘(A) LIMITATION
TO
BUSINESS
ASSOCI-
ATES.—A group health plan receiving a report 
under paragraph (1) may disclose such informa-
tion only to business associates of such plan as 
defined in section 160.103 of title 45, Code of 
Federal Regulations (or successor regulations). 
‘‘(B) CLARIFICATION REGARDING PUBLIC 
DISCLOSURE
OF
INFORMATION.—Nothing in 
this section prevents an entity providing phar-
macy benefits management services on behalf of 
a group health plan from placing reasonable re-
strictions on the public disclosure of the infor-
mation contained in a report described in para-
graph (1), except that such entity may not re-
1680 
strict disclosure of such report to the Depart-
ment of Health and Human Services, the De-
partment of Labor, or the Department of the 
Treasury. 
‘‘(C) LIMITED
FORM
OF
REPORT.—The 
Secretary shall define through rulemaking a 
limited form of the report under paragraph (1) 
required of plan sponsors who are drug manu-
facturers, drug wholesalers, or other direct par-
ticipants in the drug supply chain, in order to 
prevent anti-competitive behavior. 
‘‘(4) REPORT
TO
GAO.—An entity providing 
pharmacy benefits management services on behalf of 
a group health plan shall submit to the Comptroller 
General of the United States each of the first 4 re-
ports submitted to a plan sponsor under paragraph 
(1) with respect to such plan, and other such reports 
as requested, in accordance with the privacy require-
ments under paragraph (2) and the disclosure and 
redisclosure standards under paragraph (3), and 
such other information that the Comptroller General 
determines necessary to carry out the study under 
section 30606(b) of an Act to provide for reconcili-
ation pursuant to title II of S. Con. Res. 14. 
‘‘(c) ENFORCEMENT.—
1681 
‘‘(1) IN GENERAL.—The Secretary, in consulta-
tion with the Secretary of Labor and the Secretary 
of Health and Human Services, shall enforce this 
section. 
‘‘(2) FAILURE TO PROVIDE TIMELY INFORMA-
TION.—An entity providing pharmacy benefit man-
agement services that violates subsection (a) or fails 
to provide information required under subsection 
(b), or a drug manufacturer that fails to provide in-
formation under subsection (b)(1)(A) in a timely 
manner, shall be subject to a civil monetary penalty 
in the amount of $10,000 for each day during which 
such violation continues or such information is not 
disclosed or reported. 
‘‘(3) FALSE
INFORMATION.—An entity pro-
viding pharmacy benefit management services, or 
drug manufacturer that knowingly provides false in-
formation under this section shall be subject to a 
civil money penalty in an amount not to exceed 
$100,000 for each item of false information. Such 
civil money penalty shall be in addition to other pen-
alties as may be prescribed by law. 
‘‘(4) PROCEDURE.—The provisions of section 
1128A of the Social Security Act, other than sub-
section (a) and (b) and the first sentence of sub-
1682 
section (c)(1) of such section shall apply to civil 
monetary penalties under this subsection in the 
same manner as such provisions apply to a penalty 
or proceeding under section 1128A of the Social Se-
curity Act. 
‘‘(5) WAIVERS.—The Secretary may waive pen-
alties under paragraph (2), or extend the period of 
time for compliance with a requirement of this sec-
tion, for an entity in violation of this section that 
has made a good-faith effort to comply with this sec-
tion. 
‘‘(d) RULE OF CONSTRUCTION.—Nothing in this sec-
tion shall be construed to permit a group health plan or 
other entity to restrict disclosure to, or otherwise limit the 
access of, the Department of the Treasury to a report de-
scribed in subsection (b)(1) or information related to com-
pliance with subsection (a) by such plan or entity. 
‘‘(e) DEFINITION.—In this section, the term ‘whole-
sale acquisition cost’ has the meaning given such term in 
section 1847A(c)(6)(B) of the Social Security Act.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for subchapter B of chapter 100 of the Internal Revenue 
Code of 1986, as amended by the preceding provisions of 
this Act, is further amended by adding at the end the fol-
lowing new item: 
‘‘Sec. 9827. Oversight of pharmacy benefit manager services.’’.
1683 
PART 4—PATHWAY TO PRACTICE TRAINING 
PROGRAMS 
SEC. 137401. ADMINISTRATIVE FUNDING OF THE RURAL 
AND UNDERSERVED PATHWAY TO PRACTICE 
TRAINING 
PROGRAMS 
FOR 
POST-BACCA-
LAUREATE STUDENTS, MEDICAL STUDENTS, 
AND MEDICAL RESIDENTS. 
In addition to amounts otherwise available, there is 
appropriated to the Secretary for fiscal year 2022, out of 
any money in the Treasury not otherwise appropriated, 
$6,000,000 to remain available until September 30, 2031, 
in addition to amounts otherwise available, to carry out 
the administration of the Rural and Underserved Pathway 
to Practice Training Program for Post-Baccalaureate and 
Medical Students under section 1899C of such Act (42 
U.S.C. 1395mmm) and the Rural and Underserved Path-
way to Practice Training Programs for Medical Residents 
under section 1886(h)(4)(H)(vii) of such Act (42 U.S.C. 
1395ww(h)(4)(H)(vii)). Amounts transferred under the 
preceding sentence shall remain available until expended. 
SEC. 137402. ESTABLISHING RURAL AND UNDERSERVED 
PATHWAY 
TO 
PRACTICE 
TRAINING 
PRO-
GRAMS 
FOR 
POST-BACCALAUREATE 
STU-
DENTS AND MEDICAL STUDENTS. 
(a) PROGRAM.—
1684 
(1) IN GENERAL.—Title XVIII of the Social Se-
curity Act (42 U.S.C. 1395 et seq.) is amended by 
adding at the end the following new section: 
‘‘SEC. 1899C. RURAL AND UNDERSERVED PATHWAY TO 
PRACTICE TRAINING PROGRAM FOR POST- 
BACCALAUREATE AND MEDICAL STUDENTS. 
‘‘(a) IN GENERAL.—Not later than October 1, 2023, 
the Secretary shall, subject to the succeeding provisions 
of this section, carry out the ‘Rural and Underserved 
Pathway to Practice Training Program for Post-Bacca-
laureate and Medical Students’ (in this section, referred 
to as the ‘Program’) under which the Secretary awards 
Pathway to Practice medical scholarship vouchers to quali-
fying students described in subsection (b) for the purpose 
of increasing the number of physicians practicing in rural 
and underserved communities. 
‘‘(b) QUALIFYING STUDENT DESCRIBED.—For pur-
poses of this section, a qualifying student described in this 
subsection is an individual who— 
‘‘(1) attests he or she— 
‘‘(A) is or will be a first-generation student 
of a 4-year college, graduate school, or profes-
sional school; 
‘‘(B) was a Pell Grant recipient; or
1685 
‘‘(C) lived in a medically underserved area, 
rural area, or health professional shortage area 
for a period of 4 or more years prior to attend-
ing an undergraduate program; 
‘‘(2) has accepted enrollment in— 
‘‘(A) a post-baccalaureate program that is 
not more than 2 years and intends to enroll in 
a qualifying medical school within 2 years after 
completion of such program; or 
‘‘(B) a qualifying medical school; 
‘‘(3) will practice medicine in a health profes-
sional shortage area, medically underserved area, 
public hospital, rural area, or as required under sub-
section (d)(5); and 
‘‘(4) submits an application and a signed copy 
of the agreement described under subsection (c). 
‘‘(c) APPLICATIONS.— 
‘‘(1) IN GENERAL.—To be eligible to receive a 
Pathway to Practice medical scholarship voucher 
under this section, a qualifying student described in 
subsection (b) shall submit to the Secretary an ap-
plication at such time, in such manner, and con-
taining such information as the Secretary may re-
quire.
1686 
‘‘(2) INFORMATION
TO
BE
INCLUDED.—As a 
part of the application described in paragraph (1), 
the Secretary shall include a notice of the items 
which are required to be agreed to under subsection 
(d)(5) for the purpose of notifying the qualifying 
student of the terms of the Rural and Underserved 
Pathway to Practice Training Program for Post- 
Baccalaureate and Medical Students. 
‘‘(d) PATHWAY TO PRACTICE MEDICAL SCHOLAR-
SHIP VOUCHER DETAILS.— 
‘‘(1) NUMBER.—On an annual basis, the Sec-
retary shall award a Pathway to Practice medical 
scholarship voucher under the Program to 1,000 
qualifying students described in subsection (b). 
‘‘(2) PRIORITIZATION
CRITERIA.—In deter-
mining whether to award a Pathway to Practice 
medical scholarship voucher under the Program to 
qualifying students described in subsection (b), the 
Secretary shall prioritize applications from any such 
student who attests that he or she— 
‘‘(A) was a participant in the Health Re-
sources and Services Administration Health Ca-
reers Opportunity Program, Centers of Excel-
lence Program, or an Area Health Education 
Center program;
1687 
‘‘(B) is a disadvantaged student (as de-
fined by the National Health Service Corps of 
the Health Resources & Services Administration 
of the Department of Health and Human Serv-
ices); or 
‘‘(C) attended a historically black college 
or other minority serving institution (as defined 
in section 1067q of title 20, United States 
Code). 
‘‘(3) DURATION.—Each Pathway to Practice 
medical scholarship voucher awarded to a qualifying 
student pursuant to paragraph (1) shall be so 
awarded to such a student on an annual basis for 
each year of enrollment in a post-baccalaureate pro-
gram and a qualifying medical school (as appro-
priate). 
‘‘(4) AMOUNT.—Subject to paragraph (5), each 
Pathway to Practice medical scholarship voucher 
awarded under the Program shall include amounts 
for— 
‘‘(A) tuition; 
‘‘(B) academic fees (as determined by the 
qualifying medical school); 
‘‘(C) required textbooks and equipment;
1688 
‘‘(D) a monthly stipend equal to the 
amount provided for individuals under the 
health professions scholarship and financial as-
sistance program for active service stipend 
monthly rate; and 
‘‘(E) any other educational expenses nor-
mally incurred by students at the post-bacca-
laureate program or qualifying medical school 
(as appropriate). 
‘‘(5) REQUIRED
AGREEMENT.—No amounts 
under paragraph (4) may be provided to a qualifying 
student awarded a Pathway to Practice medical 
scholarship voucher under the Program unless the 
qualifying student submits to the Secretary an 
agreement to— 
‘‘(A) complete a post-baccalaureate pro-
gram that is not more than 2 years (if applica-
ble pursuant to the option under subsection 
(b)(2)(A)); 
‘‘(B) graduate from a qualifying medical 
school; 
‘‘(C) complete a residency program in an 
approved residency training program (as de-
fined in section 1886(h)(5)(A));
1689 
‘‘(D) complete an initial residency period 
or the period of board eligibility; 
‘‘(E) practice medicine for at least the 
number of years of the Pathway to Practice 
medical scholarship voucher awarded under 
paragraph (2) after a residency program in a 
health professional shortage area, a medically 
underserved area, a public hospital, or a rural 
area, and during such period annually submit 
documentation with respect to whether the 
qualifying student practices medicine in such an 
area and where; 
‘‘(F) for the purpose of determining com-
pliance with subparagraph (E), not later than 
180 days after the date on which qualifying stu-
dent completes a residency program, provide to 
the Secretary information with respect to where 
the qualifying student is practicing medicine 
following the period described in such subpara-
graph; 
‘‘(G) except in the case of a waiver for 
hardship pursuant to section 1892(f)(3), be lia-
ble to the United States pursuant to section 
1892 for any amounts received under this Pro-
gram that is determined a past-due obligation
1690 
under subsection (b)(3) of such section in the 
case qualifying student fails to complete all of 
the requirements of this agreement under this 
subsection; and 
‘‘(H) for the purpose of determining the 
amount of Pathway to Practice medical scholar-
ship vouchers paid or incurred by a qualifying 
medical school or any provider of a post-bacca-
laureate program referred to in subsection 
(b)(2)(A) for the costs of each item specified 
under paragraph (4), consent to any personally 
identifying information being shared with the 
Secretary of the Treasury. 
‘‘(6) RESPONSIBILITIES
OF
PARTICIPATING 
EDUCATIONAL INSTITUTIONS.—Each annual award 
of an amount of Pathway to Practice medical schol-
arship voucher under paragraph (2) shall be made 
with respect to a specific qualifying medical school 
or to a post-baccalaureate program that is not more 
than 2 years and such school or program shall (as 
a condition of, and prior to, such award being made 
with respect to such school or program)— 
‘‘(A) submit to the Secretary such infor-
mation as the Secretary may require to deter-
mine the amount of such award on the basis of
1691 
the costs of the items specified under paragraph 
(4) (except for subparagraph (D)) with respect 
to such school or program, and 
‘‘(B) enter into an agreement with the Sec-
retary under which such school or program will 
verify (in such manner as the Secretary may 
provide) that amounts paid by such school or 
program to the qualifying student are used for 
such costs. 
‘‘(e) DEFINITIONS.—In this section: 
‘‘(1) 
HEALTH
PROFESSIONAL
SHORTAGE 
AREA.—The team ‘health professional shortage area’ 
has the meaning given such term in subparagraphs 
(A) or (B) of section 332(a)(1) of the Public Health 
Service Act. 
‘‘(2) INITIAL
RESIDENCY
PERIOD.—The term 
‘initial residency period’ has the meaning given such 
term in section 1886(h)(5)(F). 
‘‘(3) MEDICALLY
UNDERSERVED
AREA.—The 
term ‘medically underserved area’ means an area 
designated pursuant to section 330(b)(3)(A) of the 
Public Health Service Act. 
‘‘(4) PELL GRANT RECIPIENT.—The term ‘Pell 
Grant recipient’ has the meaning given such term in 
section 322(3) of the Higher Education Act of 1965.
1692 
‘‘(5) PERIOD
OF
BOARD
ELIGIBILITY.—The 
term ‘period of board eligibility’ has the meaning 
given such term in section 1886(h)(5)(G). 
‘‘(6) QUALIFYING MEDICAL SCHOOL.—The term 
‘qualifying medical school’ means a school of medi-
cine accredited by the Liaison Committee on Medical 
Education of the American Medical Association and 
the Association of American Medical Colleges (or ap-
proved by such Committee as meeting the standards 
necessary for such accreditation) or a school of oste-
opathy accredited by the American Osteopathic As-
sociation, or approved by such Association as meet-
ing the standards necessary for such accreditation 
which— 
‘‘(A) for each academic year, enrolls at 
least 10 qualifying students who are in enrolled 
in such a school; 
‘‘(B) requires qualifying students to enroll 
in didactic coursework and clinical experience 
applicable to practicing medicine in health pro-
fessional shortage areas, medically underserved 
areas, or rural areas, including— 
‘‘(i) clinical rotations in such areas in 
applicable specialties (as applicable and as 
available);
1693 
‘‘(ii) coursework or training experi-
ences focused on medical issues prevalent 
in such areas and cultural or structural 
competency; and 
‘‘(C) is located in a State (as defined in 
section 210(h)). 
‘‘(7) RURAL AREA.—The term ‘rural area’ has 
the 
meaning 
given 
such 
term 
in 
section 
1886(d)(2)(D). 
‘‘(f) PENALTY FOR FALSE INFORMATION.—Any per-
son who knowingly and willfully obtains by fraud, false 
statement, or forgery, or fails to refund any funds, assets, 
or property provided under this section or attempts to so 
obtain by fraud, false statement or forgery, or fail to re-
fund any funds, assets, or property, received pursuant to 
this section shall be fined not more than $20,000 or im-
prisoned for not more than 5 years, or both.’’. 
(2) AGREEMENTS.—Section 1892 of the Social 
Security Act (42 U.S.C. 1395ccc) is amended— 
(A) in subsection (a)(1)(A)— 
(i) by striking ‘‘, or the’’ and inserting 
‘‘, the’’; and 
(ii) by inserting ‘‘or the Rural and 
Underserved Pathway to Practice Training 
Program for Post- Baccalaureate and Med-
1694 
ical Students under section 1899C’’ before 
‘‘, owes a past-due obligation’’; 
(B) in subsection (b)— 
(i) in paragraph (1), by striking at 
the end ‘‘or’’; 
(ii) in paragraph (2), by striking the 
period at the end and inserting ‘‘; or’’; and 
(iii) by adding the end the following 
new paragraph: 
‘‘(3) subject to subsection (f), owed by an indi-
vidual to the United States by breach of an agree-
ment under section 1899C(c) and which payment 
has not been paid by the individual for any amounts 
received under the Rural and Underserved Pathway 
to Practice Training Program for Post-Bacca-
laureate and Medical Students (and accrued interest 
determined in accordance with subsection (f)(4)) in 
the case such individual fails to complete the re-
quirements of such agreement.’’; and 
(C) by adding at the end the following new 
subsection: 
‘‘(f) AUTHORITIES WITH RESPECT TO THE COLLEC-
TION UNDER
THE PATHWAY
TO PRACTICE TRAINING 
PROGRAM.—The Secretary—
1695 
‘‘(1) shall require payment to the United States 
for any amount of damages that the United States 
is entitled to recover under subsection (b)(3), within 
the 5-year period beginning on the date an eligible 
individual fails to complete the requirements of such 
agreement under section 1899C(d)(5) (or such 
longer period beginning on such date as specified by 
the Secretary), and any such amounts not paid with-
in such period shall be subject to collection through 
deductions in Medicare payments pursuant to sub-
section (e); 
‘‘(2) shall allow payments described in para-
graph (1) to be paid in installments over such 5-year 
period, which shall accrue interest in an amount de-
termined pursuant to paragraph (5); 
‘‘(3) shall waive the requirement for an indi-
vidual to pay a past-due obligation under subsection 
(b)(3) in the case of hardship (as determined by the 
Secretary); 
‘‘(4) shall not disclose any past-due obligation 
under subsection (b)(3) that is owed to the United 
States to any credit reporting agency that the 
United States entitled to be recovered the United 
States under this section; and
1696 
‘‘(5) shall make a final determination of wheth-
er the amount of payment under section 1899C 
made to a qualifying student (as described in sub-
section (b) of such section) was in excess of or less 
than the amount of payment that is due, and pay-
ment of such excess or deficit is not made (or ef-
fected by offset) within 90 days of the date of the 
determination, and interest shall accrue on the bal-
ance of such excess or deficit not paid or offset (to 
the extent that the balance is owed by or owing to 
the provider) at a rate determined in accordance 
with the regulations of the Secretary of the Treasury 
applicable to charges for late payments.’’. 
SEC. 137403. FUNDING FOR THE RURAL AND UNDERSERVED 
PATHWAY 
TO 
PRACTICE 
TRAINING 
PRO-
GRAMS 
FOR 
POST-BACCALAUREATE 
STU-
DENTS AND MEDICAL STUDENTS. 
(a) IN GENERAL.—Subpart C of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
1986, as amended by the preceding provisions of this Act, 
is amended by inserting after section 36F the following 
new section:
1697 
‘‘SEC. 36G. PATHWAY TO PRACTICE MEDICAL SCHOLAR-
SHIP VOUCHER CREDIT. 
‘‘(a) IN GENERAL.—In the case of a qualified edu-
cational institution, there shall be allowed as a credit 
against the tax imposed by this subtitle for any taxable 
year an amount equal to the aggregate amount paid or 
incurred by such institution during such taxable year pur-
suant to any Pathway to Practice medical scholarship 
voucher awarded to a qualifying student with respect to 
such institution. 
‘‘(b) DETERMINATION OF AMOUNTS PAID PURSUANT 
TO QUALIFIED SCHOLARSHIP VOUCHERS, ETC.—For pur-
poses of this section— 
‘‘(1) an amount shall be treated as paid or in-
curred pursuant to an annual award of a Pathway 
to Practice medical scholarship voucher only if such 
amount is paid or incurred in reimbursement, or an-
ticipation of, an expense described in subparagraphs 
(A) through (E) of paragraph (4) of section 
1899C(d) of the Social Security Act and is subject 
to verification in such manner as the Secretary of 
Health and Human Services may provide under 
paragraph (6) of such section, and 
‘‘(2) in the case of any amount credited by a 
qualified educational institution against a liability 
owed by the qualifying student to such institution,
1698 
such amount shall be treated as paid by such insti-
tution to such student as of the date that such liabil-
ity would otherwise be due. 
‘‘(c) DEFINITIONS.—For purposes of this section— 
‘‘(1) QUALIFIED EDUCATIONAL INSTITUTION.— 
The term ‘qualified educational institution’ means, 
with respect to any annual award of a Pathway to 
Practice medical scholarship voucher— 
‘‘(A) any qualifying medical school (as de-
fined in subsection (e)(6) of section 1899C of 
the Social Security Act), and 
‘‘(B) any provider of a post-baccalaureate 
program referred to in subsection (b)(2)(A) of 
such section, 
which meets the requirements of subsection (d)(6) of 
such section. 
‘‘(2) QUALIFYING STUDENT.—The term ‘quali-
fying student’ means any student to whom the Sec-
retary of Health and Human Services has made an 
annual award of a Pathway to Practice medical 
scholarship voucher under section 1899C of the So-
cial Security Act. 
‘‘(3) ANNUAL AWARD OF A PATHWAY TO PRAC-
TICE MEDICAL SCHOLARSHIP VOUCHER.—The term 
‘annual award of a Pathway to Practice medical
1699 
scholarship voucher’ means the annual award of a 
Pathway to Practice medical scholarship voucher re-
ferred to in section 1899C(d)(3) of the Social Secu-
rity Act. 
‘‘(d) COORDINATION OF ACADEMIC AND TAXABLE 
YEARS.—The credit allowed under subsection (a) with re-
spect to any Pathway to Practice medical scholarship 
voucher shall not exceed the amount of such voucher which 
is for expenses described in subparagraphs (A) through 
(E) of section 1899C(d)(4) of the Social Security Act, re-
duced by any amount of such voucher with respect to 
which credit was allowed under this section for any prior 
taxable year. 
‘‘(e) REGULATIONS.—The Secretary shall issue such 
regulations or other guidance as are necessary or appro-
priate to carry out the purposes of this section.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 6211(b)(4)(A), as amended by the 
preceding provisions of this Act, is amended by in-
serting ‘‘36G,’’ after ‘‘36F,’’. 
(2) Paragraph (2) of section 1324(b) of title 
31, United States Code, as amended by the pre-
ceding provisions of this Act, is amended by insert-
ing ‘‘36G,’’ after ‘‘36F,’’.
1700 
(3) The table of sections for subpart C of part 
IV of subchapter A of chapter 1 of the Internal Rev-
enue Code of 1986, and amended by the preceding 
provisions of this Act, is amended by inserting after 
the item relating to section 36F the following new 
item: 
‘‘Sec. 36G. Pathway to Practice medical scholarship voucher credit.’’. 
(c) INFORMATION
SHARING.—The Secretary of 
Health and Human Services shall annually provide the 
Secretary of the Treasury such information regarding the 
program under section 1899C of the Social Security Act 
as the Secretary of the Treasury may require to admin-
ister the tax credits determined under section 36G of the 
Internal Revenue Code of 1986, including information to 
identify qualifying students and the qualified educational 
institutions at which such students are enrolled and the 
amount of the annual award of the Pathway to Practice 
medical scholarship voucher awarded to each such student 
with respect to such institution. Terms used in this sub-
paragraph shall have the same meaning as when used in 
such section 36G. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act.
1701 
SEC. 137404. ESTABLISHING RURAL AND UNDERSERVED 
PATHWAY TO PRACTICE PROGRAM FOR MED-
ICAL RESIDENTS. 
Section 1886 of the Social Security Act (42 U.S.C. 
1395ww) is amended— 
(1) in subsection (d)(5)(B)(v), by inserting 
‘‘(h)(4)(H)(vii),’’ after ‘‘The provisions of sub-
sections (h)(4)(H)(vi),’’; and 
(2) in subsection (h)(4)(H), by adding at the 
end the following new clause: 
‘‘(vii) EXCLUSION
FROM
FULL-TIME 
EQUIVALENT LIMITATION FOR HOSPITALS 
IMPLEMENTING RURAL AND UNDERSERVED 
PATHWAY TO PRACTICE PROGRAM.— 
‘‘(I) IN GENERAL.—For cost re-
porting periods beginning on or after 
October 1, 2026, during which a 
qualifying resident (as defined in sub-
clause (II)) trains in an applicable 
hospital (as defined in subclause 
(III)), the Secretary shall, for such 
cost reporting period by the number 
of full-time equivalent residents so 
trained within the applicable hospital 
during such period, exclude from the 
limitation under subparagraph (F).
1702 
‘‘(II) QUALIFYING
RESIDENT.— 
For purposes of this clause, the term 
‘qualifying resident’ means a full-time 
equivalent resident who— 
‘‘(aa) was a qualifying stu-
dent awarded a Pathway to Prac-
tice medical scholarship voucher 
under section 1899C; and 
‘‘(bb) 
graduated 
from 
a 
qualifying medical school. 
‘‘(III) APPLICABLE HOSPITAL.— 
‘‘(aa) 
IN
GENERAL.—For 
purposes of this clause, the term 
‘applicable hospital’ means any 
hospital that— 
‘‘(AA) meets the re-
quirements of item (bb); 
‘‘(BB) agrees to pro-
vide data to the Secretary 
with respect to where quali-
fying residents (as defined 
in subclause (II)) practice 
medicine or participate in 
fellowships immediately fol-
lowing their residencies; and
1703 
‘‘(CC) agrees to pro-
mote 
community-based 
training of qualifying resi-
dents (as defined in sub-
clause (II)), as appropriate. 
‘‘(bb) 
OTHER
REQUIRE-
MENTS.—For the purpose of item 
(aa)(AA), an applicable hospital 
shall also be a subsection (d) hos-
pital that has been recognized by 
the Accreditation Council for 
Graduate Medical Education as 
meeting the following require-
ments: 
‘‘(AA) 
Such 
hospital 
provides 
mentorships 
for 
residents. 
‘‘(BB) Such hospital in-
cludes cultural or structural 
competency as part of the 
training of residents. 
‘‘(CC) The hospital has 
a demonstrated record of 
training medical residents in 
health professional shortage
1704 
areas, medically underserved 
areas, public hospitals, or 
rural areas. 
‘‘(IV) OTHER DEFINITIONS.— 
‘‘(aa) 
HEALTH
PROFES-
SIONAL
SHORTAGE
AREA.—The 
team ‘health professional short-
age area’ has the meaning given 
such term in subparagraphs (A) 
or (B) of section 332(a)(1) of the 
Public Health Service Act. 
‘‘(bb) MEDICALLY
UNDER-
SERVED AREA.—The term ‘medi-
cally underserved area’ means an 
area designated pursuant to sec-
tion 330(b)(3)(A) of the Public 
Health Service Act. 
‘‘(cc) QUALIFYING MEDICAL 
SCHOOL.—The term ‘qualifying 
medical school’ has the meaning 
given 
such 
term 
in 
section 
1899C(e)(6). 
‘‘(dd) QUALIFYING MEDICAL 
STUDENT.—The term ‘qualifying 
medical student’ has the meaning
1705 
given 
such 
term 
in 
section 
1899C(b). 
‘‘(ee) RURAL
AREA.—The 
term ‘rural area’ has the mean-
ing given such term in section 
1886(d)(2)(D).’’. 
SEC. 137405. DISTRIBUTION OF ADDITIONAL RESIDENCY 
POSITIONS. 
(a) IN GENERAL.—Section 1886(h) of the Social Se-
curity Act (42 U.S.C. 1395ww(h)) is amended— 
(1) in paragraph (4)(F)(i), by striking ‘‘and 
(9)’’ and inserting ‘‘(9), and (10)’’; 
(2) in paragraph (4)(H)(i), by striking ‘‘and 
(9)’’ and inserting ‘‘(9), and (10)’’; and 
(3) by adding at the end the following new 
paragraph: 
‘‘(10) DISTRIBUTION
OF
ADDITIONAL
RESI-
DENCY POSITIONS.— 
‘‘(A) 
ADDITIONAL
RESIDENCY
POSI-
TIONS.— 
‘‘(i) IN
GENERAL.—For fiscal years 
2025 and 2026, and for each succeeding 
fiscal year until the aggregate number of 
full-time equivalent residency positions dis-
tributed under this paragraph is equal to
1706 
the aggregate number of such positions 
made available (as specified in clause (ii)), 
the Secretary shall, subject to the suc-
ceeding provisions of this paragraph, in-
crease the otherwise applicable resident 
limit for each qualifying hospital (as de-
fined in subparagraph (F)) that submits a 
timely application under this subparagraph 
by such number as the Secretary may ap-
prove effective beginning July 1 of the fis-
cal year of the increase. 
‘‘(ii) NUMBER
AVAILABLE
FOR
DIS-
TRIBUTION.— 
‘‘(I) 
TOTAL
NUMBER
AVAIL-
ABLE.—The aggregate number of 
such positions made available under 
this paragraph shall be equal to 
4,000. 
‘‘(II) ANNUAL
LIMIT.—The ag-
gregate number of such positions so 
made available shall not exceed 2,000 
for a fiscal year. 
‘‘(iii) ROUNDS
OF
APPLICATIONS.— 
The Secretary shall initiate a separate 
round of applications for an increase under
1707 
clause (i) for each fiscal year for which 
such an increase is to be provided. 
‘‘(iv) DISTRIBUTION
FOR
PRIMARY 
CARE, 
PSYCHIATRY, 
AND
OTHER 
RESIDENCIES.— 
‘‘(I) IN
GENERAL.—Except as 
provided under subclause (II), of the 
positions made available under this 
paragraph— 
‘‘(aa) not less than 25 per-
cent shall be in a primary care 
residency (as defined in subpara-
graph (F)) or obstetrics and gyn-
ecology residency; and 
‘‘(bb) not less than 15 per-
cent shall be in a psychiatry resi-
dency (as defined in such sub-
paragraph). 
‘‘(II) DISTRIBUTION FOR OTHER 
RESIDENCIES.—The 
requirement 
under subclause (I) shall not apply 
with respect to any positions made 
available under this paragraph that 
are not distributed to a qualifying 
hospital by July 1, 2027, and such
1708 
positions shall be distributed to hos-
pitals in accordance with subpara-
graph (B), without regard to spe-
cialty. 
‘‘(v) 
CLARIFICATION
REGARDING 
AVAILABILITY
OF
OTHER
INCREASE.—A 
qualifying hospital may apply for, and re-
ceive, an increase under this paragraph 
and paragraph (9) for a fiscal year. 
‘‘(B) DISTRIBUTION.—For purposes of 
providing an increase in the otherwise applica-
ble resident limit under subparagraph (A), the 
following shall apply: 
‘‘(i) ELIGIBLE HOSPITALS.—With re-
spect to the aggregate number of such po-
sitions available for distribution under this 
paragraph, the Secretary shall distribute 
30 percent of such aggregate number to 
the category of hospitals described in sub-
clause (II) of clause (ii), 20 percent of 
such aggregate number to each of the cat-
egories of hospitals described in subclauses 
(I), (III), and (IV) of such clause, and 10 
percent of such aggregate number to the 
category of hospitals described in subclause
1709 
(V) of such clause, subject to clauses (iii) 
and (iv). 
‘‘(ii) CATEGORIES OF HOSPITALS DE-
SCRIBED.—The following categories of hos-
pitals are described in this clause: 
‘‘(I) Hospitals that are located in 
a rural area (as defined in subsection 
(d)(2)(D)) or are treated as being lo-
cated in a rural area pursuant to sub-
section (d)(8)(E), hospitals that are 
located in a census tract assigned a 
rural-urban commuting area code of 4 
or greater, and hospitals that are a 
sole community hospital (as defined in 
subsection (d)(5)(D)(iii)). 
‘‘(II) Hospitals in which the ref-
erence resident level of the hospital 
(as specified in subparagraph (F)(v)) 
is greater than the otherwise applica-
ble resident limit. 
‘‘(III) Hospitals in States with— 
‘‘(aa) a new medical school 
that received ‘Candidate School’ 
status from the Liaison Com-
mittee on Medical Education or
1710 
‘Pre-Accreditation’ status from 
the American Osteopathic Asso-
ciation Commission on Osteo-
pathic College Accreditation on 
or after January 1, 2000, and 
achieved or continued to progress 
toward ‘Full Accreditation’ status 
(as such term is defined by the 
Liaison Committee on Medical 
Education) or toward ‘Accredita-
tion’ status (as such term is de-
fined by the American Osteo-
pathic Association Commission 
on Osteopathic College Accredita-
tion); or 
‘‘(bb) an additional location 
or branch campus established on 
or after January 1, 2000, by a 
medical school with ‘Full Accredi-
tation’ status (as such term is 
defined by the Liaison Committee 
on Medical Education) or ‘Ac-
creditation’ status (as such term 
is defined by the American Os-
teopathic Association Commission
1711 
on Osteopathic College Accredita-
tion). 
‘‘(IV) Hospitals that are located 
in or serve an area designated as a 
health 
professional 
shortage 
area 
under section 332(a)(1)(A) of the 
Public Health Service Act or serve a 
population group designated under 
section 332(a)(1)(B) of such Act, as 
determined by the Secretary. 
‘‘(V) Hospitals located in States 
in the lowest quartile for resident-to- 
population ratios, as defined by the 
Secretary. 
‘‘(iii) DISTRIBUTION TO OTHER HOS-
PITALS.—Any positions made available 
under this paragraph that are not distrib-
uted to a qualifying hospital in accordance 
with clause (i) by July 1, 2027, shall be 
distributed to other hospitals, subject to 
the requirement under clause (iv). In car-
rying out the preceding sentence, the Sec-
retary shall ensure that such positions are 
first offered to qualifying hospitals in cat-
1712 
egories described in clause (ii) before being 
distributed to other hospitals. 
‘‘(iv) 
REQUIREMENT.—A 
hospital 
shall only be eligible to receive positions 
made available under this paragraph if the 
hospital demonstrates to the Secretary that 
the hospital is likely to— 
‘‘(I) fill such positions within the 
first 5 training years beginning after 
the date the increase would be effec-
tive, as determined by the Secretary; 
and 
‘‘(II) use some portion (as speci-
fied by the Secretary) of such posi-
tions for the residencies described in 
(A)(iv). 
‘‘(C) CONDITIONS OF DISTRIBUTION.— 
‘‘(i) IN GENERAL.—Subject to clause 
(iv), a hospital that receives an increase in 
the otherwise applicable resident limit 
under this paragraph shall ensure, during 
the 5-year period beginning on the date of 
such increase, that the numbers of full- 
time equivalent residents in a primary care 
or psychiatry residency (as those terms are
1713 
defined in subparagraph (F)), excluding 
any additional positions attributable to an 
increase under this paragraph, are not less 
than the average numbers of full-time 
equivalent residents in a primary care or 
psychiatry residency (as so defined) during 
the 3 most recent cost reporting periods 
ending prior to the date of enactment of 
this paragraph. 
‘‘(ii) REPORTING
REQUIREMENTS.— 
Subject to clause (iv), a hospital that re-
ceives an increase in the otherwise applica-
ble resident limit under this paragraph 
shall, after making a good faith attempt to 
collect information from former residents, 
report to the Secretary in a time and man-
ner specified by the Secretary the following 
information for each year (beginning with 
the first year for which the hospital re-
ceives an increase in the otherwise applica-
ble resident limit under this paragraph), as 
applicable: 
‘‘(I) Race and ethnicity of resi-
dents.
1714 
‘‘(II) The practice patterns of 
residents one and two years after 
completion of their residency, includ-
ing the number and percent of resi-
dents who— 
‘‘(aa) practice in a primary 
care, psychiatry, or other spe-
cialty; 
‘‘(bb) primarily serve or are 
located in a health professional 
shortage area with a designation 
in effect under section 332 of the 
Public Health Service Act; or 
‘‘(cc) primarily serve or are 
located in a rural area (as de-
fined in subsection (d)(2)(D)). 
‘‘(iii) REQUIREMENT FOR RURAL HOS-
PITALS
TO
EXPAND
EXISTING
PRO-
GRAMS.—Subject to clause (iv), if a hos-
pital that receives an increase in the other-
wise applicable resident limit under this 
paragraph would be eligible for an adjust-
ment to the otherwise applicable resident 
limit for participation in a new medical 
residency training program under section
1715 
413.79(e)(3) of title 42, Code of Federal 
Regulations (or any successor regulation), 
the hospital shall ensure that any positions 
made available under this paragraph are 
used to expand an existing program of the 
hospital, and not for participation in a new 
medical residency training program. 
‘‘(iv) REDISTRIBUTION OF POSITIONS 
IF HOSPITAL NO LONGER MEETS CERTAIN 
REQUIREMENTS.—In the case where the 
Secretary determines that a hospital that 
receives an increase in the otherwise appli-
cable resident limit under this paragraph 
does not meet either of the requirements 
under clause (i), the reporting require-
ments under clause (ii), or, if applicable, 
the requirement under clause (iii), the Sec-
retary shall— 
‘‘(I) reduce the otherwise applica-
ble resident limit of the hospital by 
the amount by which such limit was 
increased under this paragraph; and 
‘‘(II) provide for the distribution 
of positions attributable to such re-
duction to other qualifying hospitals
1716 
in accordance with the requirements 
of this paragraph. 
‘‘(v) LIMITATION.—A hospital may 
not receive more than 25 additional full- 
time equivalent residency positions under 
this paragraph. 
‘‘(D) APPLICATION
OF
PER
RESIDENT 
AMOUNTS
FOR
PRIMARY
CARE
AND
NONPRI-
MARY CARE.—With respect to additional resi-
dency positions in a hospital attributable to the 
increase provided under this paragraph, the ap-
proved FTE per resident amounts are deemed 
to be equal to the hospital per resident amounts 
for primary care and nonprimary care com-
puted under paragraph (2)(D) for that hospital. 
‘‘(E) PERMITTING
FACILITIES
TO
APPLY 
AGGREGATION
RULES.—The Secretary shall 
permit hospitals receiving additional residency 
positions attributable to the increase provided 
under this paragraph to, beginning in the fifth 
year after the effective date of such increase, 
apply such positions to the limitation amount 
under paragraph (4)(F) that may be aggre-
gated pursuant to paragraph (4)(H) among 
members of the same affiliated group.
1717 
‘‘(F) DEFINITIONS.—In this paragraph: 
‘‘(i) OTHERWISE
APPLICABLE
RESI-
DENT LIMIT.—The term ‘otherwise appli-
cable resident limit’ means, with respect to 
a hospital, the limit otherwise applicable 
under subparagraphs (F)(i) and (H) of 
paragraph (4) on the resident level for the 
hospital determined without regard to this 
paragraph but taking into account para-
graphs (7)(A), (7)(B), (8)(A), (8)(B), or 
(9)(A). 
‘‘(ii) PRIMARY
CARE
RESIDENCY.— 
The term ‘primary care residency’ means a 
residency training program described in 
paragraph (5)(H). 
‘‘(iii) PSYCHIATRY
RESIDENCY.—The 
term ‘psychiatry residency’ means a resi-
dency in psychiatry, addiction medicine, 
addiction psychiatry, pain medicine, child 
and adolescent psychiatry, consultation-li-
aison psychiatry, geriatric psychiatry, brain 
injury medicine, forensic psychiatry, hos-
pice and palliative medicine, and sleep 
medicine. Such term includes a residency 
in a program that is a prerequisite (as de-
1718 
termined by the Secretary) for a residency 
described in the preceding sentence. 
‘‘(iv) QUALIFYING
HOSPITAL.—The 
term ‘qualifying hospital’ means a hospital 
described in any of subclauses (I) through 
(V) of subparagraph (B)(ii). 
‘‘(v) REFERENCE RESIDENT LEVEL.— 
The term ‘reference resident level’ means, 
with respect to a hospital, the resident 
level for the most recent cost reporting pe-
riod of the hospital ending on or before the 
date of enactment of this paragraph, for 
which a cost report has been settled (or, if 
not, submitted (subject to audit)), as de-
termined by the Secretary. 
‘‘(vi) RESIDENT
LEVEL.—The term 
‘resident level’ has the meaning given such 
term in paragraph (7)(C)(i). 
‘‘(G) FUNDING.—There is appropriated to 
the Secretary, out of any amounts in the Treas-
ury not otherwise appropriated, $10,000,000, to 
remain available until expended, for purposes of 
carrying out this paragraph and subsection 
(d)(5)(B)(xiii).’’.
1719 
(b) IME.—Section 1886(d)(5)(B) of the Social Secu-
rity Act (42 U.S.C. 1395ww(d)(5)(B)) is amended— 
(1) in clause (v), in the third sentence, by strik-
ing ‘‘and (h)(9)’’ and inserting ‘‘(h)(9), and 
(h)(10)’’; 
(2) by adding at the end the following new 
clause: 
‘‘(xiii) For discharges occurring on or after 
July 1, 2024, insofar as an additional payment 
amount under this subparagraph is attributable to 
resident positions distributed to a hospital under 
subsection (h)(10), the indirect teaching adjustment 
factor shall be computed in the same manner as pro-
vided under clause (ii) with respect to such resident 
positions.’’. 
PART 5—HIGHER EDUCATION 
SEC. 137501. CREDIT FOR PUBLIC UNIVERSITY RESEARCH 
INFRASTRUCTURE. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1, as amended by the preceding pro-
visions of this Act, is amended by adding at the end the 
following new section:
1720 
‘‘SEC. 45AA. PUBLIC UNIVERSITY RESEARCH INFRASTRUC-
TURE CREDIT. 
‘‘(a) ALLOWANCE OF CREDIT.—For purposes of sec-
tion 38, the public university research infrastructure cred-
it determined under this section for a taxable year is an 
amount equal to 40 percent of the qualified cash contribu-
tions made by a taxpayer during such taxable year. 
‘‘(b) QUALIFIED CASH CONTRIBUTION.— 
‘‘(1) IN GENERAL.— 
‘‘(A) DEFINED.—For purposes of sub-
section (a), the qualified cash contribution for 
any taxable year is the aggregate amount con-
tributed in cash by a taxpayer during such tax-
able year to a certified educational institution 
in connection with a qualifying project that, but 
for this section, would be treated as a charitable 
contribution for purposes of section 170(c). 
‘‘(B) QUALIFIED
CASH
CONTRIBUTIONS 
TAKEN
INTO
ACCOUNT
FOR
PURPOSES
OF 
CHARITABLE
CONTRIBUTION
LIMITATIONS.— 
Any qualified cash contributions made by a tax-
payer under this section shall be taken into ac-
count for purposes of determining the percent-
age limitations under section 170(b). 
‘‘(2) DESIGNATION REQUIRED.—A contribution 
shall only be treated as a qualified cash contribution
1721 
to the extent that it is designated as such by a cer-
tified educational institution under subsection (d). 
‘‘(c) DEFINITIONS.—For purposes of this section— 
‘‘(1) QUALIFYING PROJECT.—The term ‘quali-
fying project’ means a project to purchase, con-
struct, or improve research infrastructure property. 
‘‘(2) 
RESEARCH
INFRASTRUCTURE
PROP-
ERTY.—The term ‘research infrastructure property’ 
means any portion of a property, building, or struc-
ture of an eligible educational institution, or any 
land associated with such property, building, or 
structure, that is used for research. 
‘‘(3) ELIGIBLE EDUCATIONAL INSTITUTION.— 
The term ‘eligible educational institution’ means— 
‘‘(A) an institution of higher education (as 
such term is defined in section 101 or 102(c) 
of the Higher Education Act of 1965) that is 
a college or university described in section 
511(a)(2)(B), or 
‘‘(B) an organization described in section 
170(b)(1)(A)(iv), section 170(b)(1)(A)(vi), or 
section 509(a)(3) to which authority has been 
delegated by an institution described in sub-
paragraph (A) for purposes of applying for or
1722 
administering credit amounts on behalf of such 
institution. 
‘‘(4) CERTIFIED EDUCATIONAL INSTITUTION.— 
The term ‘certified educational institution’ means an 
eligible educational institution which has been allo-
cated a credit amount for a qualifying project and— 
‘‘(A) has received a certification for such 
project by submitting an application as required 
under subsection (d)(2), and 
‘‘(B) designates credit amounts to tax-
payers for qualifying cash contributions toward 
such project under subsection (d)(4). 
‘‘(d) QUALIFYING UNIVERSITY RESEARCH INFRA-
STRUCTURE PROGRAM.— 
‘‘(1) ESTABLISHMENT.— 
‘‘(A) IN
GENERAL.—Not later than 180 
days after the date of the enactment of this sec-
tion, the Secretary, after consultation with the 
Secretary of Education, shall establish a pro-
gram to— 
‘‘(i) 
certify 
and 
allocate 
credit 
amounts for qualifying projects to eligible 
educational institutions, and 
‘‘(ii) allow certified educational insti-
tutions to designate cash contributions for
1723 
qualifying projects of such certified edu-
cational institutions as qualified cash con-
tributions. 
‘‘(B) LIMITATIONS.— 
‘‘(i) ALLOCATION LIMITATION PER IN-
STITUTION.—The credit amounts allocated 
to a certified educational institution under 
subparagraph (A)(i) for all projects shall 
not exceed $50,000,000 per calendar year. 
‘‘(ii) OVERALL
ALLOCATION
LIMITA-
TION.— 
‘‘(I) IN
GENERAL.—The total 
amount of qualifying project credit 
amounts that may be allocated under 
subparagraph (A)(i) shall not ex-
ceed— 
‘‘(aa) $500,000,000 for each 
of calendar years 2022, 2023, 
2024, 2025, and 2026, and 
‘‘(bb) $0 for each subse-
quent year. 
‘‘(II) 
ROLLOVER
OF 
UNALLOCATED
CREDIT
AMOUNTS.— 
Any credit amounts described in sub-
clause (I) that are unallocated during
1724 
a calendar year shall be carried to the 
succeeding calendar year and added to 
the limitation allowable under such 
subclause for such succeeding cal-
endar year. 
‘‘(iii) DESIGNATION
LIMITATION.— 
The aggregate amount of cash contribu-
tions which are designated by a certified 
educational institution as qualifying cash 
contributions with respect to any quali-
fying project shall not exceed 250 percent 
of the credit amount allocated to such cer-
tified educational institution for a quali-
fying project under subparagraph (A)(i). 
‘‘(2) CERTIFICATION APPLICATION.—Each eligi-
ble educational institution which applies for certifi-
cation of a project under this paragraph shall sub-
mit an application in such time, form, and manner 
as the Secretary may require. 
‘‘(3) SELECTION CRITERIA FOR ALLOCATIONS 
TO
ELIGIBLE
EDUCATIONAL
INSTITUTIONS.—The 
Secretary, after consultation with the Secretary of 
Education, shall select applications from eligible 
educational institutions—
1725 
‘‘(A) based on the extent of the expected 
expansion of an eligible educational institution’s 
targeted research within disciplines in science, 
mathematics, engineering, and technology, and 
‘‘(B) in a manner that ensures consider-
ation is given to eligible educational institutions 
with full-time student populations of less than 
12,000. 
‘‘(4) DESIGNATION OF QUALIFIED CASH CON-
TRIBUTIONS TO TAXPAYERS.—The Secretary, after 
consultation with the Secretary of Education, shall 
establish a process by which certified educational in-
stitutions shall designate cash contributions to such 
institutions as qualified cash contributions. 
‘‘(5) DISCLOSURE OF ALLOCATIONS AND DES-
IGNATIONS.— 
‘‘(A) ALLOCATIONS.—The Secretary shall, 
upon allocating credit amounts to an applicant 
under this subsection, publicly disclose the iden-
tity of the applicant and the credit amount allo-
cated to such applicant. 
‘‘(B) DESIGNATIONS.—Each certified edu-
cational institution shall, upon designating con-
tributions of a taxpayer as qualified cash con-
tributions under this subsection, publicly dis-
1726 
close the identity of the taxpayer and the 
amount of contributions designated in such 
time, form, and manner as the Secretary may 
require. 
‘‘(e) REGULATIONS AND GUIDANCE.—The Secretary, 
after consultation with the Secretary of Education when 
applicable, shall prescribe such regulations and guidance 
as may be necessary or appropriate to carry out the pur-
poses of this section, including regulations or other guid-
ance for— 
‘‘(1) prevention of abuse, 
‘‘(2) establishment of reporting requirements, 
‘‘(3) establishment of selection criteria for ap-
plications, and 
‘‘(4) disclosure of allocations. 
‘‘(f) PENALTY FOR NONCOMPLIANCE.— 
‘‘(1) IN GENERAL.—If at any time during the 
5-year period beginning on the date of the allocation 
of credit amounts to a certified educational institu-
tion under subsection (d)(1)(A)(i) there is a non-
compliance event with respect to such credit 
amounts, then the following rules shall apply: 
‘‘(A) GENERAL RULE.—Any cash contribu-
tion designated as a qualifying cash contribu-
tion with respect to a qualifying project for
1727 
which such credit amounts were allocated under 
subsection (d)(1)(A)(ii) shall be treated as un-
related business taxable income (as defined in 
section 512) of such certified educational insti-
tution. 
‘‘(B) 
RULE
FOR
UNUSED
CREDIT 
AMOUNTS.—In the case of credit amounts de-
scribed under paragraph (2)(A) which are un-
used and identified pursuant to subsection (g), 
the Secretary shall reallocate any portion of 
such credit amounts that are unused to cer-
tified educational institutions in lieu of impos-
ing the general rule under subparagraph (A). 
‘‘(2) NONCOMPLIANCE
EVENT.—For purposes 
of this subsection, the term ‘noncompliance event’ 
means, with respect to a credit amount allocated to 
a certified educational institution— 
‘‘(A) cash contributions equaling the 
amount of such credit amount are not des-
ignated as qualifying cash contributions within 
2 years after December 31 of the year such 
credit amount is allocated, 
‘‘(B) a qualifying project with respect to 
which such credit amount was allocated is not 
placed in service within either—
1728 
‘‘(i) 4 years after December 31 of the 
year such credit amount is allocated, or 
‘‘(ii) a period of time that the Sec-
retary determines is appropriate, or 
‘‘(C) the research infrastructure property 
placed in service as part of a qualifying project 
with respect to which such credit amount was 
allocated ceases to be used for research within 
five years after such property is placed in serv-
ice. 
‘‘(g) REVIEW
AND
REALLOCATION
OF
CREDIT 
AMOUNTS.— 
‘‘(1) REVIEW.—Not later than 5 years after the 
date of enactment of this section, the Secretary shall 
review the credit amounts allocated under this sec-
tion as of such date. 
‘‘(2) REALLOCATION.— 
‘‘(A) IN GENERAL.—The Secretary may re-
allocate credit amounts allocated under this sec-
tion if the Secretary determines, as of the date 
of the review in paragraph (1), that such credit 
amounts are subject to a noncompliance event. 
‘‘(B) ADDITIONAL PROGRAM.—If the Sec-
retary determines that credits under this sec-
tion are available for reallocation pursuant to
1729 
the requirements set forth in subparagraph (A), 
the Secretary is authorized to conduct an addi-
tional program for applications for certification. 
‘‘(C) DEADLINE
FOR
REALLOCATION.— 
The Secretary shall not certify any project, or 
reallocate any credit amount, pursuant to this 
paragraph after December 31, 2031. 
‘‘(h) DENIAL OF DOUBLE BENEFIT.—No credit or 
deduction shall be allowed under any other provision of 
this chapter for any qualified cash contribution for which 
a credit is allowed under this section. 
‘‘(i) RULE FOR TRUSTS AND ESTATES.—For pur-
poses of this section, rules similar to the rules of sub-
section (d) of section 52 shall apply. 
‘‘(j) TERMINATION.—This section shall not apply to 
qualified cash contributions made after December 31, 
2033.’’. 
(b) CREDIT MADE PART OF GENERAL BUSINESS 
CREDIT.—Subsection (b) of section 38, as amended by the 
preceding provisions of this Act, is amended by striking 
‘‘plus’’ at the end of paragraph (41), by striking the period 
at the end of paragraph (42) and inserting ‘‘, plus’’, and 
by adding at the end the following new paragraph: 
‘‘(43) the public university research infrastruc-
ture credit determined under section 45AA.’’.
1730 
(c) CLERICAL AMENDMENT.—The table of sections 
for subpart D of part IV of subchapter A of chapter 1, 
as amended by the preceding provisions of this Act, is 
amended by adding at the end the following new item: 
‘‘Sec. 45AA. Public university research infrastructure credit.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to qualified cash contributions 
made after December 31, 2021. 
SEC. 137502. TREATMENT OF FEDERAL PELL GRANTS FOR 
INCOME TAX PURPOSES. 
(a) EXCLUSION
FROM
GROSS
INCOME.—Section 
117(b)(1) is amended by striking ‘‘means any amount’’ 
and all that follows and inserting ‘‘means— 
‘‘(A) any amount received by an individual 
as a scholarship or fellowship grant to the ex-
tent the individual establishes that, in accord-
ance with the conditions of the grant, such 
amount was used for qualified tuition and re-
lated expenses, and 
‘‘(B) any amount received by an individual 
after December 31, 2021, and before January 
1, 2026, as a Federal Pell Grant under section 
401 of the Higher Education Act of 1965.’’. 
(b) TREATMENT FOR PURPOSES OF AMERICAN OP-
PORTUNITY
TAX
CREDIT
AND
LIFETIME
LEARNING 
CREDIT.—Section 25A(g)(2) is amended—
1731 
(1) in subparagraph (A), by inserting ‘‘de-
scribed in section 117(b)(1)(A)’’ after ‘‘a qualified 
scholarship’’, and 
(2) in subparagraph (C), by inserting ‘‘or 
amount described in section 117(b)(1)(B)’’ after 
‘‘within the meaning of section 102(a)’’. 
(c) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2021. 
SEC. 137503. REPEAL OF DENIAL OF AMERICAN OPPOR-
TUNITY TAX CREDIT ON BASIS OF FELONY 
DRUG CONVICTION. 
(a) IN GENERAL.—Section 25A(b)(2) is amended by 
striking subparagraph (D). 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2021. 
PART 6—DEDUCTION FOR STATE AND LOCAL 
TAXES, ETC. 
SEC. 137601. MODIFICATION OF LIMITATION ON DEDUC-
TION FOR STATE AND LOCAL TAXES, ETC. 
(a) IN GENERAL.—Paragraph (6) of section 164(b) 
is amended— 
(1) by striking ‘‘2025’’ in the heading and in-
serting ‘‘2031’’,
1732 
(2) by striking ‘‘January 1, 2026’’ and insert-
ing ‘‘January 1, 2032’’, 
(3) in subparagraph (A), by inserting ‘‘or sec-
tion 216(a)(1)’’ after ‘‘subsection (a)(1)’’, 
(4) in subparagraph (B)— 
(A) by inserting ‘‘(and any tax described in 
any such paragraph taken into account under 
section 216(a)(1))’’ after ‘‘paragraph (5) of this 
subsection’’, and 
(B) by striking ‘‘shall not exceed $10,000 
($5,000 in the case of a married individual fil-
ing a separate return).’’ and inserting ‘‘shall 
not exceed— 
‘‘(i) in the case of any taxable year 
beginning after December 31, 2020, and 
before January 1, 2031, $80,000 ($40,000 
in the case of an estate, trust, or married 
individual filing a separate return), and 
‘‘(ii) in the case of any taxable year 
beginning after December 31, 2030, and 
before January 1, 2032, $10,000 ($5,000 
in the case of an estate, trust, or married 
individual filing a separate return).’’, and 
(5) by striking the last sentence and inserting 
the following: ‘‘In the case of taxes paid during a
1733 
taxable year beginning before January 1, 2031, the 
Secretary shall prescribe regulations or other guid-
ance which treat all or a portion of such taxes as 
paid in a taxable year or years other than the tax-
able year in which actually paid as necessary or ap-
propriate to prevent the avoidance of the limitations 
of this paragraph.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2020. 
(c) NO INFERENCE.—The amendments made by 
paragraphs (3), (4)(A), and (5) shall not be construed to 
create any inference with respect to the proper application 
of section 164(b)(6) or section 216(a) with respect to any 
taxable year beginning before January 1, 2021. 
Subtitle H—Responsibly Funding 
Our Priorities 
SEC. 138001. AMENDMENT OF 1986 CODE. 
Except as otherwise expressly provided, whenever in 
this subtitle an amendment or repeal is expressed in terms 
of an amendment to, or repeal of, a section or other provi-
sion, the reference shall be considered to be made to a 
section or other provision of the Internal Revenue Code 
of 1986.
1734 
PART 1—CORPORATE AND INTERNATIONAL TAX 
REFORMS 
Subpart A—Corporate Provisions 
SEC. 138101. CORPORATE ALTERNATIVE MINIMUM TAX. 
(a) IMPOSITION OF TAX.— 
(1) IN
GENERAL.—Paragraph (2) of section 
55(b) is amended to read as follows: 
‘‘(2) CORPORATIONS.— 
‘‘(A) APPLICABLE CORPORATIONS.—In the 
case of an applicable corporation, the tentative 
minimum tax for the taxable year shall be the 
excess of— 
‘‘(i) 15 percent of the adjusted finan-
cial statement income for the taxable year 
(as determined under section 56A), over 
‘‘(ii) the corporate AMT foreign tax 
credit for the taxable year. 
‘‘(B) OTHER CORPORATIONS.—In the case 
of any corporation which is not an applicable 
corporation, the tentative minimum tax for the 
taxable year shall be zero.’’. 
(2) APPLICABLE CORPORATION.—Section 59 is 
amended by adding at the end the following new 
subsection: 
‘‘(k) APPLICABLE CORPORATION.—For purposes of 
this part—
1735 
‘‘(1) APPLICABLE CORPORATION DEFINED.— 
‘‘(A) IN GENERAL.—The term ‘applicable 
corporation’ means, with respect to any taxable 
year, any corporation (other than an S corpora-
tion, a regulated investment company, or a real 
estate investment trust) which meets the aver-
age annual adjusted financial statement income 
test of subparagraph (B) for one or more tax-
able years which— 
‘‘(i) are prior to such taxable year, 
and 
‘‘(ii) end after December 31, 2021. 
‘‘(B) AVERAGE ANNUAL ADJUSTED FINAN-
CIAL STATEMENT INCOME TEST.—For purposes 
of this subsection— 
‘‘(i) a corporation meets the average 
annual adjusted financial statement income 
test for any taxable year if the average an-
nual adjusted financial statement income 
of such corporation for the 3-taxable-year 
period ending with such taxable year ex-
ceeds $1,000,000,000, and 
‘‘(ii) in the case of a corporation de-
scribed in paragraph (2), such corporation
1736 
meets the average annual adjusted finan-
cial statement income test if— 
‘‘(I) the corporation meets the re-
quirements of clause (i) (determined 
after the application of paragraph 
(2)), and 
‘‘(II) the average annual adjusted 
financial statement income of such 
corporation (determined without re-
gard to the application of paragraph 
(2)) for the 3-taxable-year-period end-
ing 
with 
such 
taxable 
year 
is 
$100,000,000 or more. 
‘‘(C) EXCEPTION.—Notwithstanding sub-
paragraph (A), the term ‘applicable corporation’ 
shall not include any corporation which other-
wise meets the requirements of subparagraph 
(A) if— 
‘‘(i) such corporation— 
‘‘(I) has a change in ownership, 
or 
‘‘(II) has a specified number (to 
be determined by the Secretary and 
which shall, as appropriate, take into 
account the facts and circumstances
1737 
of the taxpayer) of consecutive taxable 
years, including the most recent tax-
able year, in which the corporation 
does not meet the average annual ad-
justed financial statement income test 
of subparagraph (B), and 
‘‘(ii) the Secretary determines that it 
would not be appropriate to continue to 
treat such corporation as an applicable cor-
poration. 
The preceding sentence shall not apply to any 
corporation if, after the Secretary makes the 
determination described in clause (ii), such cor-
poration meets the average annual adjusted fi-
nancial statement income test for any taxable 
year beginning after the first taxable year for 
which the determination applies. 
‘‘(D) SPECIAL RULES FOR DETERMINING 
AVERAGE
ANNUAL
ADJUSTED
FINANCIAL 
STATEMENT
INCOME.—Solely for purposes of 
determining whether a corporation is an appli-
cable corporation under paragraph (1)— 
‘‘(i) all persons treated as a single em-
ployer under subsection (a) or (b) of sec-
tion 52 shall be treated as 1 person, and
1738 
‘‘(ii) in the case of a foreign corpora-
tion, only income described in paragraph 
(3) or (4) of section 56A(c) shall be taken 
into account. 
‘‘(E) OTHER SPECIAL RULES.— 
‘‘(i) CORPORATIONS
IN
EXISTENCE 
FOR LESS THAN 3 YEARS.—If the corpora-
tion was in existence for less than 3-tax-
able years, subparagraph (B) shall be ap-
plied on the basis of the period during 
which such corporation was in existence. 
‘‘(ii) SHORT
TAXABLE
YEARS.—Ad-
justed financial statement income for any 
taxable year of less than 12 months shall 
be annualized by multiplying the adjusted 
financial statement income for the short 
period by 12 and dividing the result by the 
number of months in the short period. 
‘‘(iii) 
TREATMENT
OF
PREDE-
CESSORS.—Any reference in this subpara-
graph to a corporation shall include a ref-
erence to any predecessor of such corpora-
tion. 
‘‘(2) SPECIAL RULE FOR FOREIGN-PARENTED 
CORPORATIONS.—
1739 
‘‘(A) IN GENERAL.—Solely for purposes of 
determining whether a corporation meets the 
average annual adjusted financial statement in-
come test under paragraph (1)(B)(i), notwith-
standing paragraph (1)(D)(ii), any corporation 
which for any taxable year is a member of an 
international financial reporting group the com-
mon parent of which is a foreign corporation 
shall include in the adjusted financial statement 
income of such corporation for such taxable 
year the adjusted financial statement income of 
all foreign members of such group. 
‘‘(B) INTERNATIONAL FINANCIAL REPORT-
ING
GROUP.—For purposes of subparagraph 
(A), the term ‘international financial reporting 
group’ shall have the meaning given such term 
by section 163(n)(3). 
‘‘(3) REGULATIONS
OR
OTHER
GUIDANCE.— 
The Secretary shall provide regulations or other 
guidance for the purposes of carrying out this sub-
section, including regulations or other guidance— 
‘‘(A) providing a simplified method for de-
termining whether a corporation meets the re-
quirements of paragraph (1), and
1740 
‘‘’(B) addressing the application of this 
subsection to a corporation that experiences a 
change in ownership.’’. 
(3) REDUCTION FOR BASE EROSION AND ANTI- 
ABUSE TAX.—Section 55(a)(2) is amended by insert-
ing ‘‘plus, in the case of an applicable corporation 
(as defined in subsection (b)(2)), the tax imposed by 
section 59A’’ before the period at the end. 
(4) CONFORMING AMENDMENTS.— 
(A) Section 55(a) is amended by striking 
‘‘In the case of a taxpayer other than a cor-
poration, there’’ and inserting ‘‘There’’. 
(B)(i) Section 55(b)(1) is amended— 
(I) by striking so much as precedes 
subparagraph (A) and inserting the fol-
lowing: 
‘‘(1) NONCORPORATE TAXPAYERS.—In the case 
of a taxpayer other than a corporation—’’, and 
(II) by adding at the end the fol-
lowing new subparagraph: 
‘‘(D) ALTERNATIVE MINIMUM TAXABLE IN-
COME.—The term ‘alternative minimum taxable 
income’ means the taxable income of the tax-
payer for the taxable year—
1741 
‘‘(i) determined with the adjustments 
provided in section 56 and section 58, and 
‘‘(ii) increased by the amount of the 
items of tax preference described in section 
57. 
If a taxpayer is subject to the regular tax, such 
taxpayer shall be subject to the tax imposed by 
this section (and, if the regular tax is deter-
mined by reference to an amount other than 
taxable income, such amount shall be treated as 
the taxable income of such taxpayer for pur-
poses of the preceding sentence).’’. 
(ii) Section 860E(a)(4) is amended by 
striking 
‘‘55(b)(2)’’ 
and 
inserting 
‘‘55(b)(1)(D)’’. 
(iii) Section 897(a)(2)(A)(i) is amended by 
striking 
‘‘55(b)(2)’’ 
and 
inserting 
‘‘55(b)(1)(D)’’. 
(C) Section 11(d) is amended by striking 
‘‘the tax imposed by subsection (a)’’ and insert-
ing ‘‘the taxes imposed by subsection (a) and 
section 55’’. 
(D) Section 12 is amended by adding at 
the end the following new paragraph:
1742 
‘‘(5) For alternative minimum tax, see section 
55.’’. 
(E) Section 882(a)(1) is amended by in-
serting ‘‘, 55,’’ after ‘‘section 11’’. 
(F) Section 6425(c)(1)(A) is amended to 
read as follows: 
‘‘(A) the sum of— 
‘‘(i) the tax imposed by section 11 or 
subchapter L of chapter 1, whichever is 
applicable, plus 
‘‘(ii) the tax imposed by section 55, 
plus 
‘‘(iii) the tax imposed by section 59A, 
over’’. 
(G) Section 6655(e)(2) is amended by in-
serting ‘‘, adjusted financial statement income 
(as defined in section 56A),’’ before ‘‘and modi-
fied taxable income’’ each place it appears in 
subparagraphs (A)(i) and (B)(i). 
(H) Section 6655(g)(1)(A) is amended by 
redesignating clauses (ii) and (iii) as clauses 
(iii) and (iv), respectively, and by inserting 
after clause (i) the following new clause: 
‘‘(ii) the tax imposed by section 55,’’. 
(b) ADJUSTED FINANCIAL STATEMENT INCOME.—
1743 
(1) IN GENERAL.—Part VI of subchapter A of 
chapter 1 is amended by inserting after section 56 
the following new section: 
‘‘SEC. 56A. ADJUSTED FINANCIAL STATEMENT INCOME. 
‘‘(a) IN GENERAL.—For purposes of this part, the 
term ‘adjusted financial statement income’ means, with re-
spect to any corporation for any taxable year, the net in-
come or loss of the taxpayer set forth on the taxpayer’s 
applicable financial statement for such taxable year, ad-
justed as provided in this section. 
‘‘(b) APPLICABLE
FINANCIAL
STATEMENT.—For 
purposes of this section, the term ‘applicable financial 
statement’ means, with respect to any taxable year, an ap-
plicable financial statement (as defined in section 
451(b)(3) or as specified by the Secretary in regulations 
or other guidance) which covers such taxable year. 
‘‘(c) GENERAL ADJUSTMENTS.— 
‘‘(1) STATEMENTS COVERING DIFFERENT TAX-
ABLE
YEARS.—Appropriate adjustments shall be 
made in adjusted financial statement income in any 
case in which an applicable financial statement cov-
ers a period other than the taxable year. 
‘‘(2) SPECIAL
RULES
FOR
RELATED
ENTI-
TIES.—
1744 
‘‘(A) CONSOLIDATED
FINANCIAL
STATE-
MENTS.—If the financial results of a taxpayer 
are reported on the applicable financial state-
ment for a group of entities, rules similar to the 
rules of section 451(b)(5) shall apply. 
‘‘(B) CONSOLIDATED
RETURNS.—Except 
as provided in regulations prescribed by the 
Secretary, if the taxpayer files a consolidated 
return for any taxable year, adjusted financial 
statement income of the taxpayer for such tax-
able year shall take into account items on the 
taxpayer’s applicable financial statement which 
are properly allocable to members of such group 
included on such return. 
‘‘(C) TREATMENT
OF
DIVIDENDS
AND 
OTHER AMOUNTS.—In the case of any corpora-
tion which is not included on a consolidated re-
turn with the taxpayer, adjusted financial state-
ment income of the taxpayer shall take into ac-
count the earnings of such other corporation 
only to the extent of the sum of the dividends 
received from such other corporation (reduced 
to the extent provided by the Secretary in regu-
lations or other guidance) and other amounts 
required to be included in gross income under
1745 
this chapter (other than amounts required to be 
included under sections 951 and 951A) in re-
spect of the earnings of such other corporation. 
‘‘(D) GROUP
INCLUDING
ONE
OR
MORE 
PARTNERSHIPS.—Under rules prescribed by the 
Secretary, if the financial results of a taxpayer 
are reported on the applicable financial state-
ment for a group of entities that includes one 
or more partnerships, adjusted financial state-
ment income shall take into account the earn-
ings of such partnerships in the same propor-
tion as the taxpayer’s distributive share of 
items from the partnerships required to be in-
cluded in gross income under this chapter. 
‘‘(3) ADJUSTMENTS TO TAKE INTO ACCOUNT 
CERTAIN ITEMS OF FOREIGN INCOME.— 
‘‘(A) IN
GENERAL.—If, for any taxable 
year, a taxpayer is a United States shareholder 
of one or more controlled foreign corporations, 
the adjusted financial statement income of such 
taxpayer shall be adjusted to take into account 
such taxpayer’s pro rata share (determined 
under rules similar to the rules under section 
951(a)(2)) of items taken into account in com-
puting the net income or loss set forth on the
1746 
applicable financial statement of each such con-
trolled foreign corporation with respect to which 
such taxpayer is a United States shareholder. 
‘‘(B) NEGATIVE
ADJUSTMENTS.—In any 
case in which the adjustment determined under 
subparagraph (A) would result in a negative ad-
justment for such taxable year— 
‘‘(i) no adjustment shall be made 
under this paragraph for such taxable 
year, and 
‘‘(ii) the amount of the adjustment 
determined under this paragraph for the 
succeeding taxable year (determined with-
out regard to this paragraph) shall be re-
duced by an amount equal to the negative 
adjustment for such taxable year. 
‘‘(4) EFFECTIVELY
CONNECTED
INCOME.—In 
the case of a foreign corporation, to determine ad-
justed financial statement income, the principles of 
section 882 shall apply. 
‘‘(5) ADJUSTMENTS FOR CERTAIN TAXES.—Ad-
justed financial statement income shall be appro-
priately adjusted to disregard any Federal income 
taxes, or income, war profits, or excess profits taxes 
(within the meaning of section 901) with respect to
1747 
a foreign country or possession of the United States, 
which are taken into account on the taxpayer’s ap-
plicable financial statement. To the extent provided 
by the Secretary, the preceding sentence shall not 
apply to income, war profits, or excess profits taxes 
(within the meaning of section 901) that are im-
posed by a foreign country or possession of the 
United States and taken into account on the tax-
payer’s applicable financial statement if the taxpayer 
does not choose to take the benefits of section 901. 
The Secretary shall prescribe such regulations or 
other guidance as may be necessary and appropriate 
to provide for the proper treatment of current and 
deferred taxes for purposes of this paragraph, in-
cluding the time at which such taxes are properly 
taken into account. 
‘‘(6) ADJUSTMENT
WITH
RESPECT
TO
DIS-
REGARDED ENTITIES.—Adjusted financial statement 
income shall be adjusted to take into account any 
adjusted financial statement income of a disregarded 
entity owned by the taxpayer. 
‘‘(7) SPECIAL
RULE
FOR
COOPERATIVES.—In 
the case of a cooperative to which section 1381 ap-
plies, the adjusted financial statement income (deter-
mined without regard to this paragraph) shall be re-
1748 
duced by the amounts referred to in section 1382(b) 
(relating to patronage dividends and per-unit retain 
allocations) to the extent such amounts were not 
otherwise taken into account in determining ad-
justed financial statement income. 
‘‘(8) RULES
FOR
ALASKA
NATIVE
CORPORA-
TIONS.—Adjusted financial statement income shall 
be appropriately adjusted to allow— 
‘‘(A) cost recovery and depletion attrib-
utable to property the basis of which is deter-
mined under section 21(c) of the Alaska Native 
Claims Settlement Act (43 U.S.C. 1620(c)), 
and 
‘‘(B) deductions for amounts payable made 
pursuant to section 7(i) or section 7(j) of such 
Act (43 U.S.C. 1606(i) and 1606(j)) only at 
such time as the deductions are allowed for tax 
purposes. 
‘‘(9) AMOUNTS ATTRIBUTABLE TO ELECTIONS 
FOR DIRECT PAYMENT OF CERTAIN CREDITS.—Ad-
justed financial statement income shall be appro-
priately adjusted to disregard any amount received 
as a refund of taxes which is attributable to an elec-
tion under section 6417.
1749 
‘‘(10) CONSISTENT TREATMENT OF MORTGAGE 
SERVICING INCOME OF TAXPAYER OTHER THAN A 
REGULATED INVESTMENT COMPANY.— 
‘‘(A) IN
GENERAL.—Adjusted financial 
statement income shall be adjusted so as not to 
include any item of income in connection with 
a mortgage servicing contract any earlier than 
when such income is included in gross income 
under any other provision of this chapter. 
‘‘(B) RULES
FOR
AMOUNTS
NOT
REP-
RESENTING
REASONABLE
COMPENSATION.— 
The Secretary shall provide regulations to pre-
vent the avoidance of taxes imposed by this 
chapter with respect to amounts not rep-
resenting reasonable compensation (as deter-
mined by the Secretary) with respect to a mort-
gage servicing contract. 
‘‘(11) SECRETARIAL
AUTHORITY
TO
ADJUST 
ITEMS.—The Secretary shall issue regulations or 
other guidance to provide for such adjustments to 
adjusted financial statement income as the Secretary 
determines necessary to carry out the purposes of 
this section, including adjustments— 
‘‘(A) to prevent the omission or duplication 
of any item,
1750 
‘‘(B) to take into account the ownership of 
a member of a group by a corporation or part-
nership which is not a member of such group, 
and 
‘‘(C) to carry out the principles of part II 
of subchapter C of this chapter (relating to cor-
porate liquidations), part III of subchapter C of 
this chapter (relating to corporate organizations 
and reorganizations), and part II of subchapter 
K of this chapter (relating to partnership con-
tributions and distributions). 
‘‘(d) DEDUCTION FOR FINANCIAL STATEMENT NET 
OPERATING LOSS.— 
‘‘(1) IN
GENERAL.—Adjusted financial state-
ment income (determined after application of sub-
section (c) and without regard to this subsection) 
shall be reduced by an amount equal to the lesser 
of— 
‘‘(A) the aggregate amount of financial 
statement net operating loss carryovers to the 
taxable year, or 
‘‘(B) 80 percent of adjusted financial 
statement income computed without regard to 
the deduction allowable under this subsection.
1751 
‘‘(2) FINANCIAL STATEMENT NET OPERATING 
LOSS CARRYOVER.—A financial statement net oper-
ating loss for any taxable year shall be a financial 
statement net operating loss carryover to each tax-
able year following the taxable year of the loss. The 
portion of such loss which shall be carried to subse-
quent taxable years shall be the amount of such loss 
remaining (if any) after the application of paragraph 
(1). 
‘‘(3) FINANCIAL STATEMENT NET OPERATING 
LOSS DEFINED.—For purposes of this subsection, 
the term ‘financial statement net operating loss’ 
means the amount of the net loss (if any) set forth 
on the corporation’s applicable financial statement 
(determined after application of subsection (c) and 
without regard to this subsection) for taxable years 
ending after December 31, 2019. 
‘‘(e) REGULATIONS
AND OTHER GUIDANCE.—The 
Secretary shall provide for such regulations and other 
guidance as necessary to carry out the purposes of this 
section, including regulations and other guidance relating 
to the effect of the rules of this section on partnerships 
with income taken into account by an applicable corpora-
tion.’’.
1752 
(2) CLERICAL AMENDMENT.—The table of sec-
tions for part VI of subchapter A of chapter 1 is 
amended by inserting after the item relating to sec-
tion 56 the following new item: 
‘‘Sec. 56A. Adjusted financial statement income.’’. 
(c) CORPORATE AMT FOREIGN TAX CREDIT.—Sec-
tion 59, as amended by this section, is amended by adding 
at the end the following new subsection: 
‘‘(l) CORPORATE AMT FOREIGN TAX CREDIT.— 
‘‘(1) IN GENERAL.—For purposes of this part, 
if an applicable corporation chooses to have the ben-
efits of subpart A of part III of subchapter N for 
any taxable year, the corporate AMT foreign tax 
credit for the taxable year of the applicable corpora-
tion is an amount equal to sum of— 
‘‘(A) the lesser of— 
‘‘(i) the aggregate of the applicable 
corporation’s pro rata share (as deter-
mined under section 56A(c)(3)) of the 
amount of income, war profits, and excess 
profits taxes (within the meaning of sec-
tion 901) imposed by any foreign country 
or possession of the United States which 
are— 
‘‘(I) taken into account on the 
applicable financial statement of each
1753 
controlled foreign corporation with re-
spect to which the applicable corpora-
tion is a United States shareholder, 
and 
‘‘(II) paid or accrued (for Fed-
eral income tax purposes) by each 
such controlled foreign corporation, or 
‘‘(ii) the product of the amount of the 
adjustment under section 56A(c)(3) and 
the 
percentage 
specified 
in 
section 
55(b)(2)(A)(i), and 
‘‘(B) the amount of income, war profits, 
and excess profits taxes (within the meaning of 
section 901) imposed by any foreign country or 
possession of the United States to the extent 
such taxes are— 
‘‘(i) taken into account on the applica-
ble corporation’s applicable financial state-
ment, and 
‘‘(ii) paid or accrued (for Federal in-
come tax purposes) by the applicable cor-
poration. 
‘‘(2) CARRYOVER OF EXCESS TAX PAID.—For 
any taxable year for which an applicable corporation 
chooses to have the benefits of subpart A of part III
1754 
of subchapter N, the excess of the amount described 
in paragraph (1)(A)(i) over the amount described in 
paragraph (1)(A)(ii) shall increase the amount de-
scribed in paragraph (1)(A)(i) in any of the first 5 
succeeding taxable years to the extent not taken into 
account in a prior taxable year. 
‘‘(3) REGULATIONS
OR
OTHER
GUIDANCE.— 
The Secretary shall provide for such regulations or 
other guidance as is necessary to carry out the pur-
poses of this subsection.’’. 
(d) TREATMENT OF GENERAL BUSINESS CREDIT.— 
Section 38(c)(6)(E) is amended to read as follows: 
‘‘(E) CORPORATIONS.—In the case of a 
corporation— 
‘‘(i) the first sentence of paragraph 
(1) shall be applied by substituting ‘25 
percent of the taxpayer’s net income tax as 
exceeds $25,000’ for ‘the greater of’ and 
all that follows, 
‘‘(ii) paragraph (2)(A) shall be applied 
without regard to clause (ii)(I) thereof, 
and 
‘‘(iii) paragraph (4)(A) shall be ap-
plied without regard to clause (ii)(I) there-
of.’’.
1755 
(e) CREDIT FOR PRIOR YEAR MINIMUM TAX LIABIL-
ITY.— 
(1) IN GENERAL.—Section 53(e) is amended to 
read as follows: 
‘‘(e) 
APPLICATION
TO
APPLICABLE
CORPORA-
TIONS.—In the case of a corporation— 
‘‘(1) subsection (b)(1) shall be applied by sub-
stituting ‘the net minimum tax for all prior taxable 
years beginning after 2022’ for ‘the adjusted net 
minimum tax imposed for all prior taxable years be-
ginning after 1986’, and 
‘‘(2) the amount determined under subsection 
(c)(1) shall be increased by the amount of tax im-
posed under section 59A for the taxable year.’’. 
(2) 
CONFORMING
AMENDMENTS.—Section 
53(d) is amended— 
(A) in paragraph (2), by striking ‘‘, except 
that in the case’’ and all that follows through 
‘‘treated as zero’’, and 
(B) by striking paragraph (3). 
(f) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2022.
1756 
SEC. 138102. EXCISE TAX ON REPURCHASE OF CORPORATE 
STOCK. 
(a) IN GENERAL.—Subtitle D is amended by insert-
ing after chapter 36 the following new chapter: 
‘‘CHAPTER 37—REPURCHASE OF 
CORPORATE STOCK 
‘‘Sec. 4501. Repurchase of corporate stock. 
‘‘SEC. 4501. REPURCHASE OF CORPORATE STOCK. 
‘‘(a) GENERAL RULE.—There is hereby imposed on 
each covered corporation a tax equal to 1 percent of the 
fair market value of any stock of the corporation which 
is repurchased by such corporation during the taxable 
year. 
‘‘(b) COVERED CORPORATION.—For purposes of this 
section, the term ‘covered corporation’ means any domes-
tic corporation the stock of which is traded on an estab-
lished securities market (within the meaning of section 
7704(b)(1)). 
‘‘(c) REPURCHASE.—For purposes of this section— 
‘‘(1) IN
GENERAL.—The term ‘repurchase’ 
means— 
‘‘(A) a redemption within the meaning of 
section 317(b) with regard to the stock of a 
covered corporation, and
1757 
‘‘(B) any transaction determined by the 
Secretary to be economically similar to a trans-
action described in subparagraph (A). 
‘‘(2) TREATMENT OF PURCHASES BY SPECIFIED 
AFFILIATES.— 
‘‘(A) IN
GENERAL.—The acquisition of 
stock of a covered corporation by a specified af-
filiate of such covered corporation, from a per-
son who is not the covered corporation or a 
specified affiliate of such covered corporation, 
shall be treated as a repurchase of the stock of 
the covered corporation by such covered cor-
poration. 
‘‘(B) SPECIFIED
AFFILIATE.—For pur-
poses of this section, the term ‘specified affil-
iate’ means, with respect to any corporation— 
‘‘(i) any corporation more than 50 
percent of the stock of which is owned (by 
vote or by value), directly or indirectly, by 
such corporation, and 
‘‘(ii) any partnership more than 50 
percent of the capital interests or profits 
interests of which is held, directly or indi-
rectly, by such corporation.
1758 
‘‘(3) ADJUSTMENT.—The amount taken into 
account under subsection (a) with respect to any 
stock repurchased by a covered corporation shall be 
reduced by the fair market value of any stock issued 
by the covered corporation during the taxable year, 
including the fair market value of any stock issued 
to employees of such covered corporation or a speci-
fied affiliate of such covered corporation during the 
taxable year, whether or not such stock is issued in 
response to the exercise of an option to purchase 
such stock. 
‘‘(d) SPECIAL RULES FOR ACQUISITION OF STOCK OF 
CERTAIN FOREIGN CORPORATIONS.— 
‘‘(1) IN GENERAL.—In the case of an acquisi-
tion of stock of an applicable foreign corporation by 
a specified affiliate of such corporation (other than 
a foreign corporation or a foreign partnership (un-
less such partnership has a domestic entity as a di-
rect or indirect partner)) from a person who is not 
the applicable foreign corporation or a specified affil-
iate of such applicable foreign corporation, for pur-
poses of this section— 
‘‘(A) such specified affiliate shall be treat-
ed as a covered corporation with respect to such 
acquisition,
1759 
‘‘(B) such acquisition shall be treated as a 
repurchase of stock of a covered corporation by 
such covered corporation, and 
‘‘(C) the adjustment under subsection 
(c)(3) shall be determined only with respect to 
stock issued by such specified affiliate to em-
ployees of the specified affiliate. 
‘‘(2) SURROGATE FOREIGN CORPORATIONS.—In 
the case of a repurchase of stock of a covered surro-
gate foreign corporation by such covered surrogate 
foreign corporation, or an acquisition of stock of a 
covered surrogate foreign corporation by a specified 
affiliate of such corporation, for purposes of this sec-
tion— 
‘‘(A) the expatriated entity with respect to 
such covered surrogate foreign corporation shall 
be treated as a covered corporation with respect 
to such repurchase or acquisition, 
‘‘(B) such repurchase or acquisition shall 
be treated as a repurchase of stock of a covered 
corporation by such covered corporation, and 
‘‘(C) the adjustment under subsection 
(c)(3) shall be determined only with respect to 
stock issued by such expatriated entity to em-
ployees of the expatriated entity.
1760 
‘‘(3) DEFINITIONS.—For purposes of this sub-
section— 
‘‘(A) APPLICABLE
FOREIGN
CORPORA-
TION.—The term ‘applicable foreign corpora-
tion’ means any foreign corporation the stock of 
which is traded on an established securities 
market 
(within 
the 
meaning 
of 
section 
7704(b)(1)). 
‘‘(B) COVERED SURROGATE FOREIGN COR-
PORATION.—The term ‘covered surrogate for-
eign corporation’ means any surrogate foreign 
corporation 
(as 
determined 
under 
section 
7874(a)(2)(B) by substituting ‘September 20, 
2021’ for ‘March 4, 2003’ each place it ap-
pears) the stock of which is traded on an estab-
lished securities market (within the meaning of 
section 7704(b)(1)), but only with respect to 
taxable years which include any portion of the 
applicable period with respect to such corpora-
tion under section 7874(d)(1). 
‘‘(C) EXPATRIATED
ENTITY.—The term 
‘expatriated entity’ has the meaning given such 
term by section 7874(a)(2)(A). 
‘‘(e) EXCEPTIONS.—Subsection (a) shall not apply—
1761 
‘‘(1) to the extent that the repurchase is part 
of a reorganization (within the meaning of section 
368(a)) and no gain or loss is recognized on such re-
purchase by the shareholder under chapter 1 by rea-
son of such reorganization, 
‘‘(2) in any case in which the stock repurchased 
is, or an amount of stock equal to the value of the 
stock repurchased is, contributed to an employer- 
sponsored retirement plan, employee stock ownership 
plan, or similar plan, 
‘‘(3) in any case in which the total value of the 
stock repurchased during the taxable year does not 
exceed $1,000,000, 
‘‘(4) under regulations prescribed by the Sec-
retary, in cases in which the repurchase is by a deal-
er in securities in the ordinary course of business, 
‘‘(5) to repurchases by a regulated investment 
company (as defined in section 851) or a real estate 
investment trust, or 
‘‘(6) to the extent that the repurchase is treated 
as a dividend for purposes of this title. 
‘‘(f) REGULATIONS AND GUIDANCE.—The Secretary 
shall prescribe such regulations and other guidance as are 
necessary or appropriate to administer and to prevent the
1762 
avoidance of the purposes of this section, including regula-
tions and other guidance— 
‘‘(1) to prevent the abuse of the exceptions pro-
vided by subsection (e), 
‘‘(2) to address special classes of stock and pre-
ferred stock, and 
‘‘(3) for the application of the rules under sub-
section (d).’’. 
(b) TAX NOT DEDUCTIBLE.—Paragraph (6) of sec-
tion 275(a) is amended by inserting ‘‘37,’’ before ‘‘41’’. 
(c) CLERICAL AMENDMENT.—The table of chapters 
for subtitle D is amended by inserting after the item relat-
ing to chapter 36 the following new item: 
‘‘CHAPTER 37—REPURCHASE OF CORPORATE STOCK’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to repurchases (within the meaning 
of section 4501(c) of the Internal Revenue Code of 1986, 
as added by this section) of stock after December 31, 
2021. 
Subpart B—Limitations on Deduction for Interest 
Expense 
SEC. 138111. LIMITATIONS ON DEDUCTION FOR INTEREST 
EXPENSE. 
(a) INTEREST EXPENSE OF CERTAIN MEMBERS OF 
INTERNATIONAL FINANCIAL REPORTING GROUPS.—Sec-
tion 163 is amended by redesignating subsection (n) as
1763 
subsection (p) and by inserting after subsection (m) the 
following new subsection: 
‘‘(n) LIMITATION ON DEDUCTION OF INTEREST BY 
CERTAIN MEMBERS OF INTERNATIONAL FINANCIAL RE-
PORTING GROUPS.— 
‘‘(1) IN GENERAL.—In the case of any specified 
domestic corporation which is a member of any 
international financial reporting group, the deduc-
tion under this chapter for interest paid or accrued 
during the taxable year in excess of the amount of 
interest includible in the gross income of such cor-
poration shall not exceed the allowable percentage of 
110 percent of such excess. 
‘‘(2) SPECIFIED DOMESTIC CORPORATION.—For 
purposes of this subsection— 
‘‘(A) IN
GENERAL.—The term ‘specified 
domestic corporation’ means any domestic cor-
poration other than— 
‘‘(i) any corporation if the excess of— 
‘‘(I) the average amount of inter-
est paid or accrued by such corpora-
tion during the 3-taxable-year period 
ending with the taxable year to which 
paragraph (1) applies, over
1764 
‘‘(II) the average amount of in-
terest includible in the gross income 
of such corporation for such 3-tax-
able-year period, 
does not exceed $12,000,000, 
‘‘(ii) any corporation to which para-
graph (1) of section 163(j) does not apply 
by reason of paragraph (3) of such section 
(determined without regard to paragraph 
(4)(B) of such section), and 
‘‘(iii) any S corporation, real estate 
investment trust, or regulated investment 
company. 
‘‘(B) AGGREGATION RULE.—For purposes 
of clauses (i) and (ii) of subparagraph (A), all 
domestic corporations which are members of the 
same international financial reporting group 
shall be treated as a single corporation. 
‘‘(C) FOREIGN
CORPORATIONS
ENGAGED 
IN TRADE OR BUSINESS WITHIN THE UNITED 
STATES.—If a foreign corporation is engaged in 
a trade or business within the United States, 
such foreign corporation shall be treated as a 
domestic corporation with respect to the items
1765 
that are effectively connected with such trade or 
business. 
‘‘(3) INTERNATIONAL
FINANCIAL
REPORTING 
GROUP.—For purposes of this subsection— 
‘‘(A) IN
GENERAL.—The term ‘inter-
national financial reporting group’ means, with 
respect to any reporting year, two or more enti-
ties if— 
‘‘(i) either— 
‘‘(I) at least one entity is a for-
eign corporation engaged in a trade or 
business within the United States, or 
‘‘(II) at least one entity is a do-
mestic corporation and another entity 
is a foreign corporation, and 
‘‘(ii) such entities are included in the 
same applicable financial statement with 
respect to such year. 
‘‘(B) ELECTION
TO
INCLUDE
ELIGIBLE 
CORPORATIONS IN GROUP.— 
‘‘(i) IN GENERAL.—To the extent pro-
vided by the Secretary in regulations or 
other guidance, an international financial 
reporting group may elect (at such time 
and in such manner as the Secretary may
1766 
provide) to treat all eligible corporations 
with respect to such group as members of 
such group for purposes of this subsection. 
As a condition of such election, all such eli-
gible corporations must maintain (and pro-
vide access to) such books and records as 
the Secretary determines are satisfactory 
to allow for the application of this sub-
section with respect to such eligible cor-
porations. Such election may be revoked 
only with the consent of the Secretary. 
‘‘(ii) ELIGIBLE
CORPORATION.—The 
term ‘eligible corporation’ means, with re-
spect to any international financial report-
ing group, any corporation if at least 20 
percent of the stock of such corporation 
(determined by vote and value) is held (di-
rectly or indirectly) by members of such 
international financial reporting group (de-
termined without regard to this subpara-
graph). 
‘‘(4) ALLOWABLE PERCENTAGE.—For purposes 
of this subsection— 
‘‘(A) IN
GENERAL.—The term ‘allowable 
percentage’ means, with respect to any specified
1767 
domestic corporation for any taxable year, the 
ratio (expressed as a percentage and not great-
er than 100 percent) of— 
‘‘(i) such corporation’s allocable share 
of the international financial reporting 
group’s reported net interest expense for 
the reporting year of such group which 
ends in or with such taxable year of such 
corporation, over 
‘‘(ii) such corporation’s reported net 
interest expense for such reporting year of 
such group. 
‘‘(B) 
REPORTED
NET
INTEREST
EX-
PENSE.—The term ‘reported net interest ex-
pense’ means— 
‘‘(i) with respect to any international 
financial reporting group for any reporting 
year, the excess of— 
‘‘(I) the aggregate amount of in-
terest 
expense 
reported 
in 
such 
group’s applicable financial state-
ments for such taxable year, over 
‘‘(II) the aggregate amount of in-
terest income reported in such group’s
1768 
applicable financial statements for 
such taxable year, and 
‘‘(ii) with respect to any specified do-
mestic corporation for any reporting year, 
the excess of— 
‘‘(I) the amount of interest ex-
pense of such corporation reported in 
the books and records of the inter-
national financial reporting group 
which are used in preparing such 
group’s applicable financial state-
ments for such taxable year, over 
‘‘(II) the amount of interest in-
come of such corporation reported in 
such books and records. 
‘‘(C) ALLOCABLE
SHARE
OF
REPORTED 
NET INTEREST EXPENSE.—With respect to any 
specified domestic corporation which is a mem-
ber of any international financial reporting 
group, such corporation’s allocable share of 
such group’s reported net interest expense for 
any reporting year is the portion of such ex-
pense which bears the same ratio to such ex-
pense as—
1769 
‘‘(i) the EBITDA of such corporation 
for such reporting year, bears to 
‘‘(ii) the EBITDA of such group for 
such reporting year. 
‘‘(D) EBITDA.— 
‘‘(i) 
IN
GENERAL.—The 
term 
‘EBITDA’ means, with respect to any re-
porting year, earnings before interest in-
come and interest expense, taxes, deprecia-
tion, depletion, and amortization— 
‘‘(I) as determined in the inter-
national financial reporting group’s 
applicable financial statements for 
such year, or 
‘‘(II) as determined in the books 
and records of the international finan-
cial reporting group which are used in 
preparing such statements if not de-
termined in such statements. 
‘‘(ii) DETERMINATION OF EBITDA OF 
A
SPECIFIED
DOMESTIC
CORPORATION.— 
The EBITDA of any specified domestic 
corporation shall be determined on a 
stand-alone basis and without regard to 
any distribution received by such corpora-
1770 
tion from any other member of the inter-
national financial reporting group. 
‘‘(E) SPECIAL RULES FOR NON-POSITIVE 
EBITDA.— 
‘‘(i) NON-POSITIVE GROUP EBITDA.— 
In the case of any international financial 
reporting group the EBITDA of which is 
zero or less, paragraph (1) shall not apply 
to any specified domestic corporation 
which is a member of such group. 
‘‘(ii) 
NON-POSITIVE
ENTITY 
EBITDA.—In the case of any specified do-
mestic corporation the EBITDA of which 
is zero or less, the allowable percentage 
shall be 0 percent. 
‘‘(5) APPLICABLE
FINANCIAL
STATEMENT.— 
For purposes of this subsection, the term ‘applicable 
financial statement’ has the meaning given such 
term in section 451(b)(3). 
‘‘(6) REPORTING YEAR.—For purposes of this 
subsection, the term ‘reporting year’ means any year 
for which an applicable financial statement is pre-
pared or required to be prepared. 
‘‘(7) REGULATIONS.—The Secretary may issue 
such regulations or other guidance as are necessary
1771 
or appropriate to carry out the purposes of this sub-
section, including regulations or other guidance 
which— 
‘‘(A) allows or requires the adjustment of 
amounts reported on applicable financial state-
ments, 
‘‘(B) allows or requires any corporation to 
be included or excluded as a member of any 
international financial reporting group for pur-
poses of any determination or calculation under 
this subsection, 
‘‘(C) treats interest income of a controlled 
foreign corporation which is subpart F income, 
and any interest expense of such corporation 
which is related to subpart F income, as income 
and interest expense, respectively, of a specified 
domestic corporation for purposes of this sub-
section, 
‘‘(D) prevents the omission, inclusion, or 
duplication of any item or amount of interest 
income or interest expense, and 
‘‘(E) provides rules for the application of 
this subsection with respect to—
1772 
‘‘(i) a domestic corporation that is a 
partner (directly or indirectly) in a part-
nership, 
‘‘(ii) a domestic corporation that owns 
(directly or indirectly) an interest in an en-
tity that is fiscally transparent in one or 
more jurisdictions, and 
‘‘(iii) a foreign corporation to which 
this subsection applies by reason of para-
graph (2)(C).’’. 
(b) MODIFICATION OF APPLICATION OF LIMITATION 
ON BUSINESS INTEREST TO PARTNERSHIPS AND S COR-
PORATIONS.— 
(1) IN GENERAL.—Section 163(j)(4) is amend-
ed to read as follows: 
‘‘(4) APPLICATION
TO
PARTNERSHIPS
AND
S 
CORPORATIONS.— 
‘‘(A) IN
GENERAL.—In the case of any 
partnership or S corporation, this subsection 
shall be applied at the partner or shareholder 
level, respectively. 
‘‘(B) APPLICATION
OF
EXEMPTION
FOR 
CERTAIN SMALL BUSINESSES.—In the case of 
any partnership or S corporation which does 
not meet the gross receipts test of section
1773 
448(c) for any taxable year, paragraph (3) shall 
not apply with respect to any distributive, or 
pro rata, share of business interest and other 
items under this subsection of such partnership 
or S corporation. 
‘‘(C) REGULATIONS.— The Secretary shall 
prescribe such regulations or other guidance as 
may be necessary or appropriate to carry out 
the purposes of this section, including regula-
tions or other guidance— 
‘‘(i) for requiring or restricting the al-
location of business interest and other 
items under this subsection, 
‘‘(ii) to provide for such reporting re-
quirements as the Secretary determines 
appropriate, and 
‘‘(iii) for the application of this sub-
section in the case of tiered structures or 
trades or businesses described in para-
graph (7).’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
163(j)(3) is amended by inserting ‘‘except to the ex-
tent provided in paragraph (4)(B)’’ after ‘‘to such 
taxpayer for such taxable year’’. 
(c) CARRYFORWARD OF DISALLOWED INTEREST.—
1774 
(1) IN GENERAL.—Section 163 is amended by 
inserting after subsection (n), as added by sub-
section (a), the following new subsection: 
‘‘(o) CARRYFORWARD OF CERTAIN DISALLOWED IN-
TEREST.—The amount of any interest not allowed as a 
deduction for any taxable year by reason of subsection (j) 
or (n)(1) (whichever imposes the lower limitation with re-
spect to such taxable year) shall be treated as interest 
(and as business interest for purposes of subsection (j) 
to the extent such amount is properly attributable to a 
trade or business as defined in subsection (j)(7)) paid or 
accrued in the succeeding taxable year.’’. 
(2) CONFORMING AMENDMENTS.— 
(A) Section 163(j)(2) is amended to read 
as follows: 
‘‘(2) CARRYFORWARD CROSS-REFERENCE.—For 
carryforward treatment, see subsection (o).’’. 
(B) Section 381(c)(20) is amended to read 
as follows: 
‘‘(20) CARRYFORWARD OF DISALLOWED INTER-
EST.—The carryover of disallowed interest described 
in section 163(o) to taxable years ending after the 
date of distribution or transfer.’’. 
(C) Section 382(d)(3) is amended to read 
as follows:
1775 
‘‘(3) APPLICATION TO CARRYFORWARD OF DIS-
ALLOWED
INTEREST.—The term ‘pre-change loss’ 
shall include any carryover of disallowed interest de-
scribed in section 163(o) under rules similar to the 
rules of paragraph (1).’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2022. 
(e) TRANSITION RULE.—In the case of a partner’s 
first succeeding taxable year described in subclause (II) 
of section 163(j)(4)(B)(ii) of the Internal Revenue Code 
of 1986 (as in effect before the amendment made by sub-
section (b)) which begins after December 31, 2022, the 
amount of excess business interest which would (but for 
such amendment) be carried to such taxable year under 
such subclause shall be treated as interest (and as busi-
ness interest for purposes of section 163(j) of such Code, 
as amended by this section) paid or accrued in such tax-
able year. A rule similar to the rule in the preceding sen-
tence shall apply in the case of an S corporation and its 
shareholders. For carryover of any such interest dis-
allowed for such taxable year, see section 163(o) of such 
Code, as amended by this section.
1776 
Subpart C—Outbound International Provisions 
SEC. 138121. MODIFICATIONS TO DEDUCTION FOR FOR-
EIGN-DERIVED 
INTANGIBLE 
INCOME 
AND 
GLOBAL INTANGIBLE LOW-TAXED INCOME. 
(a) IN GENERAL.—Section 250(a) is amended to 
read as follows: 
‘‘(a) IN GENERAL.—In the case of a domestic cor-
poration for any taxable year, there shall be allowed as 
a deduction an amount equal to the sum of— 
‘‘(1) 24.8 percent of the foreign-derived intan-
gible income of such domestic corporation for such 
taxable year, plus 
‘‘(2) 28.5 percent of— 
‘‘(A) the global intangible low-taxed income 
(if any) which is included in the gross income 
of such domestic corporation under section 
951A for such taxable year, and 
‘‘(B) the amount treated as a dividend re-
ceived by such corporation under section 78 
which is attributable to the amount described in 
subparagraph (A).’’. 
(b) DEDUCTION TAKEN INTO ACCOUNT IN DETER-
MINING NET OPERATING LOSS DEDUCTION.—Section 
172(d) is amended by striking paragraph (9). 
(c) CERTAIN OTHER MODIFICATIONS.— 
(1) Section 250(b)(3) is amended—
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(A) in subparagraph (A)(i)— 
(i) by striking ‘‘and’’ at the end of 
subclause (V), 
(ii) by striking ‘‘over’’ at the end of 
subclause (VI), and 
(iii) by adding at the end the fol-
lowing new subclauses: 
‘‘(VII) any income described in 
clause 
(i) 
or 
(ii) 
of 
section 
904(d)(2)(B), determined without re-
gard to clause (iii)(II) thereof, 
‘‘(VIII) except as otherwise pro-
vided by the Secretary, any income 
and gain from the sale or other dis-
position (including the deemed sale or 
other deemed disposition) of property 
giving rise to rents or royalties de-
rived in the active conduct of a trade 
or business, and 
‘‘(IX) 
any 
disqualified 
extraterritorial income, over’’, and 
(B) by adding at the end the following new 
subparagraph: 
‘‘(C) DISQUALIFIED
EXTRATERRITORIAL 
INCOME.—
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‘‘(i) IN
GENERAL.—For purposes of 
subparagraph (A)(i)(IX), the term ‘dis-
qualified extraterritorial income’ means 
any amount included in the gross income 
of the corporation with respect to any 
transaction for any taxable year if any 
amount could (determined after application 
of clause (ii) but without regard to any 
election under section 942(a)(3) as in ef-
fect before its repeal) be excluded from the 
gross income of the corporation with re-
spect to such transaction for such taxable 
year by reason of section 114 pursuant to 
the application of subsection (d) or (f) of 
section 101 of the American Jobs Creation 
Act of 2004. 
‘‘(ii) 
ELECTION
OUT
OF 
EXTRATERRITORIAL INCOME BENEFITS.— 
‘‘(I) IN
GENERAL.—Except as 
provided in subclause (II), the cor-
poration referred to in clause (i) may 
make an irrevocable election (at such 
time and in such form and manner as 
the Secretary may provide) to have 
subsections (d) and (f) of section 101
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of the American Jobs Creation Act of 
2004 not apply with respect to such 
corporation for the taxable year for 
which such election is made and all 
succeeding taxable years (applicable 
with respect to all transactions, in-
cluding transactions occurring before 
such taxable year). 
‘‘(II) 
EXPANDED
AFFILIATED 
GROUPS.—In the case of any corpora-
tion which is a member of an ex-
panded affiliated group, the election 
described in subclause (I) may be 
made only by the common parent of 
such group (or, in the case of a com-
mon parent which is not required to 
file a return of tax under this chapter, 
the delegate of such common parent) 
and shall apply with respect to all 
members of such group. For purposes 
of the preceding sentence, the term 
‘expanded affiliated group’ means an 
affiliated group as defined in section 
1504(a), determined without regard to 
section 
1504(b)(3) 
and 
by 
sub-
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stituting ‘more than 50 percent’ for 
‘at least 80 percent’ each place it ap-
pears.’’. 
(C) Section 250(b)(5)(E) is amended by 
inserting 
‘‘(other 
than 
paragraph 
(3)(A)(i)(VIII))’’ after ‘‘For purposes of this 
subsection’’. 
(2) Section 613A(d)(1) is amended by striking 
‘‘and’’ at the end of subparagraph (D), by striking 
the period at the end of subparagraph (E) and in-
serting ‘‘, and’’, and by inserting after subparagraph 
(E) the following new subparagraph: 
‘‘(F) any deduction allowable under section 
250.’’. 
(d) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section 
shall apply to taxable years beginning after Decem-
ber 31, 2022. 
(2) CERTAIN
MODIFICATIONS.—The amend-
ments made by subsection (c) shall apply to taxable 
years beginning after the date of the enactment of 
this Act. 
(e) NO INFERENCE REGARDING CERTAIN MODIFICA-
TIONS.—The amendments made by subsection (c) shall
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not be construed to create any inference with respect to 
the proper application of any provision of the Internal 
Revenue Code of 1986 with respect to any taxable year 
beginning before the taxable years to which such amend-
ments apply. 
(f) TRANSITION RULE FOR ACCELERATED PERCENT-
AGE REDUCTION.— 
(1) IN GENERAL.—In the case of any taxable 
year which includes December 31, 2022 (other than 
a taxable year with respect to which such date is the 
last day of such taxable year)— 
(A) the percentage in effect under section 
250(a)(1)(A) of the Internal Revenue Code of 
1986 shall be treated as being equal to the sum 
of— 
(i) the pre-effective date percentage of 
37.5 percent, plus 
(ii) the post-effective date percentage 
of 24.8 percent, and 
(B) the percentage in effect under section 
250(a)(1)(B) of such Code shall be treated as 
being equal to the sum of— 
(i) the pre-effective date percentage of 
50 percent, plus
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(ii) the post-effective date percentage 
of 28.5 percent. 
(2) PRE- AND
POST-EFFECTIVE
DATE
PER-
CENTAGES.—For purposes of this subsection, with 
respect to any taxable year— 
(A) the term ‘‘pre-effective date percent-
age’’ means the ratio that the number of days 
in such taxable year which are before January 
1, 2023, bears to the number of days in such 
taxable year, and 
(B) the term ‘‘post-effective date percent-
age’’ means the ratio that the number of days 
in such taxable year which are after December 
31, 2022, bears to the number of days in such 
taxable year. 
SEC. 138122. REPEAL OF ELECTION FOR 1-MONTH DEFER-
RAL IN DETERMINATION OF TAXABLE YEAR 
OF SPECIFIED FOREIGN CORPORATIONS. 
(a) IN GENERAL.—Section 898(c) is amended by 
striking paragraph (2) and redesignating paragraph (3) 
as paragraph (2). 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years of specified foreign 
corporations beginning after November 30, 2022.
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(c) TRANSITION RULE.—In the case of a corporation 
that is a specified foreign corporation as of November 30, 
2022, such corporation’s first taxable year beginning after 
such date shall end at the same time as the first required 
year (within the meaning of section 898(c)(1) of the Inter-
nal Revenue Code of 1986) ending after such date. If any 
specified foreign corporation is required by this section (or 
the amendments made by this section) to change its tax-
able year for its first taxable year beginning after Novem-
ber 30, 2022— 
(1) such change shall be treated as initiated by 
such corporation, 
(2) such change shall be treated as having been 
made with the consent of the Secretary, and 
(3) the Secretary (including the Secretary’s del-
egate in the case of any reference to the Secretary 
in this paragraph) shall issue regulations or other 
guidance for allocating foreign taxes that accrue in 
such first taxable year between such taxable year 
and the prior taxable year, including such adjust-
ments as the Secretary determines are necessary or 
appropriate to carry out the purposes of this section.
1784 
SEC. 138123. MODIFICATIONS OF FOREIGN TAX CREDIT 
RULES APPLICABLE TO CERTAIN TAXPAYERS 
RECEIVING SPECIFIC ECONOMIC BENEFITS. 
(a) IN GENERAL.—Section 901 is amended by redes-
ignating subsection (n) as subsection (o) and by inserting 
after subsection (m) the following new subsection: 
‘‘(n) SPECIAL RULES RELATING TO DUAL CAPACITY 
TAXPAYERS.— 
‘‘(1) GENERAL
RULE.—Notwithstanding any 
other provision of this chapter, any amount paid or 
accrued by a dual capacity taxpayer to a foreign 
country or possession of the United States for any 
period shall not be considered a tax— 
‘‘(A) if, for such period, the foreign coun-
try or possession does not impose a generally 
applicable income tax, or 
‘‘(B) to the extent such amount exceeds 
the amount which would be paid or accrued by 
such dual capacity taxpayer under the generally 
applicable income tax imposed by such country 
or possession if such taxpayer were not a dual 
capacity taxpayer. 
Nothing in this paragraph shall be construed to 
imply the proper treatment of any such amount 
not in excess of the amount determined under 
subparagraph (B).
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‘‘(2) DUAL
CAPACITY
TAXPAYER.—For pur-
poses of this subsection, the term ‘dual capacity tax-
payer’ means, with respect to any foreign country or 
possession of the United States, a person who— 
‘‘(A) is subject to a levy of such country or 
possession, and 
‘‘(B) receives (or will receive) directly or 
indirectly a specific economic benefit from such 
country or possession (or any political subdivi-
sion, agency, or instrumentality thereof). 
‘‘(3) GENERALLY APPLICABLE INCOME TAX.— 
For purposes of this subsection, the term ‘generally 
applicable income tax’ means an income tax (or a se-
ries of income taxes) which is generally imposed 
under the laws of a foreign country or possession of 
the United States on residents of such foreign coun-
try or possession that are not dual capacity tax-
payers.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to amounts paid or accrued after 
December 31, 2021.
1786 
SEC. 138124. MODIFICATIONS TO FOREIGN TAX CREDIT 
LIMITATIONS. 
(a) COUNTRY-BY-COUNTRY APPLICATION OF LIMITA-
TION ON FOREIGN TAX CREDIT BASED ON TAXABLE 
UNITS.— 
(1) IN GENERAL.—Section 904 is amended by 
inserting after subsection (d) the following new sub-
section: 
‘‘(e) COUNTRY-BY-COUNTRY APPLICATION BASED ON 
TAXABLE UNITS.— 
‘‘(1) IN
GENERAL.—Subsection (d) (and the 
provisions of this title referred to in paragraph (1) 
of such subsection) shall be applied separately with 
respect to each country by taking into account the 
aggregate income properly attributable or otherwise 
allocable to a taxable unit of the taxpayer which is 
a tax resident of (or, in the case of a branch, is lo-
cated in) such country. 
‘‘(2) TAXABLE UNITS.— 
‘‘(A) IN GENERAL.—Except as otherwise 
provided by the Secretary, each item shall be 
attributable or otherwise allocable to exactly 
one taxable unit of the taxpayer. 
‘‘(B) 
DETERMINATION
OF
TAXABLE 
UNITS.—Except as otherwise provided by the
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Secretary, the taxable units of a taxpayer are 
as follows: 
‘‘(i) GENERAL TAXABLE UNIT.—The 
person that is the taxpayer and that is not 
otherwise described in a separate clause of 
this subparagraph. 
‘‘(ii) CERTAIN
FOREIGN
CORPORA-
TIONS.—Each foreign corporation with re-
spect to which the taxpayer is a United 
States shareholder. 
‘‘(iii) INTERESTS
IN
PASS-THROUGH 
ENTITIES.—Each interest held (directly or 
indirectly) by the taxpayer or any con-
trolled foreign corporation referred to in 
clause (ii) in a pass-through entity if such 
pass-through entity is a tax resident of a 
country other than the country with re-
spect to which such taxpayer or controlled 
foreign corporation (as the case may be) is 
a tax resident. 
‘‘(iv) BRANCHES.—Each branch (or 
portion thereof) the activities of which are 
directly or indirectly carried on by the tax-
payer or any controlled foreign corporation 
referred to in clause (ii) and which give
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rise to a taxable presence in a country 
other than the country with respect to 
which such taxpayer or controlled foreign 
corporation (as the case may be) is a tax 
resident. 
‘‘(3) DEFINITIONS AND SPECIAL RULES.—For 
purposes of this subsection— 
‘‘(A) TAX RESIDENT.—Except as otherwise 
provided by the Secretary, the term ‘tax resi-
dent’ means a person or entity subject to tax 
under the tax law of a country as a resident. If 
an entity is organized under the law of a coun-
try, or resident in a country, that does not im-
pose an income tax with respect to such enti-
ties, such entity shall, except as provided by the 
Secretary, be treated as subject to tax under 
the tax law of such country for the purposes of 
the preceding sentence. 
‘‘(B) PASS-THROUGH ENTITY.—Except as 
otherwise provided by the Secretary, the term 
‘pass-through entity’ includes any partnership 
or other entity to the extent that income, gain, 
deduction, or loss of the entity is taken into ac-
count in determining the income or loss of a