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‘‘(E) TREATMENT
OF
DIRECT
PRIMARY 
CARE SERVICE ARRANGEMENTS.—
‘‘(i) IN GENERAL.—A direct primary 
care service arrangement shall not be 
treated as a health plan for purposes of 
subparagraph (A)(ii). 
‘‘(ii) DIRECT PRIMARY CARE SERVICE 
ARRANGEMENT.—For purposes of this sub-
paragraph—
‘‘(I) IN GENERAL.—The term ‘di-
rect primary care service arrange-
ment’ means, with respect to any indi-
vidual, an arrangement under which 
such individual is provided medical 
care (as defined in section 213(d)) 
consisting solely of primary care serv-
ices provided by primary care practi-
tioners 
(as 
defined 
in 
section 
1833(x)(2)(A) of the Social Security 
Act, determined without regard to 
clause (ii) thereof), if the sole com-
pensation for such care is a fixed peri-
odic fee. 
‘‘(II) LIMITATION.—With respect 
to any individual for any month, such
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term shall not include any arrange-
ment if the aggregate fees for all di-
rect primary care service arrange-
ments (determined without regard to 
this subclause) with respect to such 
individual for such month exceed 
$150 (twice such dollar amount in the 
case of an individual with any direct 
primary care service arrangement (as 
so determined) that covers more than 
one individual). 
‘‘(iii) CERTAIN
SERVICES
SPECIFI-
CALLY
EXCLUDED
FROM
TREATMENT
AS 
PRIMARY
CARE
SERVICES.—For purposes 
of this subparagraph, the term ‘primary 
care services’ shall not include—
‘‘(I) procedures that require the 
use of general anesthesia, 
‘‘(II) prescription drugs (other 
than vaccines), and 
‘‘(III) laboratory services not 
typically administered in an ambula-
tory primary care setting. 
The Secretary, after consultation with the 
Secretary of Health and Human Services,
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•HR 1 EH1S 
shall issue regulations or other guidance 
regarding the application of this clause.’’. 
(b) DIRECT PRIMARY CARE SERVICE ARRANGEMENT 
FEES
TREATED
AS
MEDICAL
EXPENSES.—Section 
223(d)(2)(C) is amended by striking ‘‘or’’ at the end of 
clause (iii), by striking the period at the end of clause (iv) 
and inserting ‘‘, or’’, and by adding at the end the fol-
lowing new clause: 
‘‘(v) any direct primary care service 
arrangement.’’. 
(c) INFLATION ADJUSTMENT.—Section 223(g)(1) is 
amended—
(1) by inserting ‘‘, (c)(1)(E)(ii)(II),’’ after 
‘‘(b)(2)’’ each place it appears, and 
(2) in subparagraph (B), by striking ‘‘clause 
(ii)’’ in clause (i) and inserting ‘‘clauses (ii) and 
(iii)’’, by striking ‘‘and’’ at the end of clause (i), by 
striking the period at the end of clause (ii) and in-
serting ‘‘, and’’, and by inserting after clause (ii) the 
following new clause: 
‘‘(iii) in the case of the dollar amount 
in subsection (c)(1)(E)(ii)(II) for taxable 
years beginning in calendar years after 
2026, ‘calendar year 2025’.’’.’’.
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(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to months beginning after Decem-
ber 31, 2025. 
SEC. 110206. ALLOWANCE OF BRONZE AND CATASTROPHIC 
PLANS IN CONNECTION WITH HEALTH SAV-
INGS ACCOUNTS. 
(a) IN GENERAL.—Section 223(c)(2) is amended by 
adding at the end the following new subparagraph: 
‘‘(H) BRONZE AND CATASTROPHIC PLANS 
TREATED
AS
HIGH
DEDUCTIBLE
HEALTH 
PLANS.—The term ‘high deductible health plan’ 
shall include any plan—
‘‘(i) available as individual coverage 
through an Exchange established under 
section 1311 or 1321 of the Patient Pro-
tection and Affordable Care Act, and 
‘‘(ii) described in subsection (d)(1)(A) 
or (e) of section 1302 of such Act.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to months beginning after Decem-
ber 31, 2025. 
SEC. 110207. ON-SITE EMPLOYEE CLINICS. 
(a) IN GENERAL.—Section 223(c)(1), as amended by 
the preceding provisions of this Act, is amended by adding 
at the end the following new subparagraph:
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‘‘(F) SPECIAL RULE FOR QUALIFIED ITEMS 
AND SERVICES.—
‘‘(i) IN
GENERAL.—For purposes of 
subparagraph (A)(ii), an individual shall 
not be treated as covered under a health 
plan described in subclauses (I) and (II) of 
such subparagraph merely because the in-
dividual is eligible to receive, or receives, 
qualified items and services—
‘‘(I) at a healthcare facility lo-
cated at a facility owned or leased by 
the employer of the individual (or of 
the individual’s spouse), or 
‘‘(II) at a healthcare facility op-
erated primarily for the benefit of em-
ployees of the employer of the indi-
vidual (or of the individual’s spouse). 
‘‘(ii) QUALIFIED ITEMS AND SERVICES 
DEFINED.—For purposes of this subpara-
graph, the term ‘qualified items and serv-
ices’ means the following: 
‘‘(I) Physical examination. 
‘‘(II) Immunizations, including 
injections of antigens provided by em-
ployees.
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‘‘(III) Drugs or biologicals other 
than a prescribed drug (as such term 
is defined in section 213(d)(3)). 
‘‘(IV) Treatment for injuries oc-
curring in the course of employment. 
‘‘(V) Preventive care for chronic 
conditions (as defined in clause (iv)). 
‘‘(VI) Drug testing. 
‘‘(VII) 
Hearing 
or 
vision 
screenings and related services. 
‘‘(iii) AGGREGATION.—For purposes 
of clause (i), all persons treated as a single 
employer under subsection (b), (c), (m), or 
(o) of section 414 shall be treated as a sin-
gle employer. 
‘‘(iv) PREVENTIVE CARE FOR CHRON-
IC CONDITIONS.—For purposes of this sub-
paragraph, the term ‘preventive care for 
chronic conditions’ means any item or 
service specified in the Appendix of Inter-
nal Revenue Service Notice 2019–45 which 
is prescribed to treat an individual diag-
nosed with the associated chronic condition 
specified in such Appendix for the purpose 
of preventing the exacerbation of such
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•HR 1 EH1S 
chronic condition or the development of a 
secondary condition, including any amend-
ment, addition, removal, or other modifica-
tion made by the Secretary (pursuant to 
the authority granted to the Secretary 
under paragraph (2)(C)) to the items or 
services specified in such Appendix subse-
quent to the date of publication of such 
Notice.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to months in taxable years begin-
ning after December 31, 2025. 
SEC. 110208. CERTAIN AMOUNTS PAID FOR PHYSICAL AC-
TIVITY, FITNESS, AND EXERCISE TREATED AS 
AMOUNTS PAID FOR MEDICAL CARE. 
(a) IN GENERAL.—Section 223(d)(2)(A) is amended 
by adding at the end the following: ‘‘For purposes of this 
subparagraph, amounts paid for qualified sports and fit-
ness expenses shall be treated as paid for medical care.’’. 
(b) QUALIFIED SPORTS AND FITNESS EXPENSES.—
Section 223(d)(2) is amended by adding at the end the 
following new subparagraph: 
‘‘(E) QUALIFIED SPORTS AND FITNESS EX-
PENSES.—For purposes of this paragraph—
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‘‘(i) IN GENERAL.—The term ‘quali-
fied sports and fitness expenses’ means 
amounts paid exclusively for the sole pur-
pose of participating in a physical activity 
including—
‘‘(I) for membership at a fitness 
facility, or 
‘‘(II) for participation or instruc-
tion in physical exercise or physical 
activity. 
‘‘(ii) 
OVERALL
DOLLAR
LIMITA-
TION.—
‘‘(I) IN
GENERAL.—The aggre-
gate amount treated as qualified 
sports and fitness expenses with re-
spect to any taxpayer for any taxable 
year shall not exceed $500 ($1,000 in 
the case of a joint return or a head of 
household (as defined in section 
2(b))). 
‘‘(II) 
MONTHLY
LIMIT.—The 
amount taken into account under sub-
paragraph (A) as paid for partici-
pating in a physical activity during a 
month beginning during the taxable
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•HR 1 EH1S 
year shall not exceed an amount equal 
to 1/12 of the amount in effect with 
respect to the taxpayer for the taxable 
year under subclause (I). 
‘‘(iii) FITNESS
FACILITY.—For pur-
poses of clause (i)(I), the term ‘fitness fa-
cility’ means a facility—
‘‘(I) which provides instruction in 
a program of physical exercise, offers 
facilities for the preservation, mainte-
nance, encouragement, or development 
of physical fitness, or serves as the 
site of such a program of a State or 
local government, 
‘‘(II) which is not a private club 
owned and operated by its members, 
‘‘(III) which does not offer golf, 
hunting, sailing, or riding facilities, 
‘‘(IV) the health or fitness com-
ponent of which is not incidental to its 
overall function and purpose, and 
‘‘(V) which is fully compliant 
with the State of jurisdiction and 
Federal anti-discrimination laws.
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•HR 1 EH1S 
‘‘(iv) 
TREATMENT
OF
PERSONAL 
TRAINERS, EXERCISE
VIDEOS, ETC.—The 
term ‘qualified sports and fitness expenses’ 
shall not include any amount paid for—
‘‘(I) videos, books, or similar ma-
terials, 
‘‘(II) remote or virtual instruc-
tion in a physical exercise or physical 
activity, unless such instruction is live, 
or 
‘‘(III) one-on-one personal train-
ing. 
‘‘(v) 
PROGRAMS
WHICH
INCLUDE 
COMPONENTS OTHER THAN PHYSICAL EX-
ERCISE
AND
PHYSICAL
ACTIVITY.—Rules 
similar to the rules of section 213(d)(6) 
shall apply in the case of any program that 
includes physical exercise or physical activ-
ity and also other components. For pur-
poses of the preceding sentence, travel and 
accommodations shall be treated as a sepa-
rate component. 
‘‘(vi) MEMBERSHIP, PARTICIPATION, 
AND
INSTRUCTION
MUST
BE
CON-
TINUING.—An amount shall not be treated
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as paid for the purpose of participating in 
a physical activity unless—
‘‘(I) in the case of a membership 
at a fitness facility, such membership 
is for more than 1 day, and 
‘‘(II) in the case of participation 
or instruction in physical exercise or 
physical activity, the amount paid 
constitutes payment for more than 1 
occasion of such participation or in-
struction. 
‘‘(vii) 
COST-OF-LIVING
ADJUST-
MENT.—In the case of any taxable year be-
ginning in a calendar year after 2026, each 
dollar amount in clause (ii)(I) shall be in-
creased by an amount equal to—
‘‘(I) such dollar amount, multi-
plied by 
‘‘(II) the cost-of-living adjust-
ment determined under section 1(f)(3) 
for the calendar year in which such 
taxable year begins by substituting 
‘calendar year 2025’ for ‘calendar 
year 2016’ in subparagraph (A)(ii) 
thereof.
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If any increase under the preceding sen-
tence is not a multiple of $50, such in-
crease shall be rounded to the nearest mul-
tiple of $50.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2025. 
SEC. 110209. ALLOW BOTH SPOUSES TO MAKE CATCH-UP 
CONTRIBUTIONS TO THE SAME HEALTH SAV-
INGS ACCOUNT. 
(a) IN GENERAL.—Section 223(b)(5) is amended to 
read as follows: 
‘‘(5) SPECIAL RULE FOR MARRIED INDIVIDUALS 
WITH FAMILY COVERAGE.—
‘‘(A) IN GENERAL.—In the case of individ-
uals who are married to each other, if both 
spouses are eligible individuals and either 
spouse has family coverage under a high de-
ductible health plan as of the first day of any 
month—
‘‘(i) the limitation under paragraph 
(1) shall be applied by not taking into ac-
count any other high deductible health 
plan coverage of either spouse (and if such 
spouses both have family coverage under
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•HR 1 EH1S 
separate high deductible health plans, only 
one such coverage shall be taken into ac-
count), 
‘‘(ii) such limitation (after application 
of clause (i)) shall be reduced by the ag-
gregate amount paid to Archer MSAs of 
such spouses for the taxable year, and 
‘‘(iii) such limitation (after application 
of clauses (i) and (ii)) shall be divided 
equally between such spouses unless they 
agree on a different division. 
‘‘(B) TREATMENT
OF
ADDITIONAL
CON-
TRIBUTION AMOUNTS.—If both spouses referred 
to in subparagraph (A) have attained age 55 
before the close of the taxable year, the limita-
tion referred to in subparagraph (A)(iii) which 
is subject to division between the spouses shall 
include the additional contribution amounts de-
termined under paragraph (3) for both spouses. 
In any other case, any additional contribution 
amount determined under paragraph (3) shall 
not be taken into account under subparagraph 
(A)(iii) and shall not be subject to division be-
tween the spouses.’’.
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•HR 1 EH1S 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2025. 
SEC. 110210. FSA AND HRA TERMINATIONS OR CONVER-
SIONS TO FUND HSAs. 
(a) IN GENERAL.—Section 106(e)(2) is amended to 
read as follows: 
‘‘(2) QUALIFIED
HSA 
DISTRIBUTION.—For 
purposes of this subsection—
‘‘(A) IN
GENERAL.—The term ‘qualified 
HSA distribution’ means, with respect to any 
employee, a distribution from a health flexible 
spending arrangement or health reimbursement 
arrangement of such employee contributed di-
rectly to a health savings account of such em-
ployee if—
‘‘(i) such distribution is made in con-
nection with such employee establishing 
coverage under a high deductible health 
plan (as defined in section 223(c)(2)) if 
during the 4-year period preceding the 
date the employee so establishes coverage 
the employee was not covered under such 
a high deductible health plan, and
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•HR 1 EH1S 
‘‘(ii) such arrangement is described in 
section 223(c)(1)(B)(v) with respect to any 
portion of the plan year remaining after 
such distribution is made, if such employee 
remains enrolled in such arrangement. 
‘‘(B) DOLLAR
LIMITATION.—The aggre-
gate amount of distributions from health flexi-
ble spending arrangements and health reim-
bursement arrangements of any employee which 
may be treated as qualified HSA distributions 
in connection with an establishment of coverage 
described in subparagraph (A)(i) shall not ex-
ceed the dollar amount in effect under section 
125(i)(1) (twice such amount in the case of cov-
erage 
which 
is 
described 
in 
section 
223(b)(2)(B)).’’. 
(b) PARTIAL REDUCTION OF LIMITATION ON DE-
DUCTIBLE HSA CONTRIBUTIONS.—Section 223(b)(4) is 
amended by striking ‘‘and’’ at the end of subparagraph 
(B), by striking the period at the end of subparagraph 
(C) and inserting ‘‘, and’’, and by inserting after subpara-
graph (C) the following new subparagraph: 
‘‘(D) so much of any qualified HSA dis-
tribution (as defined in section 106(e)(2)) made 
to a health savings account of such individual
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•HR 1 EH1S 
during the taxable year as does not exceed the 
aggregate increases in the balance of the ar-
rangement from which such distribution is 
made which occur during the portion of the 
plan year which precedes such distribution 
(other than any balance carried over to such 
plan year and determined without regard to any 
decrease in such balance during such portion of 
the plan year).’’. 
(c) CONVERSION
TO HSA-COMPATIBLE ARRANGE-
MENT
FOR
REMAINDER
OF
PLAN
YEAR.—Section 
223(c)(1)(B), as amended by this preceding provisions of 
this Act, is amended by striking ‘‘and’’ at the end of clause 
(iii), by striking the period at the end of clause (iv) and 
inserting ‘‘, and’’, and by adding at the end the following 
new clause: 
‘‘(v) coverage under a health flexible 
spending arrangement or health reimburse-
ment arrangement for the portion of the 
plan year after a qualified HSA distribu-
tion (as defined in section 106(e)(2) deter-
mined without regard to subparagraph 
(A)(ii) thereof) is made, if the terms of 
such arrangement which apply for such 
portion of the plan year are such that, if
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•HR 1 EH1S 
such terms applied for the entire plan 
year, then such arrangement would not be 
taken into account under subparagraph 
(A)(ii) of this paragraph for such plan 
year.’’. 
(d) INCLUSION OF QUALIFIED HSA DISTRIBUTIONS 
ON W–2.—
(1) IN GENERAL.—Section 6051(a), as amend-
ed by the preceding provisions of this Act, is amend-
ed by striking ‘‘and’’ at the end of paragraph (19), 
by striking the period at the end of paragraph (20) 
and inserting ‘‘, and’’, and by inserting after para-
graph (20) the following new paragraph: 
‘‘(21) the amount of any qualified HSA dis-
tribution (as defined in section 106(e)(2)) with re-
spect to such employee.’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
6051(a)(12) is amended by inserting ‘‘(other than 
any qualified HSA distribution, as defined in section 
106(e)(2))’’ before the comma at the end. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to distributions made after Decem-
ber 31, 2025.
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•HR 1 EH1S 
SEC. 110211. SPECIAL RULE FOR CERTAIN MEDICAL EX-
PENSES INCURRED BEFORE ESTABLISHMENT 
OF HEALTH SAVINGS ACCOUNT. 
(a) IN GENERAL.—Section 223(d)(2), as amended by 
the preceding provisions of this Act, is amended by adding 
at the end the following new subparagraph: 
‘‘(F) TREATMENT
OF
CERTAIN
MEDICAL 
EXPENSES INCURRED BEFORE ESTABLISHMENT 
OF ACCOUNT.—If a health savings account is 
established during the 60-day period beginning 
on the date that coverage of the account bene-
ficiary under a high deductible health plan be-
gins, then, solely for purposes of determining 
whether an amount paid is used for a qualified 
medical expense, such account shall be treated 
as having been established on the date that 
such coverage begins.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply with respect to coverage beginning 
after December 31, 2025. 
SEC. 110212. CONTRIBUTIONS PERMITTED IF SPOUSE HAS 
HEALTH 
FLEXIBLE 
SPENDING 
ARRANGE-
MENT. 
(a) CONTRIBUTIONS PERMITTED IF SPOUSE HAS A 
HEALTH FLEXIBLE SPENDING ARRANGEMENT.—Section 
223(c)(1)(B), as amended by this preceding provisions of
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•HR 1 EH1S 
this Act, is amended by striking ‘‘and’’ at the end of clause 
(iv), by striking the period at the end of clause (v) and 
inserting ‘‘, and’’, and by adding at the end the following 
new clause: 
‘‘(vi) coverage under a health flexible 
spending arrangement of the spouse of the 
individual for any plan year of such ar-
rangement if the aggregate reimburse-
ments under such arrangement for such 
year do not exceed the aggregate expenses 
which would be eligible for reimbursement 
under such arrangement if such expenses 
were determined without regard to any ex-
penses paid or incurred with respect to 
such individual.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to plan years beginning after De-
cember 31, 2025. 
SEC. 110213. INCREASE IN HEALTH SAVINGS ACCOUNT CON-
TRIBUTION LIMITATION FOR CERTAIN INDI-
VIDUALS. 
(a) INCREASE.—
(1) IN GENERAL.—Section 223(b) is amended 
by adding at the end the following new paragraph:
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•HR 1 EH1S 
‘‘(9) INCREASE
IN
LIMITATION
FOR
CERTAIN 
TAXPAYERS.—
‘‘(A) IN GENERAL.—The applicable limita-
tion under subparagraphs (A) and (B) of para-
graph (2) shall be increased by $4,300 and 
$8,550, respectively. 
‘‘(B) LIMITATION
BASED
ON
MODIFIED 
ADJUSTED GROSS INCOME.—The amount of the 
increase under subparagraph (A) (determined 
without regard to this subparagraph) shall be 
reduced (but not below zero) by the amount 
which bears the same ratio to the amount of 
such increase (as so determined) as—
‘‘(i) the excess (if any) of—
‘‘(I) 
the 
taxpayer’s 
adjusted 
gross income for such taxable year, 
over 
‘‘(II) $75,000 ($150,000 in the 
case of a joint return, if the eligible 
individual has family coverage), bears 
to 
‘‘(ii) $25,000 ($50,000 in the case of 
a joint return, if the eligible individual has 
family coverage).
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For purposes of the preceding sentence, ad-
justed gross income shall be determined in the 
same manner as under section 219(g)(3)(A), 
except determined without regard to any deduc-
tion allowed under this section.’’. 
(2) ONLY TO APPLY TO EMPLOYEE CONTRIBU-
TIONS.—Section 106(d)(1) is amended by inserting 
‘‘and section 223(b)(9)’’ after ‘‘determined without 
regard to this subsection’’. 
(b) INFLATION ADJUSTMENT.—Section 223(g), as 
amended by the preceding provisions of this Act, is amend-
ed—
(1) by inserting ‘‘, (b)(9)(A), (b)(9)(B)(i)(II),’’ 
before ‘‘and (c)(2)(A)’’ each place it appears, 
(2) by striking ‘‘clauses (ii) and (ii)’’ in para-
graph (1)(B)(i) and inserting ‘‘clauses (ii), (iii), and 
(iv)’’, 
(3) by striking ‘‘and’’ at the end of paragraph 
(1)(B)(ii), 
(4) by striking the period at the end of para-
graph (1)(B)(iii) and inserting ‘‘, and’’, and 
(5) by inserting after paragraph (1)(B)(iii) the 
following new clause:
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•HR 1 EH1S 
‘‘(iv) in the case of the dollar amounts 
in 
subsections 
(b)(9)(A) 
and 
(b)(9)(B)(i)(II), ‘calendar year 2025’.’’. 
(c) EFFECTIVE DATE.—
(1) SUBSECTION (a).—The amendments made 
by subsection (a) shall apply to taxable years begin-
ning after December 31, 2025. 
(2) SUBSECTION (b).—The amendments made 
by subsection (b) shall apply to taxable years begin-
ning after December 31, 2026. 
SEC. 110214. REGULATIONS. 
The Secretary of the Treasury and the Secretary of 
Health and Human Services may each prescribe such rules 
and other guidance as may be necessary or appropriate 
to carry out the amendments made by this part. 
Subtitle B—Make Rural America 
and Main Street Grow Again 
PART 1—EXTENSION OF TAX CUTS AND JOBS ACT 
REFORMS FOR RURAL AMERICA AND MAIN 
STREET 
SEC. 111001. EXTENSION OF SPECIAL DEPRECIATION AL-
LOWANCE FOR CERTAIN PROPERTY. 
(a) IN GENERAL.—Section 168(k) is amended—
(1) in paragraph (2)—
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•HR 1 EH1S 
(A) by striking ‘‘January 1, 2027’’ each 
place it appears and inserting ‘‘January 1, 
2030’’, and 
(B) in subparagraph (B)—
(i) in clause (i)(II), by striking ‘‘Janu-
ary 1, 2028’’ and inserting ‘‘January 1, 
2031’’, and 
(ii) in the heading of clause (ii), by 
striking ‘‘PRE-JANUARY 1, 2027 BASIS’’ and 
inserting ‘‘PRE-JANUARY 1, 2030 BASIS’’, 
(2) in paragraph (5)(A), by striking ‘‘January 
1, 2027’’ and inserting ‘‘January 1, 2030’’, and 
(3) in paragraph (6)—
(A) in subparagraph (A)—
(i) by inserting ‘‘in the case of prop-
erty acquired by the taxpayer before Janu-
ary 20, 2025,’’ after ‘‘Except as otherwise 
provided in this paragraph,’’, and 
(ii) by striking ‘‘and’’ at the end of 
clause (iv), by striking the period at the 
end of clause (v) and inserting ‘‘, and’’, 
and by adding at the end the following new 
clause:
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•HR 1 EH1S 
‘‘(vi) in the case of property placed in 
service after December 31, 2026, 0 per-
cent.’’, 
(B) in subparagraph (B)—
(i) by striking ‘‘In the case of prop-
erty described’’ and inserting ‘‘In the case 
of property acquired by the taxpayer before 
January 20, 2025 and described’’, and 
(ii) by striking ‘‘and’’ at the end of 
clause (iv), by striking the period at the 
end of clause (v) and inserting ‘‘, and’’, 
and by adding at the end the following new 
clause: 
‘‘(vi) in the case of property placed in 
service after December 31, 2027, 0 per-
cent.’’, 
(C) in subparagraph (C), by inserting 
‘‘and’’ at the end of clause (iii), by striking 
clauses (iv) and (v), and by adding at the end 
the following new clause: 
‘‘(iv) in the case of a plant which is 
planted or grafted after January 19, 2025, 
and before January 1, 2030, 100 per-
cent.’’, and
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•HR 1 EH1S 
(D) by adding at the end the following new 
subparagraph: 
‘‘(D) RULE
FOR
PROPERTY
ACQUIRED 
AFTER JANUARY 19, 2025.—
‘‘(i) IN
GENERAL.—In the case of 
property acquired by the taxpayer after 
January 19, 2025 and placed in service 
after such date and before January 1, 
2030 (January 1, 2031, in the case of 
property described in subparagraph (B) or 
(C) of paragraph (2)), the term ‘applicable 
percentage’ means 100 percent. 
‘‘(ii) ACQUISITION DATE DETERMINA-
TION.—For purposes of clause (i), property 
shall not be treated as acquired after the 
date on which a written binding contract is 
entered into for such acquisition.’’. 
(b) 
CONFORMING
AMENDMENT.—Section 
460(c)(6)(B) is amended by striking ‘‘which’’ and all that 
follows through the period and inserting ‘‘which has a re-
covery period of 7 years or less.’’. 
(c) EFFECTIVE DATES.—
(1) IN GENERAL.—Except as provided by para-
graph (2), the amendments made by this section
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•HR 1 EH1S 
shall apply to property acquired after January 19, 
2025 and placed in service after such date. 
(2) SPECIFIED
PLANTS.—The amendments 
made by this section shall apply to specified plants 
planted or grafted after January 19, 2025. 
SEC. 111002. DEDUCTION OF DOMESTIC RESEARCH AND EX-
PERIMENTAL EXPENDITURES. 
(a) SUSPENSION OF AMORTIZATION FOR DOMESTIC 
RESEARCH AND EXPERIMENTAL EXPENDITURES.—Sec-
tion 174 is amended by adding at the end the following 
new subsection: 
‘‘(e) SUSPENSION OF APPLICATION TO DOMESTIC 
RESEARCH AND EXPERIMENTAL EXPENDITURES.—In the 
case of any domestic research or experimental expendi-
tures (as defined in section 174A(b)), this section shall 
not apply to such expenditures paid or incurred in taxable 
years beginning after December 31, 2024, and before Jan-
uary 1, 2030.’’. 
(b) REINSTATEMENT OF EXPENSING FOR DOMESTIC 
RESEARCH AND EXPERIMENTAL EXPENDITURES.—Part 
VI of subchapter B of chapter 1 is amended by inserting 
after section 174 the following new section:
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‘‘SEC. 174A. TEMPORARY RULES FOR DOMESTIC RESEARCH 
AND EXPERIMENTAL EXPENDITURES. 
‘‘(a) TREATMENT AS EXPENSES.—Notwithstanding 
section 263, there shall be allowed as a deduction any do-
mestic research or experimental expenditures which are 
paid or incurred by the taxpayer during the taxable year. 
‘‘(b) DOMESTIC RESEARCH OR EXPERIMENTAL EX-
PENDITURES.—For purposes of this section, the term ‘do-
mestic research or experimental expenditures’ means re-
search or experimental expenditures paid or incurred by 
the taxpayer in connection with the taxpayer’s trade or 
business other than such expenditures which are attrib-
utable to foreign research (within the meaning of section 
41(d)(4)(F)). 
‘‘(c) AMORTIZATION
OF CERTAIN DOMESTIC RE-
SEARCH AND EXPERIMENTAL EXPENDITURES.—
‘‘(1) IN GENERAL.—At the election of the tax-
payer, made in accordance with regulations or other 
guidance provided by the Secretary, in the case of 
domestic research or experimental expenditures 
which would (but for subsection (a)) be chargeable 
to capital account but not chargeable to property of 
a character which is subject to the allowance under 
section 167 (relating to allowance for depreciation, 
etc.) or section 611 (relating to allowance for deple-
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•HR 1 EH1S 
tion), subsection (a) shall not apply and the tax-
payer shall—
‘‘(A) charge such expenditures to capital 
account, and 
‘‘(B) be allowed an amortization deduction 
of such expenditures ratably over such period of 
not less than 60 months as may be selected by 
the taxpayer (beginning with the midpoint of 
the taxable year in which such expenditures are 
paid or incurred). 
‘‘(2) TIME FOR AND SCOPE OF ELECTION.—The 
election provided by paragraph (1) may be made for 
any taxable year, but only if made not later than the 
time prescribed by law for filing the return for such 
taxable year (including extensions thereof). The 
method so elected, and the period selected by the 
taxpayer, shall be adhered to in computing taxable 
income for the taxable year for which the election is 
made and for all subsequent taxable years unless, 
with the approval of the Secretary, a change to a 
different method (or to a different period) is author-
ized with respect to part or all of such expenditures. 
The election shall not apply to any expenditure paid 
or incurred during any taxable year before the tax-
able year for which the taxpayer makes the election.
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‘‘(d) SPECIAL RULES.—
‘‘(1) LAND AND OTHER PROPERTY.—This sec-
tion shall not apply to any expenditure for the acqui-
sition or improvement of land, or for the acquisition 
or improvement of property to be used in connection 
with the research or experimentation and of a char-
acter which is subject to the allowance under section 
167 (relating to allowance for depreciation, etc.) or 
section 611 (relating to allowance for depletion); but 
for purposes of this section allowances under section 
167, and allowances under section 611, shall be con-
sidered as expenditures. 
‘‘(2) EXPLORATION EXPENDITURES.—This sec-
tion shall not apply to any expenditure paid or in-
curred for the purpose of ascertaining the existence, 
location, extent, or quality of any deposit of ore or 
other mineral (including oil and gas). 
‘‘(3) SOFTWARE DEVELOPMENT.—For purposes 
of this section, any amount paid or incurred in con-
nection with the development of any software shall 
be treated as a research or experimental expendi-
ture. 
‘‘(e) TERMINATION.—
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‘‘(1) IN GENERAL.—This section shall not apply 
to amounts paid or incurred in taxable years begin-
ning after December 31, 2029. 
‘‘(2) CHANGE IN METHOD OF ACCOUNTING.—In 
the case of a taxpayer’s first taxable year beginning 
after December 31, 2029, paragraph (1) (and the 
corresponding application of section 174) shall be 
treated as a change in method of accounting for pur-
poses of section 481 and—
‘‘(A) such change shall be treated as initi-
ated by the taxpayer, 
‘‘(B) such change shall be treated as made 
with the consent of the Secretary, and 
‘‘(C) such change shall be applied only on 
a cut-off basis for any domestic research or ex-
perimental expenditures paid or incurred in tax-
able years beginning after December 31, 2029, 
and no adjustment under section 481(a) shall 
be made.’’. 
(c) TREATMENT OF FOREIGN RESEARCH OR EXPERI-
MENTAL EXPENDITURES UPON DISPOSITION.—Section 
174(d) is amended by inserting ‘‘or reduction to amount 
realized’’ after ‘‘no deduction’’. 
(d) COORDINATION WITH CERTAIN OTHER PROVI-
SIONS.—
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(1) RESEARCH CREDIT.—
(A) Section 41(d)(1)(A) is amended by in-
serting ‘‘or domestic research or experimental 
expenditures under section 174A’’ after ‘‘sec-
tion 174’’. 
(B) Section 280C(c) is amended by adding 
at the end the following new paragraph: 
‘‘(4) DOMESTIC RESEARCH OR EXPERIMENTAL 
EXPENDITURES.—The domestic research or experi-
mental expenditures otherwise taken into account 
under section 174A shall be reduced by the amount 
of the credit allowed under section 41(a).’’. 
(C) Section 280C(c) is amended—
(i) in paragraph (1)(B)—
(I) by striking ‘‘a deduction’’ and 
inserting ‘‘an amortization deduc-
tion’’, and 
(II) by inserting ‘‘under section 
174’’ after ‘‘basic research expenses’’, 
and 
(ii) in paragraph (2)(A)(i), by striking 
‘‘paragraph (1)’’ and inserting ‘‘para-
graphs (1) and (4)’’. 
(2) AMT ADJUSTMENT.—Section 56(b)(2) is 
amended—
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•HR 1 EH1S 
(A) by striking ‘‘174(a)’’ each place it ap-
pears and inserting ‘‘174A(a)’’, and 
(B) by adding at the end of subparagraph 
(A) the following new flush sentence: 
‘‘In the case of research and experimental ex-
penditures charged to capital account and am-
ortized under section 174 or 174A, such 
amounts shall be amortized for purposes of this 
subsection as provided in clause (ii).’’. 
(3) OPTIONAL
10-YEAR
WRITEOFF.—Section 
59(e)(2)(B) is amended by striking ‘‘section 174(a) 
(relating to research and experimental expendi-
tures)’’ and inserting ‘‘section 174A(a) (relating to 
temporary rules for domestic research and experi-
mental expenditures)’’. 
(4) QUALIFIED SMALL ISSUE BONDS.—Section 
144(a)(4)(C)(iv) is amended by inserting ‘‘or 
174A(a)’’ after ‘‘174(a)’’. 
(5) 
START-UP
EXPENDITURES.—Section 
195(c)(1) is amended by striking ‘‘or 174’’ in the 
last sentence and inserting ‘‘174, or 174A’’. 
(6) CAPITAL EXPENDITURES.—
(A) Section 263(a)(1)(B) is amended by 
inserting ‘‘ or 174A’’ after ‘‘174’’.
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•HR 1 EH1S 
(B) Section 263A(c)(2) is amended by in-
serting ‘‘or 174A’’ after ‘‘174’’. 
(7) ACTIVE
BUSINESS
COMPUTER
SOFTWARE 
ROYALTIES.—Section 543(d)(4)(A)(i) is amended by 
inserting ‘‘174A,’’ after ‘‘174,’’. 
(8) SOURCE
RULES.—Section 864(g)(2) is 
amended in the last sentence—
(A) by striking ‘‘treated as deferred ex-
penses under subsection (b) of section 174’’ and 
inserting ‘‘allowed as an amortization deduction 
under section 174(a) or section 174A(c),’’, and 
(B) by striking ‘‘such subsection’’ and in-
serting ‘‘such section (as the case may be)’’. 
(9) BASIS ADJUSTMENT.—Section 1016(a)(14) 
is amended by striking ‘‘deductions as deferred ex-
penses under section 174(b)(1) (relating to research 
and experimental expenditures)’’ and inserting ‘‘de-
ductions under section 174 or 174A(c)’’. 
(10) 
SMALL
BUSINESS
STOCK.—Section 
1202(e)(2)(B) is amended by striking ‘‘research and 
experimental expenditures under section 174’’ and 
inserting ‘‘specified research or experimental expend-
itures under section 174 or domestic research or ex-
perimental expenditures under section 174A’’.
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(e) CLERICAL AMENDMENT.—The table of sections 
for part VI of subchapter B of chapter 1 is amended by 
inserting after the item relating to section 174 the fol-
lowing new item:
‘‘Sec. 174A. Temporary rules for domestic research and experimental expendi-
tures.’’.
(f) EFFECTIVE DATE AND SPECIAL RULE.—
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
this section shall apply to amounts paid or incurred 
in taxable years beginning after December 31, 2024. 
(2) TREATMENT
OF
FOREIGN
RESEARCH
OR 
EXPERIMENTAL
EXPENDITURES
UPON
DISPOSI-
TION.—The amendment made by subsection (c) shall 
apply to property disposed, retired, or abandoned 
after May 12, 2025. 
(3) COORDINATION WITH RESEARCH CREDIT.—
The amendments made by subparagraphs (B) and 
(C) of subsection (d)(1) shall apply to taxable years 
beginning after December 31, 2024. 
(4) SPECIAL
RULE
FOR
SHORT
TAXABLE 
YEARS.—The Secretary of the Treasury may pre-
scribe such rules as are necessary or appropriate to 
provide for the application of the amendments made 
by this section in the case of any taxable year of less 
than 12 months that begins after December 31,
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•HR 1 EH1S 
2024, and ends before the date of the enactment of 
this Act. 
(5) CHANGE
IN
METHOD
OF
ACCOUNTING.—
The amendments made by this section shall be treat-
ed as a change in method of accounting for purposes 
of section 481 of the Internal Revenue Code of 1986 
and—
(A) such change shall be treated as initi-
ated by the taxpayer, 
(B) such change shall be treated as made 
with the consent of the Secretary, and 
(C) such change shall be applied only on a 
cut-off basis for any research or experimental 
expenditures paid or incurred in taxable years 
beginning after December 31, 2024, and no ad-
justments under section 481(a) shall be made. 
(6) NO INFERENCE.—The amendments made 
by subparagraphs (B) and (C) of subsection (d)(1) 
shall not be construed to create any inference with 
respect to the proper application of section 280C(c) 
of the Internal Revenue Code of 1986 with respect 
to taxable years beginning before January 1, 2025.
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•HR 1 EH1S 
SEC. 111003. MODIFIED CALCULATION OF ADJUSTED TAX-
ABLE INCOME FOR PURPOSES OF BUSINESS 
INTEREST DEDUCTION. 
(a) IN GENERAL.—Section 163(j)(8)(A)(v) is amend-
ed by striking ‘‘beginning before January 1, 2022’’ and 
inserting ‘‘beginning after December 31, 2024 and before 
January 1, 2030’’. 
(b) FLOOR PLAN FINANCING APPLICABLE TO CER-
TAIN TRAILERS AND CAMPERS.—Section 163(j)(9)(C) is 
amended by adding at the end the following new flush sen-
tence: 
‘‘Such term shall also include any trailer or 
camper which is designed to provide temporary 
living quarters for recreational, camping, or 
seasonal use and is designed to be towed by, or 
affixed to, a motor vehicle.’’. 
(c) EFFECTIVE DATE AND SPECIAL RULE.—
(1) IN GENERAL.—The amendments made by 
this section shall apply to taxable years beginning 
after December 31, 2024. 
(2) SPECIAL
RULE
FOR
SHORT
TAXABLE 
YEARS.—The Secretary of the Treasury may pre-
scribe such rules as are necessary or appropriate to 
provide for the application of the amendments made 
by this section in the case of any taxable year of less 
than 12 months that begins after December 31,
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•HR 1 EH1S 
2024, and ends before the date of the enactment of 
this Act. 
SEC. 111004. EXTENSION OF DEDUCTION FOR FOREIGN-DE-
RIVED INTANGIBLE INCOME AND GLOBAL IN-
TANGIBLE LOW-TAXED INCOME. 
(a) IN GENERAL.—Section 250(a) is amended—
(1) by striking ‘‘37.5 percent’’ in paragraph 
(1)(A) and inserting ‘‘36.5 percent’’, 
(2) by striking ‘‘50 percent’’ in paragraph 
(1)(B) and inserting ‘‘49.2 percent’’, and 
(3) by striking paragraph (3). 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2025. 
SEC. 111005. EXTENSION OF BASE EROSION MINIMUM TAX 
AMOUNT. 
(a) IN GENERAL.—Section 59A(b) is amended—
(1) by striking ‘‘10 percent’’ in paragraph (1) 
and inserting ‘‘10.1 percent’’, and 
(2) by striking paragraph (2) and by redesig-
nating paragraphs (3) and (4) as paragraphs (2) 
and (3), respectively. 
(b) CONFORMING AMENDMENTS.—
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•HR 1 EH1S 
(1) Section 59A(b)(1) is amended by striking 
‘‘Except as provided in paragraphs (2) and (3)’’ and 
inserting ‘‘Except as provided in paragraph (2)’’. 
(2) Section 59A(b)(2), as redesignated by sub-
section (a)(2), is amended by striking ‘‘the percent-
age otherwise in effect under paragraphs (1)(A) and 
(2)(A) shall each be increased’’ and inserting ‘‘the 
percentages otherwise in effect under paragraph 
(1)(A) shall be increased’’. 
(3) Section 59A(e)(1)(C) is amended by strik-
ing ‘‘in the case of a taxpayer described in sub-
section (b)(3)(B)’’ and inserting ‘‘in the case of a 
taxpayer described in subsection (b)(2)(B)’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2025. 
SEC. 111006. EXCEPTION TO DENIAL OF DEDUCTION FOR 
BUSINESS MEALS. 
(a) IN GENERAL.—Section 274(o) is amended by 
striking ‘‘No deduction’’ and inserting ‘‘Except in the case 
of an expense described in subsection (e)(8), no deduc-
tion’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to amounts paid or incurred after 
December 31, 2025.
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PART 2—ADDITIONAL TAX RELIEF FOR RURAL 
AMERICA AND MAIN STREET 
SEC. 111101. SPECIAL DEPRECIATION ALLOWANCE FOR 
QUALIFIED PRODUCTION PROPERTY. 
(a) IN GENERAL.—Section 168 is amended by adding 
at the end the following new subsection: 
‘‘(n) SPECIAL ALLOWANCE FOR QUALIFIED PRODUC-
TION PROPERTY.—
‘‘(1) IN GENERAL.—In the case of any qualified 
production property—
‘‘(A) the depreciation deduction provided 
by section 167(a) for the taxable year in which 
such property is placed in service shall include 
an allowance equal to 100 percent of the ad-
justed basis of the qualified production prop-
erty, and 
‘‘(B) the adjusted basis of the qualified 
production property shall be reduced by the 
amount of such deduction before computing the 
amount otherwise allowable as a depreciation 
deduction under this chapter for such taxable 
year and any subsequent taxable year. 
‘‘(2) QUALIFIED PRODUCTION PROPERTY.—For 
purposes of this subsection—
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‘‘(A) IN
GENERAL.—The term ‘qualified 
production property’ means that portion of any 
nonresidential real property—
‘‘(i) to which this section applies, 
‘‘(ii) which is used by the taxpayer as 
an integral part of a qualified production 
activity, 
‘‘(iii) which is placed in service in the 
United States or any possession of the 
United States, 
‘‘(iv) the original use of which com-
mences with the taxpayer, 
‘‘(v) the construction of which begins 
after January 19, 2025, and before Janu-
ary 1, 2029, 
‘‘(vi) with respect to which the tax-
payer has elected the application of this 
subsection, and 
‘‘(vii) which is placed in service before 
January 1, 2033. 
‘‘(B) SPECIAL RULE FOR CERTAIN PROP-
ERTY
NOT
PREVIOUSLY
USED
IN
QUALIFIED 
PRODUCTION ACTIVITIES.—
‘‘(i) IN
GENERAL.—In the case of 
property acquired by the taxpayer during
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•HR 1 EH1S 
the period described in subparagraph 
(A)(v), the requirements of clauses (iv) and 
(v) of subparagraph (A) shall be treated as 
satisfied if such property was not used in 
a qualified production activity (determined 
without regard to the second sentence of 
subparagraph (D)) by any person at any 
time during the period beginning on Janu-
ary 1, 2021, and ending on May 12, 2025. 
‘‘(ii) 
WRITTEN
BINDING
CON-
TRACTS.—For purposes of determining 
under clause (i)—
‘‘(I) whether such property is ac-
quired before the period described in 
subparagraph (A)(v), such property 
shall be treated as acquired not later 
than the date on which the taxpayer 
enters into a written binding contract 
for such acquisition, and 
‘‘(II) whether such property is 
acquired after such period, such prop-
erty shall be treated as acquired not 
earlier than such date. 
‘‘(C) 
EXCLUSION
OF
OFFICE
SPACE, 
ETC.—The term ‘qualified production property’
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•HR 1 EH1S 
shall not include that portion of any nonresi-
dential real property which is used for offices, 
administrative services, lodging, parking, sales 
activities, research activities, software engineer-
ing activities, or other functions unrelated to 
manufacturing, production, or refining of tan-
gible personal property. 
‘‘(D) QUALIFIED PRODUCTION ACTIVITY.—
The term ‘qualified production activity’ means 
the manufacturing, production, or refining of a 
qualified product. The activities of any taxpayer 
do not constitute manufacturing, production, or 
refining of a qualified product unless the activi-
ties of such taxpayer result in a substantial 
transformation of the property comprising the 
product. 
‘‘(E) PRODUCTION.—The term ‘produc-
tion’ shall not include activities other than agri-
cultural production and chemical production. 
‘‘(F) QUALIFIED
PRODUCT.—The term 
‘qualified product’ means any tangible personal 
property. 
‘‘(G) SYNDICATION.—For purposes of sub-
paragraph (A)(iv), rules similar to the rules of 
subsection (k)(2)(E)(iii) shall apply.
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•HR 1 EH1S 
‘‘(3) DEDUCTION
ALLOWED
IN
COMPUTING 
MINIMUM TAX.—For purposes of determining alter-
native minimum taxable income under section 55, 
the deduction under section 167 for qualified pro-
duction property shall be determined under this sec-
tion without regard to any adjustment under section 
56. 
‘‘(4) COORDINATION
WITH
CERTAIN
OTHER 
PROVISIONS.—
‘‘(A) OTHER SPECIAL DEPRECIATION AL-
LOWANCES.—The term ‘qualified production 
property’ shall not include any property to 
which subsection (k), (l), or (m) applies. For 
purposes of subsections (k)(7), (l)(3)(D), and 
(m)(2)(B)(iii), qualified production property to 
which this subsection applies shall be treated as 
a separate class of property. 
‘‘(B) ALTERNATIVE DEPRECIATION PROP-
ERTY.—The term ‘qualified production prop-
erty’ shall not include any property to which the 
alternative depreciation system under sub-
section (g) applies. For purposes of subsection 
(g)(7)(A), qualified production property to 
which this subsection applies shall be treated as 
separate nonresidential real property.
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•HR 1 EH1S 
‘‘(5) RECAPTURE.—If, at any time during the 
10-year period beginning on the date that any quali-
fied production property is placed in service by the 
taxpayer, such property ceases to be used as de-
scribed in paragraph (2)(A)(ii) and is used by the 
taxpayer in a productive use not described in para-
graph (2)(A)(ii)—
‘‘(A) section 1245 shall be applied—
‘‘(i) by treating such property as hav-
ing been disposed of by the taxpayer as of 
the first time such property is so used in 
a productive use not described in para-
graph (2)(A)(ii), and 
‘‘(ii) by treating the amount described 
in subparagraph (B) of section 1245(a)(1) 
with respect to such disposition as being 
not less than the amount described in sub-
paragraph (A) of such section, and 
‘‘(B) the basis of the taxpayer in such 
property, and the taxpayer’s allowance for de-
preciation with respect to such property, shall 
be appropriately adjusted to take into account 
amounts recognized by reason of subparagraph 
(A).
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•HR 1 EH1S 
‘‘(6) REGULATIONS.—The Secretary shall issue 
such regulations or other guidance as may be nec-
essary or appropriate to carry out the purposes of 
this subsection, including regulations or other guid-
ance—
‘‘(A) regarding what constitutes a substan-
tial transformation of property, and 
‘‘(B) providing for the application of para-
graph (5) with respect to a change in use de-
scribed in such paragraph by a transferee fol-
lowing a fully or partially tax free transfer of 
qualified production property.’’. 
(b) TREATMENT OF QUALIFIED PRODUCTION PROP-
ERTY AS SECTION 1245 PROPERTY.—Section 1245(a)(3) 
is amended by striking ‘‘or’’ at the end of subparagraph 
(E), by striking the period at the end of subparagraph 
(F) and inserting ‘‘, or’’, and by adding at the end the 
following new subparagraph: 
‘‘(G) any qualified production property (as 
defined in section 168(n)(2)).’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to property placed in service after 
the date of the enactment of this Act.
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•HR 1 EH1S 
SEC. 111102. RENEWAL AND ENHANCEMENT OF OPPOR-
TUNITY ZONES. 
(a) MODIFICATION
OF LOW-INCOME COMMUNITY 
DEFINITION.—Section 1400Z–1(c)(1) is amended—
(1) by striking ‘‘COMMUNITIES.—The term’’ 
and inserting the following: ‘‘COMMUNITIES.—
‘‘(A) IN GENERAL.—The term’’, and 
(2) by adding at the end the following: 
‘‘(B) MODIFICATIONS.—For purposes of 
subparagraph (A), section 45D(e)(1) shall be 
applied in subparagraph (B) thereof, by sub-
stituting ‘70 percent’ for ‘80 percent’ each 
place it appears. 
‘‘(C) 
CERTAIN
CENSUS
TRACTS
DIS-
ALLOWED.—The term ‘low-income community’ 
shall not include any population census tract 
if—
‘‘(i) in the case of a tract not located 
within a metropolitan area, the median 
family income for such tract is at least 125 
percent of statewide median family income, 
or 
‘‘(ii) in the case of a tract located 
within a metropolitan area, the median 
family income for such tract is at least 125
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•HR 1 EH1S 
percent of the metropolitan area median 
family income.’’. 
(b) NEW ROUND OF QUALIFIED OPPORTUNITY ZONE 
DESIGNATIONS.—
(1) IN GENERAL.—Section 1400Z–1 is amended 
by adding at the end the following new subsection: 
‘‘(g) NEW ROUND
OF QUALIFIED OPPORTUNITY 
ZONE DESIGNATIONS.—
‘‘(1) IN GENERAL.—In addition to designations 
under subsection (b), and under rules similar to the 
rules of such subsection, the Secretary shall des-
ignate tracts nominated by the chief executive offi-
cers of States for purposes of this section. 
‘‘(2) NUMBER OF DESIGNATIONS; PROPORTION 
OF RURAL AREAS DESIGNATED.—
‘‘(A) IN
GENERAL.—Of the low-income 
communities within a State, the Secretary may 
designate under this subsection not more than 
25 percent as qualified opportunity zones, of 
which at least the lesser of the following shall 
be qualified opportunity zones which are com-
prised entirely of a rural area: 
‘‘(i) The applicable percentage of the 
total number of qualified opportunity zone
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•HR 1 EH1S 
designations which may be made within 
the State under this subsection. 
‘‘(ii) All low-income communities with-
in the State which are comprised entirely 
of a rural area. 
‘‘(B) 
APPLICABLE
PERCENTAGE.—For 
purposes of this paragraph, the applicable per-
centage shall be, for any calendar year during 
which a designation is made, the greater of—
‘‘(i) 33 percent, or 
‘‘(ii) the percentage of the United 
States population living within a rural area 
for the preceding calendar year. 
‘‘(3) RURAL
AREA.—Whether a low-income 
community is comprised entirely of a rural area shall 
be determined by the Secretary in consultation with 
the Secretary of Agriculture. For purposes of this 
subsection, the term ‘rural area’ has the meaning 
given such term by section 343(a)(13)(A) of the 
Consolidated Farm and Rural Development Act. 
‘‘(4) PERIOD FOR WHICH DESIGNATION IS IN 
EFFECT.—A designation as a qualified opportunity 
zone under this subsection shall remain in effect for 
the period beginning on January 1, 2027, and end-
ing on December 31, 2033.
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•HR 1 EH1S 
‘‘(5) CONTIGUOUS
TRACTS
NOT
ELIGIBLE.—
Subsection (e) shall not apply to designations made 
under this subsection.’’. 
(2) ELECTION WITH RESPECT TO NEW ROUND 
OF ZONES.—Section 1400Z–2(a)(2)(B) is amended 
by striking ‘‘December 31, 2026’’ and inserting 
‘‘December 31, 2033’’. 
(3) YEAR
OF
INCLUSION.—Section 1400Z–
2(b)(1)(B) is amended to read as follows: 
‘‘(B)(i) December 31, 2026, in the case of 
an amount invested before January 1, 2027, 
and 
‘‘(ii) December 31, 2033, in the case of an 
amount invested after December 31, 2026, and 
before January 1, 2034.’’. 
(4) WINDING
DOWN
INITIAL
ZONE
DESIGNA-
TIONS.—Section 1400Z–1(f) is amended—
(A) by striking ‘‘and ending’’ and all that 
follows and inserting the following: ‘‘and ending 
on December 31, 2026.’’, and 
(B) by striking ‘‘A designation’’ and in-
serting ‘‘Except as provided in subsection 
(g)(4), a designation’’. 
(c) MODIFICATION OF OPPORTUNITY ZONE INVEST-
MENT INCENTIVES.—
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•HR 1 EH1S 
(1) CONSOLIDATED BASIS INCREASES; RURAL 
ZONE BASIS INCREASE.—Section 1400Z–2(b)(2)(B) 
is amended by adding at the end the following new 
clauses: 
‘‘(v) CONSOLIDATED BASIS INCREASE 
FOR INVESTMENTS AFTER 2026.—In the 
case of investments made after December 
31, 2026—
‘‘(I) clauses (iii) and (iv) shall 
not apply, and 
‘‘(II) for any such investment 
held by the taxpayer for at least 5 
years, the basis of such adjustment 
shall be increased by an amount equal 
to 10 percent of the amount of gain 
deferred by reason of subsection 
(a)(1)(A). 
‘‘(vi) SPECIAL RULE FOR RURAL OP-
PORTUNITY
FUNDS.—Clause (v) shall be 
applied by substituting ‘30 percent’ for ‘10 
percent’ in the case of an investment in a 
qualified rural opportunity fund. 
‘‘(vii) 
QUALIFIED
RURAL
OPPOR-
TUNITY
FUND.—For purposes of clause 
(vi), a ‘qualified rural opportunity fund’
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•HR 1 EH1S 
means a qualified opportunity fund that 
holds at least 90 percent of its assets in 
qualified 
opportunity 
zone 
property 
which—
‘‘(I) is qualified opportunity zone 
business property substantially all of 
the use of which, during substantially 
all of the fund’s holding period for 
such property, was in a qualified op-
portunity zone comprised entirely of a 
rural area, or 
‘‘(II) is qualified opportunity 
zone stock, or a qualified opportunity 
zone partnership interest, in a quali-
fied opportunity zone business in 
which substantially all of the tangible 
property owned or leased is qualified 
opportunity zone business property 
described in subsection (d)(3)(A)(i) 
and substantially all the use of which 
is in a qualified opportunity zone com-
prised entirely of a rural area. 
For purposes of the preceding sentence, 
property held in the fund shall be meas-
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•HR 1 EH1S 
ured under rules similar to the rules of 
subsection (d)(1).’’. 
(2) LIMITED
TREATMENT
OF
ORDINARY
IN-
COME.—Section 1400Z–2(a) is amended by adding 
at the end the following new paragraph: 
‘‘(3) SPECIAL RULE FOR ORDINARY INCOME.—
In the case of any ordinary income of the taxpayer 
for the taxable year—
‘‘(A) the taxpayer may elect the applica-
tion of paragraph (1) with respect to so much 
of ordinary income as does not exceed $10,000 
(reduced by the amount of any income with re-
spect to which an election pursuant to this 
paragraph has previously been made), and 
‘‘(B) subsection (b)(2)(B) shall not apply 
to the investment with respect to such elec-
tion.’’. 
(3) SPECIAL RULE FOR IMPROVEMENT OF EX-
ISTING STRUCTURES IN RURAL AREAS, INCLUDING 
FOR DATA CENTERS.—Section 1400Z–2(d)(2)(D)(ii) 
is amended by inserting ‘‘(50 percent of such ad-
justed basis in the case of property in a qualified op-
portunity zone comprised entirely of a rural area)’’ 
after ‘‘the adjusted basis of such property’’.
819
•HR 1 EH1S 
(d) INFORMATION REPORTING ON QUALIFIED OP-
PORTUNITY FUNDS
AND QUALIFIED RURAL OPPOR-
TUNITY FUNDS.—
(1) FILING
REQUIREMENTS
FOR
FUNDS
AND 
INVESTORS.—Subpart A of part III of subchapter A 
of chapter 61 is amended by inserting after section 
6039J the following new sections: 
‘‘SEC. 6039K. RETURNS WITH RESPECT TO QUALIFIED OP-
PORTUNITY FUNDS AND QUALIFIED RURAL 
OPPORTUNITY FUNDS. 
‘‘(a) IN GENERAL.—Every qualified opportunity fund 
shall file an annual return (at such time and in such man-
ner as the Secretary may prescribe) containing the infor-
mation described in subsection (b). 
‘‘(b) INFORMATION FROM QUALIFIED OPPORTUNITY 
FUNDS.—The information described in this subsection 
is—
‘‘(1) the name, address, and taxpayer identifica-
tion number of the qualified opportunity fund, 
‘‘(2) whether the qualified opportunity fund is 
organized as a corporation or a partnership, 
‘‘(3) the value of the total assets held by the 
qualified opportunity fund as of each date described 
in section 1400Z–2(d)(1),
820
•HR 1 EH1S 
‘‘(4) the value of all qualified opportunity zone 
property held by the qualified opportunity fund on 
each such date, 
‘‘(5) with respect to each investment held by 
the qualified opportunity fund in qualified oppor-
tunity zone stock or a qualified opportunity zone 
partnership interest—
‘‘(A) the name, address, and taxpayer 
identification number of the corporation in 
which such stock is held or the partnership in 
which such interest is held, as the case may be, 
‘‘(B) each North American Industry Clas-
sification System (NAICS) code that applies to 
the trades or businesses conducted by such cor-
poration or partnership, 
‘‘(C) the population census tracts in which 
the qualified opportunity zone business property 
of such corporation or partnership is located, 
‘‘(D) the amount of the investment in such 
stock or partnership interest as of each date de-
scribed in section 1400Z–2(d)(1), 
‘‘(E) the value of tangible property held by 
such corporation or partnership on each such 
date which is owned by such corporation or 
partnership,
821
•HR 1 EH1S 
‘‘(F) the value of tangible property held by 
such corporation or partnership on each such 
date which is leased by such corporation or 
partnership, 
‘‘(G) the approximate number of residen-
tial units (if any) for any real property held by 
such corporation or partnership, and 
‘‘(H) the approximate average monthly 
number of full-time equivalent employees of 
such corporation or partnership for the year 
(within numerical ranges identified by the Sec-
retary) or such other indication of the employ-
ment impact of such corporation or partnership 
as determined appropriate by the Secretary, 
‘‘(6) with respect to the items of qualified op-
portunity zone business property held by the quali-
fied opportunity fund—
‘‘(A) the North American Industry Classi-
fication System (NAICS) code that applies to 
the trades or businesses in which such property 
is held, 
‘‘(B) the population census tract in which 
the property is located, 
‘‘(C) whether the property is owned or 
leased,
822
•HR 1 EH1S 
‘‘(D) the aggregate value of the items of 
qualified opportunity zone property held by the 
qualified opportunity fund as of each date de-
scribed in section 1400Z–2(d)(1), and 
‘‘(E) in the case of real property, number 
of residential units (if any), 
‘‘(7) the approximate average monthly number 
of full-time equivalent employees for the year of the 
trades or businesses of the qualified opportunity 
fund in which qualified opportunity zone business 
property is held (within numerical ranges identified 
by the Secretary) or such other indication of the em-
ployment impact of such trades or businesses as de-
termined appropriate by the Secretary, 
‘‘(8) with respect to each person who disposed 
of an investment in the qualified opportunity fund 
during the year—
‘‘(A) the name and taxpayer identification 
number of such person, 
‘‘(B) the date or dates on which the invest-
ment disposed was acquired, and 
‘‘(C) the date or dates on which any such 
investment was disposed and the amount of the 
investment disposed, and
823
•HR 1 EH1S 
‘‘(9) such other information as the Secretary 
may require. 
‘‘(c) STATEMENT REQUIRED TO BE FURNISHED TO 
INVESTORS.—Every person required to make a return 
under subsection (a) shall furnish to each person whose 
name is required to be set forth in such return by reason 
of subsection (b)(8) a written statement showing—
‘‘(1) the name, address and phone number of 
the information contact of the person required to 
make such return, and 
‘‘(2) the information required to be shown on 
such return by reason of subsection (b)(8) with re-
spect to the person whose name is required to be so 
set forth. 
‘‘(d) DEFINITIONS.—For purposes of this section—
‘‘(1) IN GENERAL.—Any term used in this sec-
tion which is also used in subchapter Z of chapter 
1 shall have the meaning given such term under 
such subchapter. 
‘‘(2) FULL-TIME
EQUIVALENT
EMPLOYEES.—
The term ‘full-time equivalent employees’ means, 
with respect to any month, the sum of—
‘‘(A) the number of full-time employees (as 
defined in section 4980H(c)(4)) for the month, 
plus
824
•HR 1 EH1S 
‘‘(B) the number of employees determined 
(under rules similar to the rules of section 
4980H(c)(2)(E)) by dividing the aggregate 
number of hours of service of employees who 
are not full-time employees for the month by 
120. 
‘‘(e) APPLICATION TO QUALIFIED RURAL OPPOR-
TUNITY FUNDS.—Every qualified rural opportunity fund 
(as defined in section 1400Z–2(b)(2)(B)(vii)) shall file the 
annual return required under subsection (a), and the 
statements required under subsection (c), applied—
‘‘(1) by substituting ‘qualified rural oppor-
tunity’ for ‘qualified opportunity’ each place it ap-
pears, 
‘‘(2) 
by 
substituting 
‘section 
1400Z–
2(b)(2)(B)(vii)’ for ‘section 1400Z–2(d)(1)’ each 
place it appears, and 
‘‘(3) by treating any reference (after the appli-
cation of paragraph (1)) to qualified rural oppor-
tunity zone stock, a qualified rural opportunity zone 
partnership interest, a qualified rural opportunity 
zone business, or qualified opportunity zone business 
property as stock, an interest, a business, or prop-
erty, respectively, described in subclause (I) or (II),
825
•HR 1 EH1S 
as 
the 
case 
may 
be, 
of 
section 
1400Z–
2(b)(2)(B)(vii). 
‘‘SEC. 6039L. INFORMATION REQUIRED FROM QUALIFIED 
OPPORTUNITY 
ZONE 
BUSINESSES 
AND 
QUALIFIED 
RURAL 
OPPORTUNITY 
ZONE 
BUSINESSES. 
‘‘(a) IN GENERAL.—Every applicable qualified oppor-
tunity zone business shall furnish to the qualified oppor-
tunity fund described in subsection (b) a written state-
ment in such manner and setting forth such information 
as the Secretary may by regulations prescribe for purposes 
of enabling such qualified opportunity fund to meet the 
requirements of section 6039K(b)(5). 
‘‘(b) APPLICABLE QUALIFIED OPPORTUNITY ZONE 
BUSINESS.—For purposes of subsection (a), the term ‘ap-
plicable qualified opportunity zone business’ means any 
qualified opportunity zone business—
‘‘(1) which is a trade or business of a qualified 
opportunity fund, 
‘‘(2) in which a qualified opportunity fund holds 
qualified opportunity zone stock, or 
‘‘(3) in which a qualified opportunity fund holds 
a qualified opportunity zone partnership interest.
826
•HR 1 EH1S 
‘‘(c) OTHER TERMS.—Any term used in this section 
which is also used in subchapter Z of chapter 1 shall have 
the meaning given such term under such subchapter. 
‘‘(d) APPLICATION TO QUALIFIED RURAL OPPOR-
TUNITY BUSINESSES.—Every applicable qualified rural 
opportunity zone business (as defined in subsection (b) de-
termined after application of the substitutions described 
in this sentence) shall furnish the written statement re-
quired under subsection (a), applied—
‘‘(1) by substituting ‘qualified rural oppor-
tunity’ for ‘qualified opportunity’ each place it ap-
pears, and 
‘‘(2) by treating any reference (after the appli-
cation of paragraph (1)) to qualified rural oppor-
tunity zone stock, a qualified rural opportunity zone 
partnership interest, or a qualified rural opportunity 
zone business as stock, an interest, or a business, re-
spectively, described in subclause (I) or (II), as the 
case may be, of section 1400Z–2(b)(2)(B)(vii).’’. 
(2) PENALTIES.—
(A) IN GENERAL.—Part II of subchapter 
B of chapter 68 is amended by inserting after 
section 6725 the following new section:
827
•HR 1 EH1S 
‘‘SEC. 6726. FAILURE TO COMPLY WITH INFORMATION RE-
PORTING 
REQUIREMENTS 
RELATING 
TO 
QUALIFIED 
OPPORTUNITY 
FUNDS 
AND 
QUALIFIED RURAL OPPORTUNITY FUNDS. 
‘‘(a) IN GENERAL.—In the case of any person re-
quired to file a return under section 6039K fails to file 
a complete and correct return under such section in the 
time and in the manner prescribed therefor, such person 
shall pay a penalty of $500 for each day during which 
such failure continues. 
‘‘(b) LIMITATION.—
‘‘(1) IN
GENERAL.—The maximum penalty 
under this section on failures with respect to any 1 
return shall not exceed $10,000. 
‘‘(2) 
LARGE
QUALIFIED
OPPORTUNITY 
FUNDS.—In the case of any failure described in sub-
section (a) with respect to a fund the gross assets 
of which (determined on the last day of the taxable 
year) are in excess of $10,000,000, paragraph (1) 
shall be applied by substituting ‘$50,000’ for 
‘$10,000’. 
‘‘(c) PENALTY
IN CASES
OF INTENTIONAL DIS-
REGARD.—If a failure described in subsection (a) is due 
to intentional disregard, then—
‘‘(1) subsection (a) shall be applied by sub-
stituting ‘$2,500’ for ‘$500’,
828
•HR 1 EH1S 
‘‘(2) subsection (b)(1) shall be applied by sub-
stituting ‘$50,000’ for ‘$10,000’, and 
‘‘(3) subsection (b)(2) shall be applied by sub-
stituting ‘$250,000’ for ‘$50,000’. 
‘‘(d) INFLATION ADJUSTMENT.—
‘‘(1) IN GENERAL.—In the case of any failure 
relating to a return required to be filed in a calendar 
year beginning after 2025, each of the dollar 
amounts in subsections (a), (b), and (c) shall be in-
creased by an amount equal to such dollar amount 
multiplied by the cost-of-living adjustment deter-
mined under section 1(f)(3) for the calendar year 
determined by substituting ‘calendar year 2024’ for 
‘calendar year 2016’ in subparagraph (A)(ii) thereof. 
‘‘(2) ROUNDING.—
‘‘(A) IN
GENERAL.—If the $500 dollar 
amount in subsection (a) and (c)(1) or the 
$2,500 amount in subsection (c)(1), after being 
increased under paragraph (1), is not a mul-
tiple of $10, such dollar amount shall be round-
ed to the next lowest multiple of $10. 
‘‘(B) 
ASSET
THRESHOLD.—If 
the 
$10,000,000 dollar amount in subsection (b)(2), 
after being increased under paragraph (1), is 
not a multiple of $10,000, such dollar amount
829
•HR 1 EH1S 
shall be rounded to the next lowest multiple of 
$10,000. 
‘‘(C) OTHER
DOLLAR
AMOUNTS.—If any 
dollar amount in subsection (b) or (c) (other 
than any amount to which subparagraph (A) or 
(B) applies), after being increased under para-
graph (1), is not a multiple of $1,000, such dol-
lar amount shall be rounded to the next lowest 
multiple of $1,000.’’. 
(B) INFORMATION REQUIRED TO BE SENT 
TO OTHER TAXPAYERS.—Section 6724(d)(2), as 
amended by the preceding provisions of this 
Act, is amended—
(i) by striking ‘‘or’’ at the end of sub-
paragraph (LL), 
(ii) by striking the period at the end 
of the subparagraph (MM) and inserting a 
comma, and 
(iii) by inserting after subparagraph 
(MM) the following new subparagraphs: 
‘‘(NN) section 6039K(c) (relating to dis-
position of qualified opportunity fund invest-
ments), or 
‘‘(OO) section 6039L (relating to informa-
tion required from certain qualified opportunity
830
•HR 1 EH1S 
zone businesses and qualified rural opportunity 
zone businesses).’’. 
(3) ELECTRONIC FILING.—Section 6011(e) is 
amended by adding at the end the following new 
paragraph: 
‘‘(8) QUALIFIED
OPPORTUNITY
FUNDS
AND 
QUALIFIED RURAL OPPORTUNITY FUNDS.—Notwith-
standing paragraphs (1) and (2), any return filed by 
a qualified opportunity fund or qualified rural oppor-
tunity fund shall be filed on magnetic media or other 
machine-readable form.’’. 
(4) CLERICAL AMENDMENTS.—
(A) The table of sections for subpart A of 
part III of subchapter A of chapter 61 is 
amended by inserting after the item relating to 
section 6039J the following new items:
‘‘Sec. 6039K. Returns with respect to qualified opportunity funds and qualified 
rural opportunity funds. 
‘‘Sec. 6039L. Information required from qualified opportunity zone businesses 
and qualified rural opportunity zone businesses.’’.’’.
(B) The table of sections for part II of 
subchapter B of chapter 68 is amended by in-
serting after the item relating to section 6725 
the following new item:
‘‘Sec. 6726. Failure to comply with information reporting requirements relating 
to qualified opportunity funds and qualified rural opportunity 
funds.’’.
831
•HR 1 EH1S 
(5) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to taxable years begin-
ning after the date of the enactment of this Act. 
(e) SECRETARY REPORTING OF DATA ON OPPOR-
TUNITY ZONE AND RURAL OPPORTUNITY ZONE TAX IN-
CENTIVES.—
(1) IN GENERAL.—As soon as practical after 
the date of the enactment of this Act, and annually 
thereafter, the Secretary of the Treasury, or the 
Secretary’s delegate (referred to in this section as 
the ‘‘Secretary’’) shall make publicly available a re-
port on qualified opportunity funds. 
(2) INFORMATION INCLUDED.—The report re-
quired under paragraph (1) shall include, to the ex-
tent available, the following information: 
(A) The number of qualified opportunity 
funds. 
(B) The aggregate dollar amount of assets 
held in qualified opportunity funds. 
(C) The aggregate dollar amount of invest-
ments made by qualified opportunity funds in 
qualified opportunity fund property, stated sep-
arately for each North American Industry Clas-
sification System (NAICS) code.
832
•HR 1 EH1S 
(D) The percentage of population census 
tracts designated as qualified opportunity zones 
that have received qualified opportunity fund 
investments. 
(E) For each population census tract des-
ignated as a qualified opportunity zone, the ap-
proximate average monthly number of full-time 
equivalent employees of the qualified oppor-
tunity zone businesses in such qualified oppor-
tunity zone for the preceding 12-month period 
(within numerical ranges identified by the Sec-
retary) or such other indication of the employ-
ment impact of such qualified opportunity fund 
businesses as determined appropriate by the 
Secretary. 
(F) The percentage of the total amount of 
investments made by qualified opportunity 
funds in—
(i) qualified opportunity zone property 
which is real property; and 
(ii) other qualified opportunity zone 
property. 
(G) For each population census tract, the 
aggregate approximate number of residential
833
•HR 1 EH1S 
units resulting from investments made by quali-
fied opportunity funds in real property. 
(H) The aggregate dollar amount of in-
vestments made by qualified opportunity funds 
in each population census tract. 
(3) ADDITIONAL INFORMATION.—
(A) IN GENERAL.—Beginning with the re-
port submitted under paragraph (1) for the 6th 
year after the date of the enactment of this Act, 
the Secretary shall include in such report the 
impacts and outcomes of a designation of a 
population census tract as a qualified oppor-
tunity zone as measured by economic indicators, 
such as job creation, poverty reduction, new 
business starts, and other metrics as deter-
mined by the Secretary. 
(B) SEMI-DECENNIAL INFORMATION.—
(i) IN GENERAL.—In the case of any 
report submitted under paragraph (1) in 
the 6th year or the 11th year after the 
date of the enactment of this Act, the Sec-
retary shall include the following informa-
tion: 
(I) For population census tracts 
designated as a qualified opportunity
834
•HR 1 EH1S 
zone, a comparison (based on aggre-
gate information) of the factors listed 
in clause (iii) between the 5-year pe-
riod ending on the date of the enact-
ment of Public Law 115–97 and the 
most recent 5-year period for which 
data is available. 
(II) For population census tracts 
designated as a qualified opportunity 
zone, a comparison (based on aggre-
gate information) of the factors listed 
in clause (iii) for the most recent 5-
year period for which data is available 
between such population census tracts 
and a similar population census tracts 
that were not designated as a quali-
fied opportunity zone. 
(ii) CONTROL GROUPS.—For purposes 
of clause (i), the Secretary may combine 
population census tracts into such groups 
as the Secretary determines appropriate 
for purposes of making comparisons. 
(iii) FACTORS
LISTED.—The factors 
listed in this clause are the following: 
(I) The unemployment rate.
835
•HR 1 EH1S 
(II) The number of persons 
working in the population census 
tract, including the percentage of such 
persons who were not residents in the 
population census tract in the pre-
ceding year. 
(III) 
Individual, 
family, 
and 
household poverty rates. 
(IV) Median family income of 
residents of the population census 
tract. 
(V) Demographic information on 
residents of the population census 
tract, including age, income, edu-
cation, race, and employment. 
(VI) The average percentage of 
income of residents of the population 
census tract spent on rent annually. 
(VII) The number of residences 
in the population census tract. 
(VIII) The rate of home owner-
ship in the population census tract. 
(IX) The average value of resi-
dential property in the population cen-
sus tract.
836
•HR 1 EH1S 
(X) The number of affordable 
housing units in the population census 
tract. 
(XI) The number and percentage 
of residents in the population census 
tract that were not employed for the 
preceding year. 
(XII) The number of new busi-
ness starts in the population census 
tract. 
(XIII) The distribution of em-
ployees in the population census tract 
by North American Industry Classi-
fication System (NAICS) code. 
(4) PROTECTION OF IDENTIFIABLE RETURN IN-
FORMATION.—In making reports required under this 
subsection, the Secretary—
(A) shall establish appropriate procedures 
to ensure that any amounts reported do not dis-
close taxpayer return information that can be 
associated with any particular taxpayer or com-
petitive or proprietary information, and 
(B) if necessary to protect taxpayer return 
information, may combine information required
837
•HR 1 EH1S 
with respect to individual population census 
tracts into larger geographic areas. 
(5) DEFINITIONS.—Any term used in this sub-
section which is also used in subchapter Z of chapter 
1 of the Internal Revenue Code of 1986 shall have 
the meaning given such term under such subchapter. 
(6) REPORTS
ON
QUALIFIED
RURAL
OPPOR-
TUNITY FUNDS.—The Secretary shall make publicly 
available, with respect to qualified rural opportunity 
funds, separate reports as required under this sub-
section, applied—
(A) by substituting ‘‘qualified rural oppor-
tunity’’ for ‘‘qualified opportunity’’ each place it 
appears, 
(B) by substituting a reference to this Act 
for ‘‘Public Law 115–97’’, and 
(C) by treating any reference (after the ap-
plication of subparagraph (A)) to qualified rural 
opportunity zone stock, qualified rural oppor-
tunity zone partnership interest, qualified rural 
opportunity zone business, or qualified oppor-
tunity zone business property as stock, interest, 
business, or property, respectively, described in 
subclause (I) or (II), as the case may be, of sec-
838
•HR 1 EH1S 
tion 1400Z–2(b)(2)(B)(vii) of the Internal Rev-
enue Code of 1986. 
SEC. 111103. INCREASED DOLLAR LIMITATIONS FOR EX-
PENSING OF CERTAIN DEPRECIABLE BUSI-
NESS ASSETS. 
(a) IN GENERAL.—Section 179(b) is amended—
(1) in paragraph (1), by striking ‘‘$1,000,000’’ 
and inserting ‘‘$2,500,000’’, and 
(2) in paragraph (2), by striking ‘‘$2,500,000’’ 
and inserting ‘‘$4,000,000’’. 
(b) 
CONFORMING
AMENDMENTS.—Section 
179(b)(6)(A) is amended—
(1) by inserting ‘‘(2025 in the case of the dollar 
amounts in paragraphs (1) and (2))’’ after ‘‘In the 
case of any taxable year beginning after 2018’’, and 
(2) in clause (ii), by striking ‘‘determined by 
substituting ‘calendar year 2017’ for ‘calendar year 
2016’ in subparagraph (A)(ii) thereof.’’ and insert-
ing ‘‘determined by substituting in subparagraph 
(A)(ii) thereof—
‘‘(I) in the case of amounts in 
paragraphs (1) and (2), ‘calendar year 
2024’ for ‘calendar year 2016’, and
839
•HR 1 EH1S 
‘‘(II) in the case of the amount 
in paragraph (5)(A), ‘calendar year 
2017’ for ‘calendar year 2016’.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to property placed in service in 
taxable years beginning after December 31, 2024. 
SEC. 111104. REPEAL OF REVISION TO DE MINIMIS RULES 
FOR 
THIRD 
PARTY 
NETWORK 
TRANS-
ACTIONS. 
(a) REINSTATEMENT OF EXCEPTION FOR DE MINI-
MIS PAYMENTS AS IN EFFECT PRIOR TO ENACTMENT OF 
AMERICAN RESCUE PLAN ACT OF 2021.—
(1) IN GENERAL.—Section 6050W(e) is amend-
ed to read as follows: 
‘‘(e) EXCEPTION FOR DE MINIMIS PAYMENTS BY 
THIRD PARTY SETTLEMENT ORGANIZATIONS.—A third 
party settlement organization shall be required to report 
any information under subsection (a) with respect to third 
party network transactions of any participating payee only 
if—
‘‘(1) the amount which would otherwise be re-
ported under subsection (a)(2) with respect to such 
transactions exceeds $20,000, and 
‘‘(2) the aggregate number of such transactions 
exceeds 200.’’.
840
•HR 1 EH1S 
(2) EFFECTIVE DATE.—The amendment made 
by this subsection shall take effect as if included in 
section 9674 of the American Rescue Plan Act. 
(b) APPLICATION OF DE MINIMIS RULE FOR THIRD 
PARTY NETWORK TRANSACTIONS
TO BACKUP WITH-
HOLDING.—
(1) IN GENERAL.—Section 3406(b) is amended 
by adding at the end the following new paragraph: 
‘‘(8) OTHER REPORTABLE PAYMENTS INCLUDE 
PAYMENTS IN SETTLEMENT OF THIRD PARTY NET-
WORK
TRANSACTIONS
ONLY
WHERE
AGGREGATE 
TRANSACTIONS
EXCEED
REPORTING
THRESHOLD 
FOR THE CALENDAR YEAR.—
‘‘(A) IN GENERAL.—Any payment in set-
tlement of a third party network transaction re-
quired to be shown on a return required under 
section 6050W which is made during any cal-
endar year shall be treated as a reportable pay-
ment only if—
‘‘(i) the aggregate number of trans-
actions with respect to the participating 
payee during such calendar year exceeds 
the number of transactions specified in 
section 6050W(e)(2), and
841
•HR 1 EH1S 
‘‘(ii) the aggregate amount of trans-
actions with respect to the participating 
payee during such calendar year exceeds 
the dollar amount specified in section 
6050W(e)(1) at the time of such payment. 
‘‘(B) EXCEPTION
IF
THIRD
PARTY
NET-
WORK
TRANSACTIONS
MADE
IN
PRIOR
YEAR 
WERE REPORTABLE.—Subparagraph (A) shall 
not apply with respect to payments to any par-
ticipating payee during any calendar year if one 
or more payments in settlement of third party 
network transactions made by the payor to the 
participating payee during the preceding cal-
endar year were reportable payments.’’. 
(2) EFFECTIVE DATE.—The amendment made 
by this subsection shall apply to calendar years be-
ginning after December 31, 2024. 
SEC. 111105. INCREASE IN THRESHOLD FOR REQUIRING IN-
FORMATION REPORTING WITH RESPECT TO 
CERTAIN PAYEES. 
(a) IN GENERAL.—Section 6041(a) is amended by 
striking ‘‘$600’’ and inserting ‘‘$2,000’’. 
(b) INFLATION
ADJUSTMENT.—Section 6041 is 
amended by adding at the end the following new sub-
section:
842
•HR 1 EH1S 
‘‘(h) INFLATION ADJUSTMENT.—In the case of any 
calendar year after 2026, the dollar amount in subsection 
(a) shall be increased by an amount equal to—
‘‘(1) such dollar amount, multiplied by 
‘‘(2) the cost-of-living adjustment determined 
under section 1(f)(3) for such calendar year, deter-
mined by substituting ‘calendar year 2025’ for ‘cal-
endar year 2016’ in subparagraph (A)(ii) thereof. 
If any increase under the preceding sentence is not a mul-
tiple of $100, such increase shall be rounded to the nearest 
multiple of $100.’’. 
(c) APPLICATION TO REPORTING ON REMUNERATION 
FOR SERVICES.—Section 6041A(a)(2) is amended by 
striking ‘‘is $600 or more’’ and inserting ‘‘equals or ex-
ceeds the dollar amount in effect for such calendar year 
under section 6041(a)’’. 
(d) APPLICATION TO BACKUP WITHHOLDING.—Sec-
tion 3406(b)(6) is amended—
(1) by striking ‘‘$600’’ in subparagraph (A) 
and inserting ‘‘the dollar amount in effect for such 
calendar year under section 6041(a)’’, and 
(2) by striking ‘‘ONLY WHERE AGGREGATE FOR 
CALENDAR YEAR IS $600 OR MORE’’ in the heading 
and inserting ‘‘ONLY IF IN EXCESS OF THRESHOLD’’. 
(e) CONFORMING AMENDMENTS.—
843
•HR 1 EH1S 
(1) The heading of section 6041(a) is amended 
by striking ‘‘OF $600 OR MORE’’ and inserting ‘‘EX-
CEEDING THRESHOLD’’. 
(2) Section 6041(a) is amended by striking 
‘‘taxable year’’ and inserting ‘‘calendar year’’. 
(f) EFFECTIVE DATE.—The amendments made by 
this section shall apply with respect to payments made 
after December 31, 2025. 
SEC. 111106. EXCLUSION OF INTEREST ON LOANS SECURED 
BY RURAL OR AGRICULTURAL REAL PROP-
ERTY. 
(a) IN GENERAL.—Part III of subchapter B of chap-
ter 1, as amended by the preceding provisions of this Act, 
is amended by inserting after section 139J the following 
new section: 
‘‘SEC. 139K. INTEREST ON LOANS SECURED BY RURAL OR 
AGRICULTURAL REAL PROPERTY. 
‘‘(a) IN GENERAL.—Gross income shall not include 
25 percent of the interest received by a qualified lender 
on any qualified real estate loan. 
‘‘(b) QUALIFIED LENDER.—For purposes of this sec-
tion, the term ‘qualified lender’ means—
‘‘(1) any bank or savings association the depos-
its of which are insured under the Federal Deposit 
Insurance Act (12 U.S.C. 1811 et seq.),
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•HR 1 EH1S 
‘‘(2) any State- or federally-regulated insurance 
company, 
‘‘(3) any entity wholly owned, directly or indi-
rectly, by a company that is treated as a bank hold-
ing company for purposes of section 8 of the Inter-
national Banking Act of 1978 (12 U.S.C. 3106) if—
‘‘(A) such entity is organized, incor-
porated, or established under the laws of the 
United States or any State of the United 
States, and 
‘‘(B) the principal place of business of 
such entity is in the United States (including 
any territory of the United States), 
‘‘(4) any entity wholly owned, directly or indi-
rectly, by a company that is considered an insurance 
holding company under the laws of any State if such 
entity satisfies the requirements described in sub-
paragraphs (A) and (B) of paragraph (3), and 
‘‘(5) with respect to interest received on a quali-
fied real estate loan secured by real estate described 
in subsection (c)(3)(A), any federally chartered in-
strumentality of the United States established under 
section 8.1(a) of the Farm Credit Act of 1971 (12 
U.S.C. 2279aa-1(a)).
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•HR 1 EH1S 
‘‘(c) QUALIFIED REAL ESTATE LOAN.—For purposes 
of this section—
‘‘(1) IN GENERAL.—The term ‘qualified real es-
tate loan’ means any loan—
‘‘(A) secured by—
‘‘(i) rural or agricultural real estate, 
or 
‘‘(ii) a leasehold mortgage (with a sta-
tus as a lien) on rural or agricultural real 
estate, 
‘‘(B) made to a person other than a speci-
fied foreign entity (as defined in section 
7701(a)(51)), and 
‘‘(C) made after the date of the enactment 
of this section and before January 1, 2029. 
For purposes of the preceding sentence, the deter-
mination of whether property securing such loan is 
rural or agricultural real estate shall be made as of 
the time the interest income on such loan is accrued. 
‘‘(2) REFINANCINGS.—For purposes of sub-
paragraphs (A) and (C) of paragraph (1), a loan 
shall not be treated as made after the date of the 
enactment of this section to the extent that the pro-
ceeds of such loan are used to refinance a loan 
which was made on or before the date of the enact-
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•HR 1 EH1S 
ment of this section (or, in the case of any series of 
refinancings, the original loan was made on or be-
fore such date). 
‘‘(3) RURAL
OR
AGRICULTURAL
REAL
ES-
TATE.—The term ‘rural or agricultural real estate’ 
means—
‘‘(A) any real property which is substan-
tially used for the production of one or more 
agricultural products, 
‘‘(B) any real property which is substan-
tially used in the trade or business of fishing or 
seafood processing, and 
‘‘(C) any aquaculture facility. 
Such term shall not include any property which is 
not located in a State or a possession of the United 
States. 
‘‘(4) 
AQUACULTURE
FACILITY.—The 
term 
‘aquaculture facility’ means any land, structure, or 
other appurtenance that is used for aquaculture (in-
cluding any hatchery, rearing pond, raceway, pen, or 
incubator). 
‘‘(d) COORDINATION WITH SECTION 265.—Qualified 
real estate loans shall be treated as obligations described 
in section 265(a)(2) the interest on which is wholly exempt 
from the taxes imposed by this subtitle.’’.
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•HR 1 EH1S 
(b) CLERICAL AMENDMENT.—The table of sections 
for part III of subchapter B of chapter 1, as amended 
by the preceding provisions of this Act, is amended by in-
serting after the item relating to section 139J the fol-
lowing new item:
‘‘Sec. 139K. Interest on loans secured by rural or agricultural real property.’’.
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years ending after the 
date of the enactment of this Act. 
SEC. 111107. TREATMENT OF CERTAIN QUALIFIED SOUND 
RECORDING PRODUCTIONS. 
(a) ELECTION TO TREAT COSTS AS EXPENSES.—
Section 181(a)(1) is amended by striking ‘‘qualified film 
or television production, and any qualified live theatrical 
production,’’ and inserting ‘‘qualified film or television 
production, any qualified live theatrical production, and 
any qualified sound recording production’’. 
(b) DOLLAR
LIMITATION.—Section 181(a)(2) is 
amended by adding at the end the following new subpara-
graph: 
‘‘(C) QUALIFIED SOUND RECORDING PRO-
DUCTION.—Paragraph (1) shall not apply to so 
much of the aggregate cost of any qualified 
sound recording production, or to so much of 
the aggregate, cumulative cost of all such quali-
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•HR 1 EH1S 
fied sound recording productions in the taxable 
year, as exceeds $150,000.’’. 
(c) NO OTHER DEDUCTION OR AMORTIZATION DE-
DUCTION ALLOWABLE.—Section 181(b) is amended by 
striking ‘‘qualified film or television production or any 
qualified live theatrical production’’ and inserting ‘‘quali-
fied film or television production, any qualified live theat-
rical production, or any qualified sound recording produc-
tion’’. 
(d) ELECTION.—Section 181(c)(1) is amended by 
striking ‘‘qualified film or television production or any 
qualified live theatrical production’’ and inserting ‘‘quali-
fied film or television production, any qualified live theat-
rical production, or any qualified sound recording produc-
tion’’. 
(e) QUALIFIED SOUND RECORDING PRODUCTION 
DEFINED.—Section 181 is amended by redesignating sub-
sections (f) and (g) as subsections (g) and (h), respec-
tively, and by inserting after subsection (e) the following 
new subsection: 
‘‘(f) QUALIFIED SOUND RECORDING PRODUCTION.—
For purposes of this section, the term ‘qualified sound re-
cording production’ means a sound recording (as defined 
in section 101 of title 17, United States Code) produced 
and recorded in the United States.’’.
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•HR 1 EH1S 
(f) APPLICATION OF TERMINATION.—Section 181(g) 
is amended by striking ‘‘qualified film and television pro-
ductions or qualified live theatrical productions’’ and in-
serting ‘‘qualified film and television productions, qualified 
live theatrical productions, and qualified sound recording 
productions’’. 
(g) BONUS DEPRECIATION.—
(1) QUALIFIED
SOUND
RECORDING
PRODUC-
TION
AS
QUALIFIED
PROPERTY.—Section 
168(k)(2)(A)(i) is amended—
(A) by striking ‘‘or’’ at the end of sub-
clause (IV), by inserting ‘‘or’’ at the end of sub-
clause (V), and by inserting after subclause (V) 
the following: 
‘‘(VI) which is a qualified sound 
recording production (as defined in 
subsection (f) of section 181) which is 
placed in service before January 1, 
2029, for which a deduction would 
have been allowable under section 181 
without regard to subsections (a)(2) 
and (h) of such section or this sub-
section, and’’, and 
(B) in subclauses (IV) and (V) (as so 
amended) by striking ‘‘without regard to sub-
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•HR 1 EH1S 
sections (a)(2) and (g)’’ both places it appears 
and inserting ‘‘without regard to subsections 
(a)(2) and (h)’’. 
(2) PRODUCTION PLACED IN SERVICE.—Section 
168(k)(2)(H) is amended by striking ‘‘and’’ at the 
end of clause (i), by striking the period at the end 
of clause (ii) and inserting ‘‘, and’’, and by adding 
after clause (ii) the following: 
‘‘(iii) a qualified sound recording pro-
duction shall be considered to be placed in 
service at the time of initial release or 
broadcast.’’. 
(h) CONFORMING AMENDMENTS.—
(1) The heading for section 181 is amended to 
read as follows: ‘‘TREATMENT
OF
CERTAIN 
QUALIFIED PRODUCTIONS.’’. 
(2) The table of sections for part VI of sub-
chapter B of chapter 1 is amended by striking the 
item relating to section 181 and inserting the fol-
lowing new item:
‘‘Sec. 181. Treatment of certain qualified productions.’’.
(i) EFFECTIVE DATE.—The amendments made by 
this section shall apply to productions commencing in tax-
able years ending after the date of the enactment of this 
Act.
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SEC. 111108. MODIFICATIONS TO LOW-INCOME HOUSING 
CREDIT. 
(a) STATE HOUSING CREDIT CEILING INCREASE FOR 
LOW-INCOME HOUSING CREDIT.—
(1) 
IN
GENERAL.—Section 
42(h)(3)(I) 
is 
amended—
(A) by striking ‘‘and 2021,’’ and inserting 
‘‘2021, 2026, 2027, 2028, and 2029,’’, and 
(B) by striking ‘‘2018, 2019, 2020, AND 
2021’’ in the heading and inserting ‘‘CERTAIN 
CALENDAR YEARS’’. 
(2) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to calendar years after 
2025. 
(b) TAX-EXEMPT
BOND
FINANCING
REQUIRE-
MENT.—
(1) IN GENERAL.—Section 42(h)(4) is amended 
by striking subparagraph (B) and inserting the fol-
lowing: 
‘‘(B) SPECIAL
RULE
WHERE
MINIMUM 
PERCENT
OF
BUILDINGS
IS
FINANCED
WITH 
TAX-EXEMPT
BONDS
SUBJECT
TO
VOLUME 
CAP.—For purposes of subparagraph (A), para-
graph (1) shall not apply to any portion of the 
credit allowable under subsection (a) with re-
spect to a building if—
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•HR 1 EH1S 
‘‘(i) 50 percent or more of the aggre-
gate basis of such building and the land on 
which the building is located is financed by 
1 or more obligations described in subpara-
graph (A), or 
‘‘(ii)(I) 25 percent or more of the ag-
gregate basis of such building and the land 
on which the building is located is financed 
by 1 or more qualified obligations, and 
‘‘(II) 1 or more of such qualified obli-
gations—
‘‘(aa) are part of an issue the 
issue date of which is after December 
31, 2025, and 
‘‘(bb) provide the financing for 
not less than 5 percent of the aggre-
gate basis of such building and the 
land on which the building is located. 
‘‘(C) QUALIFIED
OBLIGATION.—For pur-
poses of subparagraph (B)(ii), the term ‘quali-
fied obligation’ means an obligation which is de-
scribed in subparagraph (A) and which is part 
of an issue the issue date of which is before 
January 1, 2030.’’. 
(2) EFFECTIVE DATE.—
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•HR 1 EH1S 
(A) IN GENERAL.—The amendment made 
by this subsection shall apply to buildings 
placed in service in taxable years beginning 
after December 31, 2025. 
(B) 
REHABILITATION
EXPENDITURES 
TREATED
AS
SEPARATE
NEW
BUILDING.—In 
the case of any building with respect to which 
any expenditures are treated as a separate new 
building under section 42(e) of the Internal 
Revenue Code of 1986, for purposes of sub-
paragraph (A), both the existing building and 
the separate new building shall be treated as 
having been placed in service on the date such 
expenditures are treated as placed in service 
under section 42(e)(4) of such Code. 
(c) TEMPORARY INCLUSION OF INDIAN AREAS AND 
RURAL AREAS AS DIFFICULT DEVELOPMENT AREAS FOR 
PURPOSES OF CERTAIN BUILDINGS.—
(1) IN GENERAL.—Section 42(d)(5)(B)(iii)(I) is 
amended by inserting before the period the fol-
lowing: ‘‘, and, in the case of buildings placed in 
service after December 31, 2025 and before January 
1, 2030, any Indian area or rural area’’. 
(2) INDIAN
AREA; 
RURAL
AREA.—Section 
42(d)(5)(B)(iii) is amended by redesignating sub-
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•HR 1 EH1S 
clause (II) as subclause (IV) and by inserting after 
subclause (I) the following new subclauses: 
‘‘(II) INDIAN
AREA.—For pur-
poses of subclause (I), the term ‘In-
dian area’ means any Indian area (as 
defined in section 4(11) of the Native 
American Housing Assistance and 
Self Determination Act of 1996 (25 
U.S.C. 4103(11))) and any housing 
area (as defined in section 801(5) of 
such Act (25 U.S.C. 4221(5))). 
‘‘(III) RURAL
AREA.—For pur-
poses of subclause (I), the term ‘rural 
area’ means any non-metropolitan 
area, or any rural area as defined by 
section 520 of the Housing Act of 
1949, which is identified by the quali-
fied allocation plan under subsection 
(m)(1)(B).’’. 
(3) 
ELIGIBLE
BUILDINGS.—Section 
42(d)(5)(B)(iii), as amended by paragraph (2), is 
further amended by adding at the end the following 
new subclause: 
‘‘(V) SPECIAL RULE FOR BUILD-
INGS IN INDIAN AREAS.—In the case
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•HR 1 EH1S 
of an area which is a difficult develop-
ment area solely because it is an In-
dian area under this section, a build-
ing shall not be treated as located in 
such area unless such building is as-
sisted or financed under the Native 
American Housing Assistance and 
Self Determination Act of 1996 (25 
U.S.C. 4101 et seq.) or the project 
sponsor is an Indian tribe (as defined 
in section 45A(c)(6)), a tribally des-
ignated housing entity (as defined in 
section 4(22) of such Act (25 U.S.C. 
4103(22))), or wholly owned or con-
trolled by such an Indian tribe or trib-
ally designated housing entity.’’. 
(4) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to buildings placed in 
service after December 31, 2025. 
SEC. 111109. INCREASED GROSS RECEIPTS THRESHOLD 
FOR SMALL MANUFACTURING BUSINESSES. 
(a) IN GENERAL.—Section 448(c) is amended by re-
designating paragraph (4) as paragraph (5) and by insert-
ing after paragraph (3) the following new paragraph:
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•HR 1 EH1S 
‘‘(4) GROSS
RECEIPTS
TEST
FOR
MANUFAC-
TURING
TAXPAYERS.—In the case of a manufac-
turing taxpayer, paragraph (1) shall be applied by 
substituting ‘$80,000,000’ for ‘$25,000,000’.’’. 
(b) INFLATION ADJUSTMENT.—Section 448(c)(5) (as 
so redesignated) is amended by striking ‘‘the dollar 
amount in paragraph (1) shall be increased’’ and inserting 
‘‘the dollar amounts in paragraphs (1) and (4) shall each 
be increased’’. 
(c) MANUFACTURING TAXPAYER DEFINED.—Section 
448(d) is amended by redesignating paragraph (8) as 
paragraph (9) and by inserting after paragraph (7) the 
following new paragraph: 
‘‘(8) MANUFACTURING TAXPAYER.—
‘‘(A) IN GENERAL.—The term ‘manufac-
turing taxpayer’ means a corporation or part-
nership substantially all the gross receipts of 
which during the 3-taxable-year period de-
scribed in subsection (c)(1) are derived from 
the lease, rental, license, sale, exchange, or 
other disposition of qualified products. 
‘‘(B) QUALIFIED PRODUCT.—For purposes 
of subparagraph (A), the term ‘qualified prod-
uct’ means a product that is both—
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•HR 1 EH1S 
‘‘(i) tangible personal property which 
is not a food or beverage prepared in the 
same building as a retail establishment in 
which substantially similar property is sold 
to the public, and 
‘‘(ii) produced or manufactured by the 
taxpayer in a manner which results in a 
substantial transformation (within the 
meaning of section 168(n)(2)(D)) of the 
property comprising the product. 
‘‘(C) AGGREGATION RULE.—Solely for pur-
poses of determining whether a taxpayer is a 
manufacturing taxpayer under subparagraph 
(A)—
‘‘(i) gross receipts shall be determined 
under the rules of paragraphs (2) and (3) 
of subsection (c), and 
‘‘(ii) for purposes of subsection (c)(2), 
in applying section 52(b), the term ‘trade 
or business’ shall include any activity 
treated as a trade or business under para-
graph (5) or (6) of section 469(c) (deter-
mined without regard to the phrase ‘To 
the extent provided in regulations’ in such 
paragraph (6)).’’.
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•HR 1 EH1S 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2025. 
SEC. 111110. GLOBAL INTANGIBLE LOW-TAXED INCOME DE-
TERMINED WITHOUT REGARD TO CERTAIN 
INCOME 
DERIVED 
FROM 
SERVICES 
PER-
FORMED IN THE VIRGIN ISLANDS. 
(a) IN
GENERAL.—Section 951A(c)(2)(A)(i) is 
amended by striking ‘‘and’’ at the end of subclause (IV), 
by striking ‘‘, over’’ at the end of subclause (V) and insert-
ing ‘‘, and’’, and by adding at the end the following new 
subclause: 
‘‘(VI) in the case of any specified 
United States shareholder, any quali-
fied Virgin Islands services income, 
over’’. 
(b) DEFINITIONS
AND SPECIAL RULES.—Section 
951A(c)(2) is amended by adding at the end the following 
new subparagraph: 
‘‘(C) PROVISIONS RELATED TO QUALIFIED 
VIRGIN ISLANDS SERVICES INCOME.—For pur-
poses of subparagraph (A)(i)(VI)—
‘‘(i) 
QUALIFIED
VIRGIN
ISLANDS 
SERVICES
INCOME.—The term ‘qualified 
Virgin Islands services income’ means any
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•HR 1 EH1S 
gross income which satisfies all of the fol-
lowing requirements: 
‘‘(I) Such gross income is com-
pensation for labor or personal serv-
ices performed in the Virgin Islands 
by a corporation formed under the 
laws of the Virgin Islands. 
‘‘(II) Such gross income is attrib-
utable to services performed from 
within the Virgin Islands by individ-
uals for the benefit of such corpora-
tion. 
‘‘(III) Such gross income is effec-
tively connected with the conduct of a 
trade or business within the Virgin Is-
lands. 
‘‘(ii) 
SPECIFIED
UNITED
STATES 
SHAREHOLDER.—The 
term 
‘specified 
United States shareholder’ means any 
United States shareholder which is—
‘‘(I) an individual, trust, or es-
tate, or 
‘‘(II) a closely held C corporation 
(as defined in section 469(j)(1)) if 
such corporation acquired its direct or
860
•HR 1 EH1S 
indirect equity interest in the foreign 
corporation which derived the quali-
fied Virgin Islands services income be-
fore December 31, 2023. 
‘‘(iii) REGULATIONS.—The Secretary 
shall prescribe such regulations or other 
guidance as may be necessary or appro-
priate to carry out this subparagraph and 
subparagraph (A)(i)(VI), including regula-
tions or other guidance to prevent the 
abuse of such subparagraphs.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years of foreign corpora-
tions beginning after the date of the enactment of this 
Act, and to taxable years of United States shareholders 
with or within which such taxable years of foreign corpora-
tions end. 
SEC. 111111. EXTENSION AND MODIFICATION OF CLEAN 
FUEL PRODUCTION CREDIT. 
(a) PROHIBITION ON FOREIGN FEEDSTOCKS.—
(1) IN
GENERAL.—Section 45Z(f)(1)(A) is 
amended—
(A) in clause (i)(II)(bb), by striking ‘‘and’’ 
at the end,
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•HR 1 EH1S 
(B) in clause (ii), by striking the period at 
the end and inserting ‘‘, and’’, and 
(C) by adding at the end the following new 
clause: 
‘‘(iii) such fuel is exclusively derived 
from a feedstock which was produced or 
grown in the United States, Mexico, or 
Canada.’’. 
(2) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to transportation fuel 
sold after December 31, 2025. 
(b) DETERMINATION OF EMISSIONS RATE.—
(1) IN
GENERAL.—Section 45Z(b)(1)(B) is 
amended by adding at the end the following new 
clauses: 
‘‘(iv) EXCLUSION OF INDIRECT LAND 
USE
CHANGES.—Notwithstanding clauses 
(ii) and (iii), the lifecycle greenhouse gas 
emissions shall be adjusted as necessary to 
exclude any emissions attributed to indi-
rect land use change. Any such adjustment 
shall be based on regulations or methodolo-
gies determined by the Secretary in con-
sultation with the Administrator of the En-
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•HR 1 EH1S 
vironmental Protection Agency and the 
Secretary of Agriculture. 
‘‘(v) ANIMAL
MANURES.—For pur-
poses of the table described in clause (i), 
with respect to any transportation fuels 
which are derived from animal manure, a 
distinct emissions rate shall be provided 
with respect to each of the specific feed-
stocks used to such produce such fuel, 
which shall include dairy manure, swine 
manure, poultry manure, and such other 
sources as are determined appropriate by 
the Secretary.’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
45Z(b)(1)(B)(i) is amended by striking ‘‘clauses (ii) 
and (iii)’’ and inserting ‘‘clauses (ii), (iii), (iv), and 
(v)’’. 
(3) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to emissions rates pub-
lished for taxable years beginning after December 
31, 2025. 
(c) EXTENSION
OF
CLEAN
FUEL
PRODUCTION 
CREDIT.—Section 45Z(g) is amended by striking ‘‘Decem-
ber 31, 2027’’ and inserting ‘‘December 31, 2031’’.
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•HR 1 EH1S 
(d) RESTRICTIONS RELATING TO PROHIBITED FOR-
EIGN ENTITIES.—
(1) IN GENERAL.—Section 45Z(f) is amended 
by adding at the end the following new paragraph: 
‘‘(8) RESTRICTIONS RELATING TO PROHIBITED 
FOREIGN ENTITIES.—
‘‘(A) IN GENERAL.—No credit determined 
under subsection (a) shall be allowed under sec-
tion 38 for any taxable year beginning after the 
date of enactment of this paragraph if the tax-
payer is a specified foreign entity (as defined in 
section 7701(a)(51)(B)). 
‘‘(B) OTHER PROHIBITED FOREIGN ENTI-
TIES.—No credit determined under subsection 
(a) shall be allowed under section 38 for any 
taxable year beginning after the date which is 
2 years after the date of enactment of this 
paragraph if the taxpayer is a foreign-influ-
enced 
entity 
(as 
defined 
in 
section 
7701(a)(51)(D)).’’. 
(2) EFFECTIVE DATE.—The amendment made 
by this subsection shall apply to taxable years begin-
ning after the date of enactment of this Act.
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•HR 1 EH1S 
SEC. 111112. RESTORATION OF TAXABLE REIT SUBSIDIARY 
ASSET TEST. 
(a) 
IN
GENERAL.—Section 
856(c)(4)(B)(ii) 
is 
amended by striking ‘‘20 percent’’ and inserting ‘‘25 per-
cent’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2025. 
PART 3—INVESTING IN THE HEALTH OF RURAL 
AMERICA AND MAIN STREET 
SEC. 111201. EXPANDING THE DEFINITION OF RURAL 
EMERGENCY HOSPITAL UNDER THE MEDI-
CARE PROGRAM. 
(a) IN GENERAL.—Section 1861(kkk) of the Social 
Security Act (42 U.S.C. 1395x(kkk)) is amended—
(1) in paragraph (2)—
(A) in subparagraph (A), by striking ‘‘the 
detailed transition plan’’ and all that follows 
through ‘‘such paragraph’’ and inserting ‘‘the 
detailed transition plan described in clause 
(i)(I) of such paragraph or the assessment of 
health care needs described in clause (i)(II) of 
such paragraph, as applicable,’’; 
(B) in subparagraph (D)(vi), by striking 
the period at the end and inserting ‘‘; and’’; 
and
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•HR 1 EH1S 
(C) by adding at the end the following new 
subparagraph: 
‘‘(E) in the case of a facility described in para-
graph (3)(B)—
‘‘(i) submits an application under section 
1866(j) to enroll under this title as a rural 
emergency hospital—
‘‘(I) in the case that such facility is 
located in a State that, as of January 1, 
2027, provides for the licensing of rural 
emergency hospitals under State or appli-
cable local law (as described in paragraph 
(5)(A)), not later than December 31, 2027; 
and 
‘‘(II) in the case that such facility is 
located in a State that, as of January 1, 
2027, does not provide for the licensing of 
such rural emergency hospitals under State 
or applicable local law (as so described), 
not later than the date that is 1 year after 
the date on which such State begins to 
provide for such licensing; and 
‘‘(ii) in the case that such facility is lo-
cated less than 35 miles away from the nearest 
hospital, critical access hospital, or rural emer-
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•HR 1 EH1S 
gency hospital as of the date on which such fa-
cility submits an application under section 
1866(j) to enroll under this title as a rural 
emergency hospital, beginning not later than 1 
year after the end of the first full cost reporting 
period for which the facility is so enrolled, dem-
onstrates annually, in a form and manner de-
termined appropriate by the Secretary, that 
more than 50 percent of the services furnished 
for the most recent cost reporting period (as de-
termined by the Secretary) were services de-
scribed in paragraph (1)(A)(i), as determined 
based on discharges of individuals entitled to 
benefits under part A or enrolled under part B 
during such cost reporting period.’’; 
(2) in paragraph (3)—
(A) by redesignating subparagraphs (A) 
and (B) as clauses (i) and (ii), respectively, and 
adjusting the margins accordingly; 
(B) by striking ‘‘A facility’’ and inserting: 
‘‘(A) IN GENERAL.—A facility’’; and 
(C) by adding at the end the following new 
subparagraph:
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•HR 1 EH1S 
‘‘(B) 
ADDITIONAL
FACILITIES.—Beginning 
January 1, 2027, a facility described in this para-
graph shall also include a facility that—
‘‘(i) at any time during the period begin-
ning January 1, 2014, and ending December 
26, 2020—
‘‘(I) was a critical access hospital; or 
‘‘(II) was a subsection (d) hospital (as 
defined in section 1886(d)(1)(B)) with not 
more than 50 beds located in a county (or 
equivalent unit of local government) in a 
rural 
area 
(as 
defined 
in 
section 
1886(d)(2)(D)); and 
‘‘(ii) as of December 27, 2020, was not en-
rolled in the program under this title under sec-
tion 1866(j).’’; and 
(3) in paragraph (4)—
(A) in subparagraph (A)(i)—
(i) in subclause (IV), by striking the 
period at the end and inserting ‘‘; and’’; 
(ii) by redesignating subclauses (I) 
through (IV) as items (aa) through (dd), 
respectively, and adjusting the margins ac-
cordingly;
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•HR 1 EH1S 
(iii) by striking ‘‘including a detailed’’ 
and inserting ‘‘including—
‘‘(I) except in the case of a facility de-
scribed in paragraph (3)(B), a detailed’’; 
and 
(iv) by adding at the end the following 
new subclause: 
‘‘(II) in the case of a facility described 
in paragraph (3)(B), an assessment of the 
health care needs of the county (or equiva-
lent unit of local government) in which 
such facility is located, which shall in-
clude—
‘‘(aa) a description of the services 
furnished by the facility during the 
period that such facility was enrolled 
in the program under this title under 
section 1866(j); 
‘‘(bb) a description of the reasons 
that the facility, as of December 27, 
2020, was no longer so enrolled; 
‘‘(cc) the population of such 
county (or equivalent unit); 
‘‘(dd) the percentage of such pop-
ulation who are individuals entitled to
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benefits under part A or enrolled 
under part B; and 
‘‘(ee) a description of any lack of 
access to health care services experi-
enced by such individuals, and an ex-
planation of how reopening the facility 
as a rural emergency hospital would 
mitigate such lack of access.’’. 
(b) AMENDMENTS
TO PAYMENT RULES.—Section 
1834(x) of the Social Security Act (42 U.S.C. 1395m(x)) 
is amended—
(1) in paragraph (1), by inserting ‘‘, except 
that, in the case of a facility described in section 
1861(kkk)(3)(B) that, as of the date on which such 
facility submits an application under section 1866(j) 
to enroll under this title as a rural emergency hos-
pital, is located less than 35 miles away from the 
nearest hospital, critical access hospital, or rural 
emergency hospital, such increase shall not apply’’ 
before the period at the end; and 
(2) in paragraph (2)(A), by inserting ‘‘(other 
than a facility described in section 1861(kkk)(3)(B) 
that, as of the date on which such facility submits 
an application under section 1866(j) to enroll under 
this title as a rural emergency hospital, is located
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less than 10 miles away from the nearest hospital, 
critical access hospital, or rural emergency hos-
pital)’’ after ‘‘rural emergency hospital’’. 
Subtitle C—Make America Win 
Again 
PART 1—WORKING FAMILIES OVER ELITES 
SEC. 112001. TERMINATION OF PREVIOUSLY-OWNED CLEAN 
VEHICLE CREDIT. 
(a) IN GENERAL.—Section 25E(g) is amended by 
striking ‘‘December 31, 2032’’ and inserting ‘‘December 
31, 2025’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to vehicles acquired after Decem-
ber 31, 2025. 
SEC. 112002. TERMINATION OF CLEAN VEHICLE CREDIT. 
(a) IN GENERAL.—Section 30D is amended—
(1) by redesignating subsection (h) as sub-
section (i), and 
(2) in subsection (i), as so redesignated, by 
striking ‘‘December 31, 2032’’ and inserting ‘‘De-
cember 31, 2026’’. 
(b) SPECIAL RULE FOR TAXABLE YEAR 2026.—Sec-
tion 30D is amended by inserting after subsection (g) the 
following new subsection: 
‘‘(h) SPECIAL RULE FOR TAXABLE YEAR 2026.—
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‘‘(1) IN GENERAL.—With respect to any vehicle 
placed in service after December 31, 2025, such ve-
hicle shall not be treated as a new clean vehicle for 
purposes of this section if, during the period begin-
ning on December 31, 2009, and ending on Decem-
ber 31, 2025, the number of covered vehicles manu-
factured by the manufacturer of such vehicle which 
are sold for use in the United States is greater than 
200,000. 
‘‘(2) COVERED
VEHICLES.—For purposes of 
this subsection, the term ‘covered vehicles’ means—
‘‘(A) with respect to vehicles placed in 
service before January 1, 2023, new qualified 
plug-in electric drive motor vehicles (as defined 
in subsection (d)(1), as in effect on December 
31, 2022), and 
‘‘(B) new clean vehicles. 
‘‘(3) CONTROLLED GROUPS.—Rules similar to 
the rules of section 30B(f)(4) shall apply for pur-
poses of this subsection.’’. 
(c) CONFORMING AMENDMENTS.—Section 30D(e) is 
amended—
(1) in paragraph (1)(B)—
(A) in clause (iii), by inserting ‘‘and’’ after 
the comma at the end,
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(B) in clause (iv), by striking ‘‘, and’’ and 
inserting a period, and 
(C) by striking clause (v), and 
(2) in paragraph (2)(B)—
(A) in clause (ii), by inserting ‘‘and’’ after 
the comma at the end, 
(B) in clause (iii), by striking the comma 
at the end and inserting a period, and 
(C) by striking clauses (iv) through (vi). 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to vehicles placed in service after 
December 31, 2025. 
SEC. 112003. TERMINATION OF QUALIFIED COMMERCIAL 
CLEAN VEHICLES CREDIT. 
(a) IN GENERAL.—Section 45W(g) is amended to 
read as follows: 
‘‘(g) TERMINATION.—
‘‘(1) IN GENERAL.—No credit shall be deter-
mined under this section with respect to any vehicle 
acquired after December 31, 2025. 
‘‘(2) EXCEPTION FOR BINDING CONTRACTS.—
Paragraph (1) shall not apply with respect to vehi-
cles placed in service before January 1, 2033, and 
acquired pursuant to a written binding contract en-
tered into before May 12, 2025.’’.
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(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to vehicles acquired after Decem-
ber 31, 2025. 
SEC. 112004. TERMINATION OF ALTERNATIVE FUEL VEHI-
CLE REFUELING PROPERTY CREDIT. 
(a) IN GENERAL.—Section 30C(i) is amended by 
striking ‘‘December 31, 2032’’ and inserting ‘‘December 
31, 2025’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to property placed in service after 
December 31, 2025. 
SEC. 112005. TERMINATION OF ENERGY EFFICIENT HOME 
IMPROVEMENT CREDIT. 
(a) IN GENERAL.—Section 25C(i) is amended to read 
as follows: 
‘‘(i) TERMINATION.—This section shall not apply 
with respect to any property placed in service after Decem-
ber 31, 2025.’’. 
(b) CONFORMING AMENDMENTS.—
(1) Section 25C(d)(2)(C) is amended to read as 
follows: 
‘‘(C) Any oil furnace or hot water boiler 
which is placed in service before January 1, 
2026, and—
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‘‘(i) meets or exceeds 2021 Energy 
Star efficiency criteria, and 
‘‘(ii) is rated by the manufacturer for 
use with fuel blends at least 20 percent of 
the volume of which consists of an eligible 
fuel.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to property placed in service after 
December 31, 2025. 
SEC. 112006. TERMINATION OF RESIDENTIAL CLEAN EN-
ERGY CREDIT. 
(a) IN GENERAL.—Section 25D(h) is amended by 
striking ‘‘December 31, 2034’’ and inserting ‘‘December 
31, 2025’’. 
(b) CONFORMING AMENDMENTS.—Section 25D(g) is 
amended—
(1) in paragraph (2), by inserting ‘‘and’’ after 
the comma at the end, 
(2) in paragraph (3), by striking ‘‘January 1, 
2033, 30 percent,’’ and inserting ‘‘January 1, 2026, 
30 percent.’’, and 
(3) by striking paragraphs (4) and (5). 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to property placed in service after 
December 31, 2025.
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SEC. 112007. TERMINATION OF NEW ENERGY EFFICIENT 
HOME CREDIT. 
(a) IN GENERAL.—Section 45L(h) is amended to 
read as follows: 
‘‘(h) TERMINATION.—This section shall not apply to 
any qualified new energy efficient home acquired after De-
cember 31, 2025 (December 31, 2026, in the case of any 
home for which construction began before May 12, 
2025).’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to homes acquired after December 
31, 2025. 
SEC. 112008. RESTRICTIONS ON CLEAN ELECTRICITY PRO-
DUCTION CREDIT. 
(a) TERMINATION
OF
CREDIT.—Section 45Y is 
amended by striking subsection (d) and by adding at the 
end the following new subsection: 
‘‘(h) TERMINATION OF CREDIT.—
‘‘(1) IN GENERAL.—Except as provided in para-
graphs (2) and (3), no credit shall be allowed under 
this section for any qualified facility—
‘‘(A) the construction of which begins after 
the date which is 60 days after the date of the 
enactment of this subsection, or 
‘‘(B) which is placed in service after De-
cember 31, 2028.
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‘‘(2) ADVANCED NUCLEAR FACILITIES.—In the 
case of any qualified facility that is an advanced nu-
clear facility (as defined in section 45J(d)(2))—
‘‘(A) paragraph (1) shall not apply, and 
‘‘(B) no credit shall be allowed under this 
section for any such facility the construction of 
which begins after December 31, 2028. 
‘‘(3) EXPANSION OF NUCLEAR FACILITIES.—In 
the case of any nuclear facility the reactor design for 
which is approved by the Nuclear Regulatory Com-
mission—
‘‘(A) paragraph (1) shall not apply, and 
‘‘(B) no credit shall be allowed under this 
section for any such facility the expansion of 
which begins after December 31, 2028.’’. 
(b) RESTRICTIONS RELATING TO PROHIBITED FOR-
EIGN ENTITIES.—Section 45Y is amended—
(1) in subsection (b)(1), by adding at the end 
the following new subparagraph: 
‘‘(E) MATERIAL
ASSISTANCE
FROM
PRO-
HIBITED FOREIGN ENTITIES.—The term ‘quali-
fied facility’ shall not include any facility for 
which construction begins after December 31, 
2025 if the construction of such facility in-
cludes any material assistance from a prohib-
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•HR 1 EH1S 
ited foreign entity (as defined in section 
7701(a)(52)).’’, and 
(2) in subsection (g), by adding at the end the 
following new paragraph: 
‘‘(13) RESTRICTIONS
RELATING
TO
PROHIB-
ITED FOREIGN ENTITIES.—
‘‘(A) IN GENERAL.—No credit determined 
under subsection (a) shall be allowed under sec-
tion 38 for any taxable year beginning after the 
date of enactment of this paragraph if the tax-
payer is a specified foreign entity (as defined in 
section 7701(a)(51)(B)). 
‘‘(B) OTHER PROHIBITED FOREIGN ENTI-
TIES.—No credit determined under subsection 
(a) shall be allowed under section 38 for any 
taxable year beginning after the date which is 
2 years after the date of enactment of this 
paragraph if—
‘‘(i) the taxpayer is a foreign-influ-
enced 
entity 
(as 
defined 
in 
section 
7701(a)(51)(D)), or 
‘‘(ii) during such taxable year, the 
taxpayer—
‘‘(I) makes a payment of divi-
dends, interest, compensation for serv-
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ices, rentals or royalties, guarantees 
or any other fixed, determinable, an-
nual, or periodic amount to a prohib-
ited foreign entity (as defined in sec-
tion 7701(a)(51)) in an amount which 
is equal to or greater than 5 percent 
of the total of such payments made by 
such taxpayer during such taxable 
year which are related to the produc-
tion of electricity, or 
‘‘(II) makes payments described 
in subclause (I) to more than 1 pro-
hibited foreign entity (as so defined) 
in an amount which, in the aggregate, 
is equal to or greater than 15 percent 
of the total of such payments made by 
such taxpayer during such taxable 
year which are related to the produc-
tion of electricity.’’. 
(c) DEFINITIONS RELATING TO PROHIBITED FOR-
EIGN ENTITIES.—Section 7701(a) is amended by adding 
at the end the following new paragraphs: 
‘‘(51) PROHIBITED FOREIGN ENTITY.—
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‘‘(A) IN GENERAL.—The term ‘prohibited 
foreign entity’ means a specified foreign entity 
or a foreign-influenced entity. 
‘‘(B) SPECIFIED
FOREIGN
ENTITY.—For 
purposes of subparagraph (A), the term ‘speci-
fied foreign entity’ means—
‘‘(i) a foreign entity of concern de-
scribed in subparagraph (A), (B), (D), or 
(E) of section 9901(8) of the William M. 
(Mac) Thornberry National Defense Au-
thorization Act for Fiscal Year 2021 (Pub-
lic Law 116–283; 15 U.S.C. 4651), 
‘‘(ii) an entity identified as a Chinese 
military company operating in the United 
States in accordance with section 1260H 
of the William M. (Mac) Thornberry Na-
tional Defense Authorization Act for Fiscal 
Year 2021 (Public Law 116–283; 10 
U.S.C. 113 note), 
‘‘(iii) an entity included on a list re-
quired by clause (i), (ii), (iv), or (v) of sec-
tion 2(d)(2)(B) of Public Law 117–78 
(135 Stat. 1527), 
‘‘(iv) an entity specified under section 
154(b) of the National Defense Authoriza-
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tion Act for Fiscal Year 2024 (Public Law 
118–31; 10 U.S.C. note prec. 4651), or 
‘‘(v) a foreign-controlled entity. 
‘‘(C) FOREIGN-CONTROLLED ENTITY.—For 
purposes of subparagraph (B), the term ‘for-
eign-controlled entity’ means—
‘‘(i) the government of a covered na-
tion (as defined in section 4872(f)(2) of 
title 10, United States Code), 
‘‘(ii) a person who is a citizen, na-
tional, or resident of a covered nation, pro-
vided that such person is not an individual 
who is a citizen or lawful permanent resi-
dent of the United States, 
‘‘(iii) an entity or a qualified business 
unit (as defined in section 989(a)) incor-
porated or organized under the laws of, or 
having its principal place of business in, a 
covered nation, or 
‘‘(iv) an entity (including subsidiary 
entities) controlled (as determined under 
subparagraph (F)) by an entity described 
in clause (i), (ii), or (iii).
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‘‘(D) FOREIGN-INFLUENCED ENTITY.—For 
purposes of subparagraph (A), the term ‘for-
eign-influenced entity’ means an entity—
‘‘(i) with respect to which, during the 
taxable year—
‘‘(I) a specified foreign entity has 
the direct or indirect authority to ap-
point a covered officer of such entity, 
‘‘(II) a single specified foreign 
entity owns at least 10 percent of 
such entity, 
‘‘(III) one or more specified for-
eign entities own in the aggregate at 
least 25 percent of such entity, or 
‘‘(IV) at least 25 percent of the 
debt of such entity is held in the ag-
gregate by one or more specified for-
eign entities, or 
‘‘(ii) which, during the previous tax-
able year—
‘‘(I) makes a payment of divi-
dends, interest, compensation for serv-
ices, rentals or royalties, guarantees 
or any other fixed, determinable, an-
nual, or periodic amount to a specified
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foreign entity in an amount which is 
equal to or greater than 10 percent of 
the total of such payments made by 
such entity during such taxable year, 
or 
‘‘(II) makes payments described 
in subclause (I) to more than 1 speci-
fied foreign entity in an amount 
which, in the aggregate, is equal to or 
greater than 25 percent of the total of 
such payments made by such entity 
during such taxable year. 
Clause (ii) shall not apply unless such enti-
ty makes such payments knowingly (or has 
reason to know). 
‘‘(E) COVERED OFFICER.—For purposes of 
this paragraph, the term ‘covered officer’ 
means, with respect to an entity—
‘‘(i) a member of the board of direc-
tors, board of supervisors, or equivalent 
governing body, 
‘‘(ii) an executive-level officer, includ-
ing the president, chief executive officer, 
chief operating officer, chief financial offi-
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•HR 1 EH1S 
cer, general counsel, or senior vice presi-
dent, or 
‘‘(iii) an individual having powers or 
responsibilities similar to those of officers 
or members described in clause (i) or (ii). 
‘‘(F) DETERMINATION OF CONTROL.—For 
purposes of subparagraph (C)(iv), the term 
‘control’ means—
‘‘(i) in the case of a corporation, own-
ership (by vote or value) of more than 50 
percent of the stock in such corporation, 
‘‘(ii) in the case of a partnership, 
ownership of more than 50 percent of the 
profits interests or capital interests in such 
partnership, or 
‘‘(iii) in any other case, ownership of 
more than 50 percent of the beneficial in-
terests in the entity. 
‘‘(G) DETERMINATION OF OWNERSHIP.—
For purposes of this section, section 318 (other 
than subsection (a)(3) thereof) shall apply for 
purposes of determining ownership of stock in 
a corporation. Similar principles shall apply for 
purposes of determining ownership of interests 
in any other entity.
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‘‘(H) REGULATIONS AND GUIDANCE.—The 
Secretary may prescribe such regulations and 
guidance as may be necessary or appropriate to 
carry out the provisions of this paragraph. 
‘‘(52) MATERIAL ASSISTANCE FROM A PROHIB-
ITED FOREIGN ENTITY.—
‘‘(A) IN
GENERAL.—The term ‘material 
assistance from a prohibited foreign entity’ 
means, with respect to any property—
‘‘(i) any component, subcomponent, or 
applicable critical mineral (as defined in 
section 45X(c)(6)) included in such prop-
erty that is extracted, processed, recycled, 
manufactured, or assembled by a prohib-
ited foreign entity, or 
‘‘(ii) any design of such property 
which is based on any copyright or patent 
held by a prohibited foreign entity or any 
know-how or trade secret provided by a 
prohibited foreign entity. 
‘‘(B) EXCLUSION.—
‘‘(i) IN GENERAL.—The term ‘mate-
rial assistance from a prohibited foreign 
entity’ shall not include any assembly part 
or constituent material, provided that such
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•HR 1 EH1S 
part or material is not acquired directly 
from a prohibited foreign entity. 
‘‘(ii) ASSEMBLY PART.—For purposes 
of this subparagraph, the term ‘assembly 
part’ means a subcomponent or collection 
of subcomponents which is—
‘‘(I) not uniquely designed for 
use in the construction of a qualified 
facility described in section 45Y or 
48E or an eligible component de-
scribed in section 45X, and 
‘‘(II) not exclusively or predomi-
nantly produced by prohibited foreign 
entities. 
‘‘(iii) CONSTITUENT MATERIAL.—For 
purposes of this subparagraph, the term 
‘constituent material’ means any material 
which is—
‘‘(I) not uniquely formulated for 
use in a qualified facility described in 
section 45Y or 48E or an eligible 
component described in section 45X, 
and
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•HR 1 EH1S 
‘‘(II) not exclusively or predomi-
nantly produced, processed, or ex-
tracted by prohibited foreign entities. 
‘‘(iv) 
REGULATIONS
AND
GUID-
ANCE.—The Secretary may prescribe such 
regulations and guidance as may be nec-
essary or appropriate to carry out the pro-
visions of this paragraph.’’. 
(d) DENIAL OF CREDIT FOR EXPENDITURES FOR 
CERTAIN WIND AND SOLAR LEASING ARRANGEMENTS.—
Section 45Y, as amended by subsection (a), is amended 
by inserting after subsection (c) the following new sub-
section: 
‘‘(d) DENIAL OF CREDIT FOR EXPENDITURES FOR 
WIND AND SOLAR LEASING ARRANGEMENTS.—No credit 
shall be allowed under this section for any investment dur-
ing the taxable year with respect to property described in 
paragraph (1), (2), or (4) of section 25D(d) if—
‘‘(1) the taxpayer rents or leases such property 
to a third party during such taxable year, and 
‘‘(2) the lessee would qualify for a credit under 
section 25D with respect to such property if the les-
see owned such property.’’. 
(e) EFFECTIVE DATES.—
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•HR 1 EH1S 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section 
shall apply to taxable years beginning after the date 
of enactment of this Act. 
(2) TERMINATION
OF
CREDIT.—The amend-
ment made by subsection (a) shall apply to facilities 
for which construction begins after the date that is 
60 days after the date of enactment of this Act. 
SEC. 112009. RESTRICTIONS ON CLEAN ELECTRICITY IN-
VESTMENT CREDIT. 
(a) TERMINATION
OF
CREDIT.—Section 48E is 
amended by striking subsection (e) and by adding at the 
end the following new subsection: 
‘‘(j) TERMINATION OF CREDIT.—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), no credit shall be allowed under this sec-
tion for any qualified facility or energy storage tech-
nology—
‘‘(A) the construction of which begins after 
the date which is 60 days after the date of the 
enactment of this subsection, or 
‘‘(B) which is placed in service after De-
cember 31, 2028.
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•HR 1 EH1S 
‘‘(2) ADVANCED
NUCLEAR
FACILITY.—In the 
case of any qualified facility that is an advanced nu-
clear facility (as defined in section 45J(d)(2))—
‘‘(A) paragraph (1) shall not apply, and 
‘‘(B) no credit shall be allowed under this 
section for any such facility the construction of 
which begins after December 31, 2028.’’. 
(b) RESTRICTIONS RELATING TO PROHIBITED FOR-
EIGN ENTITIES.—
(1) IN GENERAL.—Section 48E is amended—
(A) in subsection (b)(3), by adding at the 
end the following new subparagraph: 
‘‘(D) MATERIAL ASSISTANCE FROM PRO-
HIBITED FOREIGN ENTITIES.—The term ‘quali-
fied facility’ shall not include any facility the 
construction of which begins after December 
31, 2025 if the construction of such facility in-
cludes any material assistance from a prohib-
ited foreign entity (as defined in section 
7701(a)(52)).’’, and 
(B) in subsection (c), by adding at the end 
the following new paragraph: 
‘‘(3) MATERIAL ASSISTANCE FROM PROHIBITED 
FOREIGN ENTITIES.—The term ‘energy storage tech-
nology’ shall not include any property the construc-
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•HR 1 EH1S 
tion of which begins after December 31, 2025 if the 
construction of such property includes any material 
assistance from a prohibited foreign entity (as de-
fined in section 7701(a)(52)).’’. 
(2) RESTRICTIONS RELATING TO PROHIBITED 
FOREIGN ENTITIES.—Section 48E(d) is amended by 
adding at the end the following new paragraph: 
‘‘(6) RESTRICTIONS RELATING TO PROHIBITED 
FOREIGN ENTITIES.—
‘‘(A) IN GENERAL.—No credit determined 
under subsection (a) shall be allowed under sec-
tion 38 for any taxable year beginning after the 
date of enactment of this paragraph if the tax-
payer is a specified foreign entity (as defined in 
section 7701(a)(51)(B)). 
‘‘(B) OTHER PROHIBITED FOREIGN ENTI-
TIES.—No credit determined under subsection 
(a) shall be allowed under section 38 for any 
taxable year beginning after the date which is 
2 years after the date of enactment of this 
paragraph if—
‘‘(i) the taxpayer is a foreign-influ-
enced 
entity 
(as 
defined 
in 
section 
7701(a)(51)(D)), or
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•HR 1 EH1S 
‘‘(ii) during such taxable year, the 
taxpayer—
‘‘(I) makes a payment of divi-
dends, interest, compensation for serv-
ices, rentals or royalties, guarantees 
or any other fixed, determinable, an-
nual, or periodic amount to a prohib-
ited foreign entity (as defined in sec-
tion 7701(a)(51)) in an amount which 
is equal to or greater than 5 percent 
of the total of such payments made by 
such taxpayer during such taxable 
year which are related to the produc-
tion of electricity or storage of energy, 
or 
‘‘(II) makes payments described 
in subclause (I) to more than 1 pro-
hibited foreign entity (as so defined) 
in an amount which, in the aggregate, 
is equal to or greater than 15 percent 
of the total of such payments made by 
such taxpayer during such taxable 
year which are related to the produc-
tion of electricity or storage of en-
ergy.’’.
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(3) RECAPTURE.—Section 50(a) is amended—
(A) 
by 
redesignating 
paragraphs 
(4) 
through (6) as paragraphs (5) through (7), re-
spectively, 
(B) by inserting after paragraph (3) the 
following new paragraph: 
‘‘(4) PAYMENTS TO PROHIBITED FOREIGN EN-
TITIES.—
‘‘(A) IN GENERAL.—If there is an applica-
ble payment made by a specified taxpayer be-
fore the close of the 10-year period beginning 
on the date such taxpayer placed in service in-
vestment credit property which is eligible for 
the clean electricity investment credit under 
section 48E(a), then the tax under this chapter 
for the taxable year in which such applicable 
payment occurs shall be increased by 100 per-
cent of the aggregate decrease in the credits al-
lowed under section 38 for all prior taxable 
years which would have resulted solely from re-
ducing to zero any credit determined under sec-
tion 46 which is attributable to the clean elec-
tricity investment credit under section 48E(a) 
with respect to such property.
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‘‘(B) APPLICABLE
PAYMENT.—For pur-
poses of this paragraph, the term ‘applicable 
payment’ means, with respect to any taxable 
year, a payment or payments described in sub-
clause (I) or (II) of section 48E(d)(6)(B)(ii). 
‘‘(C) SPECIFIED
TAXPAYER.—For pur-
poses of this paragraph, the term ‘specified tax-
payer’ means any taxpayer who has been al-
lowed a credit under section 48E(a) for any 
taxable year beginning after the date which is 
2 years after the date of enactment of this 
paragraph.’’, 
(C) in paragraph (5), as redesignated by 
subparagraph (A), by striking ‘‘or any applica-
ble transaction to which paragraph (3)(A) ap-
plies,’’ and inserting ‘‘any applicable trans-
action to which paragraph (3)(A) applies, or 
any applicable payment to which paragraph 
(4)(A) applies,’’, and 
(D) in paragraph (7), as redesignated by 
subparagraph (A), by striking ‘‘or (3)’’ and in-
serting ‘‘(3), or (4)’’. 
(c) DENIAL OF CREDIT FOR EXPENDITURES FOR 
CERTAIN WIND AND SOLAR LEASING ARRANGEMENTS.—
Section 48E, as amended by subsection (a), is amended
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•HR 1 EH1S 
by inserting after subsection (d) the following new sub-
section: 
‘‘(e) DENIAL OF CREDIT FOR EXPENDITURES FOR 
WIND AND SOLAR LEASING ARRANGEMENTS.—No credit 
shall be allowed under this section for any investment dur-
ing the taxable year with respect to property described in 
paragraph (1), (2), or (4) of section 25D(d) if—
‘‘(1) the taxpayer rents or leases such property 
to a third party during such taxable year, and 
‘‘(2) the lessee would qualify for a credit under 
section 25D with respect to such property if the les-
see owned such property.’’. 
(d) CONFORMING AMENDMENTS.—Section 48E(h)(4) 
is amended—
(1) in subparagraph (C), by striking ‘‘December 
31 of the applicable year (as defined in section 
45Y(d)(3))’’ and inserting ‘‘December 31, 2028’’, 
(2) in subparagraph (D), by striking ‘‘the third 
calendar year following the applicable year (as de-
fined in section 45Y(d)(3))’’ and inserting ‘‘2028’’, 
and 
(3) in subparagraph (E)(i), by striking ‘‘after 
the date that is 4 years after the date of the alloca-
tion with respect to the facility of which such prop-
erty is a part’’ and inserting ‘‘the earlier of—
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•HR 1 EH1S 
‘‘(I) the date that is 4 years after 
the date of the allocation with respect 
to the facility of which such property 
is a part, or 
‘‘(II) December 31, 2028.’’. 
(e) EFFECTIVE DATES.—
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section 
shall apply to taxable years beginning after the date 
of enactment of this Act. 
(2) TERMINATION
OF
CREDIT.—The amend-
ment made by subsection (a) shall apply to facilities 
and energy storage technology for which construc-
tion begins after the date that is 60 days after the 
date of enactment of this Act. 
SEC. 112010. REPEAL OF TRANSFERABILITY OF CLEAN 
FUEL PRODUCTION CREDIT. 
(a) IN GENERAL.—Section 6418(f)(1)(A) is amended 
by striking clause (viii). 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to fuel produced after December 
31, 2027.
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SEC. 112011. RESTRICTIONS ON CARBON OXIDE SEQUES-
TRATION CREDIT. 
(a) RESTRICTIONS RELATING TO PROHIBITED FOR-
EIGN ENTITIES.—Section 45Q(f) is amended by adding 
at the end the following new paragraph: 
‘‘(10) RESTRICTIONS
RELATING
TO
PROHIB-
ITED FOREIGN ENTITIES.—
‘‘(A) IN GENERAL.—No credit determined 
under subsection (a) shall be allowed under sec-
tion 38 for any taxable year beginning after the 
date of enactment of this paragraph if the tax-
payer is a specified foreign entity (as defined in 
section 7701(a)(51)(B)). 
‘‘(B) OTHER PROHIBITED FOREIGN ENTI-
TIES.—No credit determined under subsection 
(a) shall be allowed under section 38 for any 
taxable year beginning after the date which is 
2 years after the date of enactment of this 
paragraph if the taxpayer is a foreign-influ-
enced 
entity 
(as 
defined 
in 
section 
7701(a)(51)(D)).’’. 
(b) 
REPEAL
OF
TRANSFERABILITY.—Section 
6418(f)(1), as amended by section 112010, is amended—
(1) in subparagraph (A), by striking clause (iii), 
and 
(2) in subparagraph (B)—
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(A) in the matter preceding clause (i), by 
striking ‘‘clause (ii), (iii), or (v)’’ and inserting 
‘‘clause (ii) or (v)’’, and 
(B) in clause (ii), by striking ‘‘(or, in the 
case’’ and all that follows through ‘‘at such fa-
cility)’’. 
(c) EFFECTIVE DATES.—
(1) RESTRICTIONS RELATING TO PROHIBITED 
FOREIGN
ENTITIES.—The amendments made by 
subsection (a) shall apply to taxable years beginning 
after the date of enactment of this Act. 
(2) 
REPEAL
OF
TRANSFERABILITY.—The 
amendments made by subsection (b) shall apply to 
carbon capture equipment the construction of which 
begins after the date that is 2 years after the date 
of enactment of this Act. 
SEC. 112012. RESTRICTIONS ON ZERO-EMISSION NUCLEAR 
POWER PRODUCTION CREDIT. 
(a) RESTRICTIONS RELATING TO PROHIBITED FOR-
EIGN ENTITIES.—Section 45U(c) is amended by adding 
at the end the following new paragraph: 
‘‘(3) RESTRICTIONS RELATING TO PROHIBITED 
FOREIGN ENTITIES.—
‘‘(A) IN GENERAL.—No credit determined 
under subsection (a) shall be allowed under sec-
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tion 38 for any taxable year beginning after the 
date of enactment of this paragraph if the tax-
payer is a specified foreign entity (as defined in 
section 7701(a)(51)(B)). 
‘‘(B) OTHER PROHIBITED FOREIGN ENTI-
TIES.—No credit determined under subsection 
(a) shall be allowed under section 38 for any 
taxable year beginning after the date which is 
2 years after the date of enactment of this 
paragraph if the taxpayer is a foreign-influ-
enced 
entity 
(as 
defined 
in 
section 
7701(a)(51)(D)).’’. 
(b) TERMINATION OF CREDIT.—Section 45U(e) is 
amended by striking ‘‘December 31, 2032’’ and inserting 
‘‘December 31, 2031’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of enactment of this Act. 
SEC. 112013. TERMINATION OF CLEAN HYDROGEN PRODUC-
TION CREDIT. 
(a) TERMINATION.—Section 45V(c)(3)(C) is amend-
ed by striking ‘‘January 1, 2033’’ and inserting ‘‘January 
1, 2026’’.
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(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to facilities the construction of 
which begins after December 31, 2025. 
SEC. 112014. PHASE-OUT AND RESTRICTIONS ON AD-
VANCED 
MANUFACTURING 
PRODUCTION 
CREDIT. 
(a) PHASE-OUT.—Section 45X(b)(3) is amended—
(1) in subparagraph (B)—
(A) in clause (ii), by adding ‘‘and’’ at the 
end, 
(B) in clause (iii), by striking ‘‘during cal-
endar year 2032, 25 percent,’’ and inserting 
‘‘after December 31, 2031, 0 percent.’’, and 
(C) by striking clause (iv), and 
(2) by striking subparagraph (C) and inserting 
the following: 
‘‘(C) TERMINATION
FOR
WIND
ENERGY 
COMPONENTS.—This section shall not apply to 
wind energy components sold after December 
31, 2027.’’. 
(b) RESTRICTIONS RELATING TO PROHIBITED FOR-
EIGN ENTITIES.—Section 45X is amended—
(1) in subsection (c)(1), by adding at the end 
the following new subparagraph:
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‘‘(C) MATERIAL
ASSISTANCE
FROM
PRO-
HIBITED FOREIGN ENTITIES.—In the case of 
taxable years beginning after the date which is 
2 years after the date of enactment of this sub-
paragraph, the term ‘eligible component’ shall 
not include any property which—
‘‘(i) includes any material assistance 
from a prohibited foreign entity (as defined 
in section 7701(a)(52)), or 
‘‘(ii) is produced subject to a licensing 
agreement with a prohibited foreign entity 
(as defined in section 7701(a)(51)) for 
which the value of such agreement is in ex-
cess of $1,000,000.’’, and 
(2) in subsection (d), by adding at the end the 
following new paragraph: 
‘‘(5) RESTRICTIONS RELATING TO PROHIBITED 
FOREIGN ENTITIES.—
‘‘(A) IN GENERAL.—No credit determined 
under subsection (a) shall be allowed under sec-
tion 38 for any taxable year beginning after the 
date of enactment of this paragraph if the tax-
payer is a specified foreign entity (as defined in 
section 7701(a)(51)(B)).
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•HR 1 EH1S 
‘‘(B) OTHER PROHIBITED FOREIGN ENTI-
TIES.—No credit determined under subsection 
(a) shall be allowed under section 38 for any 
taxable year beginning after the date which is 
2 years after the date of enactment of this 
paragraph if the taxpayer is a foreign-influ-
enced 
entity 
(as 
defined 
in 
section 
7701(a)(51)(D)). 
‘‘(C) PAYMENTS TO PROHIBITED FOREIGN 
ENTITIES.—
‘‘(i) IN GENERAL.—If, for any taxable 
year beginning after the date that is 2 
years after the date of the enactment of 
this paragraph, a taxpayer is described in 
clause (ii) for such taxable year with re-
spect to any eligible component category, 
no credit shall be determined under sub-
section (a) for eligible components in such 
eligible component category for such tax-
able year. 
‘‘(ii) TAXPAYER DESCRIBED.—A tax-
payer is described in this clause for a tax-
able year with respect to any eligible com-
ponent category if such taxpayer—
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‘‘(I) makes a payment of divi-
dends, interest, compensation for serv-
ices, rentals or royalties, guarantees 
or any other fixed, determinable, an-
nual, or periodic amount to a prohib-
ited foreign entity (as defined in sec-
tion 7701(a)(51)) in an amount which 
is equal to or greater than 5 percent 
of the total of such payments made by 
such taxpayer during such taxable 
year which are related to the produc-
tion of eligible components included 
within such eligible component cat-
egory, or 
‘‘(II) makes payments described 
in subclause (I) to more than 1 pro-
hibited foreign entity (as so defined) 
in an amount which, in the aggregate, 
is equal to or greater than 15 percent 
of such payments made by such tax-
payer during such taxable year which 
are related to the production of eligi-
ble components included within such 
eligible component category.
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•HR 1 EH1S 
‘‘(iii) ELIGIBLE
COMPONENT
CAT-
EGORY.—For purposes of this subpara-
graph, the term ‘eligible component cat-
egory’ means eligible components which 
are included within each respective clause 
under subsection (c)(1)(A).’’. 
(c) REPEAL OF TRANSFERABILITY.—Section 6418, 
as amended by sections 112010, 112011, and 112012 is 
amended—
(1) in subsection (f)(1)—
(A) in subparagraph (A)—
(i) by striking clause (vi), and 
(ii) by redesignating clauses (iv), (v), 
(vii), (ix), (x), and (xi) as clauses (iii), (iv), 
(v), (vi), (vii), and (viii), respectively, and 
(B) in subparagraph (B), by striking 
‘‘clause (ii) or (v)’’ and inserting ‘‘clause (ii) or 
(iv)’’, and 
(2) in subsection (g)(3), by striking ‘‘clause (ix) 
or (x)’’ and inserting ‘‘clause (vi) or (vii)’’. 
(d) EFFECTIVE DATES.—
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section 
shall apply to taxable years beginning after the date 
of enactment of this Act.
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•HR 1 EH1S 
(2) 
REPEAL
OF
TRANSFERABILITY.—The 
amendments made by subsection (c) shall apply to 
components sold after December 31, 2027. 
SEC. 112015. PHASE-OUT OF CREDIT FOR CERTAIN ENERGY 
PROPERTY. 
(a) PHASE-OUT.—Section 48(a) is amended—
(1) in paragraph (3)(vii), by striking ‘‘the con-
struction of which begins before January 1, 2035’’ 
and inserting ‘‘the construction of which begins be-
fore January 1, 2032’’, and 
(2) by striking paragraph (7) and inserting the 
following new paragraph: 
‘‘(7) PHASE-OUT FOR CERTAIN ENERGY PROP-
ERTY.—In the case of any energy property described 
in clause (vii) of paragraph (3)(A), the energy per-
centage determined under paragraph (2) shall be 
equal to—
‘‘(A) in the case of any property the con-
struction of which begins before January 1, 
2030, and which is placed in service after De-
cember 31, 2021, 6 percent, 
‘‘(B) in the case of any property the con-
struction of which begins after December 31, 
2029, and before January 1, 2031, 5.2 percent, 
and
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•HR 1 EH1S 
‘‘(C) in the case of any property the con-
struction of which begins after December 31, 
2030, and before January 1, 2032, 4.4 per-
cent.’’. 
(b) RESTRICTIONS RELATING TO PROHIBITED FOR-
EIGN ENTITIES.—Section 48(a) is amended by redesig-
nating paragraph (16) as paragraph (17) and by inserting 
after paragraph (15) the following new paragraph: 
‘‘(16) RESTRICTIONS
RELATING
TO
PROHIB-
ITED FOREIGN ENTITIES.—
‘‘(A) IN GENERAL.—No credit determined 
under this subsection for energy property de-
scribed in paragraph (3)(A)(vii) shall be allowed 
under section 38 for any taxable year beginning 
after the date of enactment of this paragraph 
if the taxpayer is a specified foreign entity (as 
defined in section 7701(a)(51)(B)). 
‘‘(B) OTHER PROHIBITED FOREIGN ENTI-
TIES.—No credit determined under this sub-
section for energy property described in para-
graph (3)(A)(vii) shall be allowed under section 
38 for any taxable year beginning after the date 
which is 2 years after the date of enactment of 
this paragraph if the taxpayer is a foreign-influ-
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•HR 1 EH1S 
enced 
entity 
(as 
defined 
in 
section 
7701(a)(51)(D)).’’. 
(c) 
REPEAL
OF
TRANSFERABILITY.—Section 
6418(f)(1)(A)(iii), as redesignated by section 112014, is 
amended by inserting ‘‘(except so much of the credit as 
is determined under paragraph (3)(A)(vii) of such sec-
tion)’’ after ‘‘section 48’’. 
(d) EFFECTIVE DATES.—
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section 
shall apply to taxable years beginning after the date 
of the enactment of this Act. 
(2) 
REPEAL
OF
TRANSFERABILITY.—The 
amendments made by subsection (c) shall apply to 
property the construction of which begins after the 
date that is 2 years after the date of enactment of 
this Act. 
SEC. 112016. INCOME FROM HYDROGEN STORAGE, CARBON 
CAPTURE ADDED TO QUALIFYING INCOME OF 
CERTAIN PUBLICLY TRADED PARTNERSHIPS 
TREATED AS CORPORATIONS. 
(a) IN GENERAL.—Section 7704(d)(1)(E) is amend-
ed—
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•HR 1 EH1S 
(1) by striking ‘‘income and gains derived from 
the exploration’’ and inserting ‘‘income and gains 
derived from—
‘‘(i) the exploration’’, 
(2) 
by 
inserting 
‘‘or’’ 
before 
‘‘industrial 
source’’, and 
(3) by striking ‘‘the transportation or storage’’ 
and all that follows and inserting the following: 
‘‘(ii) the transportation or storage 
of—
‘‘(I) any fuel described in sub-
section (b), (c), (d), (e), or (k) of sec-
tion 6426, or any alcohol fuel defined 
in section 6426(b)(4)(A) or any bio-
diesel fuel as defined in section 
40A(d)(1) or sustainable aviation fuel 
as defined in section 40B(d)(1), or 
‘‘(II) liquified hydrogen or com-
pressed hydrogen, or 
‘‘(iii) in the case of a qualified facility 
(as defined in section 45Q(d), without re-
gard to any date by which construction of 
the facility is required to begin) not less 
than 50 percent of the total carbon oxide
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•HR 1 EH1S 
production of which is qualified carbon 
oxide (as defined in section 45Q(c))—
‘‘(I) the generation, availability 
for such generation, or storage of elec-
tric power at such facility, or 
‘‘(II) the capture of carbon diox-
ide by such facility,’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2025. 
SEC. 112017. LIMITATION ON AMORTIZATION OF CERTAIN 
SPORTS FRANCHISES. 
(a) IN GENERAL.—Section 197 is amended by redes-
ignating subsection (g) as subsection (h) and by inserting 
after subsection (f) the following new subsection: 
‘‘(g) LIMITATION ON AMORTIZATION OF CERTAIN 
SPORTS FRANCHISES.—
‘‘(1) IN GENERAL.—In the case of a specified 
sports franchise intangible, subsection (a) shall be 
applied by substituting ‘50 percent of the adjusted 
basis’ for ‘the adjusted basis’. 
‘‘(2) SPECIFIED
SPORTS
FRANCHISE
INTAN-
GIBLE.—For purposes of this subsection, the term 
‘specified sports franchise intangible’ means any am-
ortizable section 197 intangible which is—
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•HR 1 EH1S 
‘‘(A) a franchise to engage in professional 
football, basketball, baseball, hockey, soccer, or 
other professional sport, or 
‘‘(B) acquired in connection with such a 
franchise.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to property acquired after the date 
of the enactment of this Act. 
SEC. 112018. LIMITATION ON INDIVIDUAL DEDUCTIONS FOR 
CERTAIN STATE AND LOCAL TAXES, ETC. 
(a) IN GENERAL.—Section 275 is amended by redes-
ignating subsection (b) as subsection (c) and by inserting 
after subsection (a) the following new subsection: 
‘‘(b) LIMITATION ON INDIVIDUAL DEDUCTIONS FOR 
CERTAIN STATE AND LOCAL TAXES, ETC.—
‘‘(1) LIMITATION.—
‘‘(A) IN GENERAL.—In the case of an indi-
vidual, no deduction shall be allowed for—
‘‘(i) any disallowed foreign real prop-
erty taxes, and 
‘‘(ii) any specified taxes to the extent 
that such taxes for such taxable year in 
the aggregate exceed—
‘‘(I) half the dollar amount in ef-
fect under subclause (II), in the case
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•HR 1 EH1S 
of a married individual filing a sepa-
rate return, and 
‘‘(II) $40,400, in the case of any 
other taxpayer. 
‘‘(B) PHASEDOWN
BASED
ON
MODIFIED 
ADJUSTED GROSS INCOME.—
‘‘(i) IN
GENERAL.—Except as pro-
vided in clause (ii), the limitation otherwise 
in effect under subparagraph (A)(ii) shall 
be reduced by 30 percent of the excess (if 
any) of the taxpayer’s modified adjusted 
gross income over—
‘‘(I) half the dollar amount in ef-
fect under subclause (II), in the case 
of a married individual filing a sepa-
rate return, and 
‘‘(II) $505,000, in the case of 
any other taxpayer. 
‘‘(ii) LIMITATION
ON
REDUCTION.—
The reduction under clause (i) shall not re-
sult in—
‘‘(I) the limitation in effect under 
subparagraph (A)(ii)(I) being less 
than $5,000, or
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‘‘(II) the limitation in effect 
under subparagraph (A)(ii)(II) being 
less than $10,000. 
‘‘(C) MODIFIED
ADJUSTED
GROSS
IN-
COME.—For purposes of this paragraph, the 
term ‘modified adjusted gross income’ means 
adjusted gross income increased by any amount 
excluded from gross income under section 911, 
931, or 933. 
‘‘(D) ADJUSTMENT OF CERTAIN DOLLAR 
AMOUNTS.—
‘‘(i) IN GENERAL.—In the case of any 
taxable year beginning after December 31, 
2026, and before January 1, 2034, the dol-
lar amount in effect under subparagraph 
(A)(ii)(II), and the dollar amount in effect 
under subparagraph (B)(i)(II), shall each 
be equal to 101 percent of such dollar 
amount as in effect for taxable years be-
ginning in the preceding taxable year. 
‘‘(ii) MAINTENANCE
OF
INCREASE 
THEREAFTER.—In the case of any taxable 
year beginning after December 31, 2033, 
the dollar amounts referred to in clause (i)
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•HR 1 EH1S 
shall be equal to such dollar amounts as in 
effect for taxable years beginning in 2033. 
‘‘(2) DISALLOWED
FOREIGN
REAL
PROPERTY 
TAX.—For purposes of this subsection, the term 
‘disallowed foreign real property tax’ means any tax 
which—
‘‘(A) is a foreign real property tax de-
scribed in section 164(a)(1) or 216(a)(1), and 
‘‘(B) is not an excepted tax. 
‘‘(3) SPECIFIED
TAX.—For purposes of this 
subsection, the term ‘specified tax’ means—
‘‘(A) any tax which—
‘‘(i) is described in paragraph (1), (2), 
or (3) of section 164(a) or section 
216(a)(1), or is taken into account under 
section 164(b)(5), and 
‘‘(ii) is not an excepted tax or a dis-
allowed foreign real property tax, and 
‘‘(B) any substitute payment. 
‘‘(4) EXCEPTED
TAX.—For purposes of this 
subsection—
‘‘(A) IN
GENERAL.—The term ‘excepted 
tax’ means—
‘‘(i) any foreign tax described in sec-
tion 164(a)(3),
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•HR 1 EH1S 
‘‘(ii) any tax described in section 
164(a)(3) which is paid or accrued by a 
qualifying entity with respect to carrying 
on a qualified trade or business (as defined 
in section 199A(d), without regard to sec-
tion 199A(b)(3)), and 
‘‘(iii) any tax described in paragraph 
(1) or (2) of section 164(a), or section 
216(a)(1), which is paid or accrued in car-
rying on a trade or business or an activity 
described in section 212. 
‘‘(B) QUALIFYING ENTITY.—For purposes 
of subparagraph (A), the term ‘qualifying enti-
ty’ means any partnership or S corporation 
with gross receipts for the taxable year (within 
the meaning of section 448(c)) if at least 75 
percent of such gross receipts are derived in a 
qualified trade or business (as defined in sec-
tion 
199A(d), 
without 
regard 
to 
section 
199A(b)(3)). For purposes of the preceding 
sentence, the gross receipts of all trades or 
businesses which are under common control 
(within the meaning of section 52(b)) with any 
trade or business of the partnership or S cor-
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•HR 1 EH1S 
poration shall be taken into account as gross 
receipts of the entity. 
‘‘(5) SUBSTITUTE PAYMENT.—For purposes of 
this subsection—
‘‘(A) IN GENERAL.—The term ‘substitute 
payment’ means any amount (other than a tax 
described in paragraph (3)(A) or (4)(A)(ii)) 
paid, incurred, or accrued to any entity referred 
to in section 164(b)(2) if, under the laws of one 
or 
more 
entities 
referred 
to 
in 
section 
164(b)(2), one or more persons would (if the 
assumptions described in subparagraphs (B) 
and (C) applied) be entitled to specified tax 
benefits the aggregate dollar value of which 
equals or exceeds 25 percent of such amount. 
‘‘(B) ASSUMPTION
REGARDING
DOLLAR 
VALUE OF TAX BENEFITS.—The assumption de-
scribed in this subparagraph is that the dollar 
value of a specified tax benefit is—
‘‘(i) in the case of a credit or refund, 
the amount of such credit or refund, 
‘‘(ii) in the case of a deduction or ex-
clusion, 15 percent of the amount of such 
deduction or exclusion, and
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•HR 1 EH1S 
‘‘(iii) in any other case, an amount 
determined in such manner as the Sec-
retary may provide consistent with the 
principles of clauses (i) and (ii). 
‘‘(C) ASSUMPTION REGARDING STATUS OF 
PARTNERS OR SHAREHOLDERS.—The assump-
tion described in this subparagraph is, in the 
case of any amount referred to in subparagraph 
(A) which is paid, incurred, or accrued by a 
partnership or S corporation, that all of the 
partners or shareholders of such partnership or 
S corporation, respectively, are individuals who 
are residents of the jurisdiction of the entity or 
entities providing the specified tax benefits (and 
possess such other characteristics as the laws of 
such entities may require for entitlement to 
such benefits). 
‘‘(D) SPECIFIED TAX BENEFIT.—For pur-
poses of subparagraph (A), the term ‘specified 
tax benefit’ means any benefit which—
‘‘(i) is determined with respect to the 
amount referred to in subparagraph (A), 
and
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•HR 1 EH1S 
‘‘(ii) is allowed against, or determined 
by reference to, a tax described in para-
graph (3)(A) or section 164(b)(5). 
‘‘(E) EXCEPTION
FOR
NON-DEDUCTIBLE 
PAYMENTS.—To the extent that a deduction for 
an amount described in subparagraph (A) is 
not allowed under this chapter (determined 
without regard to this subsection, section 
170(b)(1), section 703(a), section 704(d), and 
section 1363(b)), the term ‘substitute payment’ 
shall not include such amount. 
‘‘(F) EXCEPTION
FOR
CERTAIN
WITH-
HOLDING
TAXES.—To the extent provided in 
regulations issued by the Secretary, the term 
‘substitute payment’ shall not include an 
amount withheld on behalf of another person if 
all of such amount is included in the gross in-
come of such person (determined under this 
chapter). 
‘‘(6) REGULATIONS.—The Secretary shall issue 
such regulations or other guidance as may be nec-
essary or appropriate to carry out the purposes of 
this subsection, including regulations or other guid-
ance—
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•HR 1 EH1S 
‘‘(A) to treat as a tax described in para-
graph (3) of section 164(a) any tax that is, in 
substance, based on general tax principles, de-
scribed in such paragraph, 
‘‘(B) to treat as a substitute payment any 
amount that, in substance, substitutes for a 
specified tax, 
‘‘(C) to provide for the proper allocation, 
for purposes of paragraph (4)(A)(ii), of taxes 
described in section 164(a)(3) between trades 
or business described in section 199A(d)(1) and 
trades or business not so described, and 
‘‘(D) to otherwise prevent the avoidance of 
the purposes of this subsection.’’. 
(b) STATE
AND LOCAL INCOME TAXES PAID
BY 
PARTNERSHIPS AND S CORPORATIONS TAKEN INTO AC-
COUNT
SEPARATELY
BY
PARTNERS
AND
SHARE-
HOLDERS.—
(1) IN GENERAL.—Section 702(a)(6) is amend-
ed to read as follows: 
‘‘(6)(A) taxes, described in section 901, paid or 
accrued to foreign countries, 
‘‘(B) taxes, described in section 901, paid or ac-
crued to possessions of the United States,
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•HR 1 EH1S 
‘‘(C) specified taxes (within the meaning of sec-
tion 275(b)), other than taxes described in subpara-
graph (B), and 
‘‘(D) taxes described in section 275(b)(2),’’. 
(2) TREATMENT OF SUBSTITUTE PAYMENTS.—
Section 702 is amended by redesignating subsection 
(d) as subsection (e) and by inserting after sub-
section (c) the following new subsection: 
‘‘(d) TREATMENT OF SUBSTITUTE PAYMENTS.—Any 
substitute payment (as defined in section 275(b)(5)) shall 
be taken into account under subsection (a)(6)(C) and not 
under any other paragraph of subsection (a).’’. 
(3) DISALLOWANCE OF DEDUCTION TO PART-
NERSHIPS.—Section 703(a)(2)(B) is amended to 
read as follows: 
‘‘(B) any deduction under this chapter 
with respect to taxes or payments described in 
section 702(a)(6),’’. 
(4) S CORPORATIONS.—For corresponding pro-
visions related to S corporations which apply by rea-
son of the amendments made by paragraphs (1) 
through (3), see sections 1366(a)(1) and 1363(b)(2) 
of the Internal Revenue Code of 1986. 
(5) ALLOWABLE
SALT
DEDUCTIONS
TAKEN 
INTO ACCOUNT FOR PURPOSES OF LIMITATION ON
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PARTNERSHIP
LOSSES.—Section 
704(d)(3) 
is 
amended by striking subparagraph (A), by redesig-
nating subparagraph (B) as subparagraph (C), and 
by inserting before subparagraph (C) (as so redesig-
nated) the following new subparagraphs: 
‘‘(A) IN
GENERAL.—In determining the 
amount of any loss under paragraph (1), there 
shall be taken into account—
‘‘(i) the partner’s distributive share of 
amounts described in paragraphs (4) and 
(6)(A) of section 702(a), 
‘‘(ii) if the taxpayer chooses to take to 
any extent the benefits of section 901, the 
partner’s distributive share of amounts de-
scribed in section 702(a)(6)(B), and 
‘‘(iii) the amount by which the deduc-
tions allowed under this chapter (deter-
mined without regard to this subsection) to 
the partner would decrease if the partner’s 
distributive share of amounts described in 
section 702(a)(6)(C) were not taken into 
account. 
‘‘(B) TREATMENT OF POSSESSION TAXES 
IN
EVENT
PARTNER
DOES
NOT
ELECT
THE 
FOREIGN TAX CREDIT.—In the case of a tax-
919
•HR 1 EH1S 
payer not described in subparagraph (A)(ii), 
subparagraph (A)(iii) shall be applied by sub-
stituting ‘subparagraphs (B) and (C) of section 
702(a)(6)’ for ‘section 702(a)(6)(C)’.’’. 
(6) 
CONFORMING
AMENDMENT.—Section 
56(b)(1)(A)(ii) is amended by inserting ‘‘or for any 
substitute 
payment 
(as 
defined 
in 
section 
275(b)(5))’’ before the period at the end. 
(c) ADDITION TO TAX FOR STATE AND LOCAL TAX 
ALLOCATION MISMATCH.—
(1) IN GENERAL.—Part I of subchapter A of 
chapter 68 is amended by adding at the end the fol-
lowing new section: 
‘‘SEC. 6659. STATE AND LOCAL TAX ALLOCATION MIS-
MATCH. 
‘‘(a) IN GENERAL.—In the case of any covered indi-
vidual, there shall be added to the tax imposed under sec-
tion 1 for the taxable year an amount equal to the product 
of—
‘‘(1) the highest rate of tax in effect under such 
section for such taxable year, multiplied by 
‘‘(2) the sum of the State and local tax alloca-
tion mismatches for such taxable year with respect 
to each partnership specified tax payment with re-
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•HR 1 EH1S 
spect to which such individual is a covered indi-
vidual. 
‘‘(b) COVERED INDIVIDUAL.—For purposes of this 
section, the term ‘covered individual’ means, with respect 
to any partnership specified tax payment, any individual 
(or estate or trust) who—
‘‘(1) is entitled (directly or indirectly) to one or 
more specified tax benefits with respect to such pay-
ment, and 
‘‘(2) takes into account (directly or indirectly) 
any item of income, gain, deduction, loss, or credit 
of the partnership which made such payment. 
‘‘(c) STATE
AND LOCAL TAX ALLOCATION MIS-
MATCH.—For purposes of this section—
‘‘(1) IN GENERAL.—The term ‘State and local 
tax allocation mismatch’ means, with respect to any 
partnership specified tax payment, the excess (if 
any) of—
‘‘(A) the aggregate dollar value of the 
specified tax benefits of the covered individual 
with respect to such payment, over 
‘‘(B) the amount of such payment taken 
into account by such individual under section 
702(a) (without regard to sections 275(b) and 
704(d)).
921
•HR 1 EH1S 
‘‘(2) TAXABLE YEAR OF INDIVIDUAL IN WHICH 
MISMATCH TAKEN INTO ACCOUNT.—In the case of 
any partnership specified tax payment paid, in-
curred, or accrued in any taxable year of the part-
nership, the State and local tax allocation mismatch 
determined under paragraph (1) with respect to 
such payment shall be taken into account under sub-
section (a) by the covered individual for the taxable 
year of such individual in which such individual 
takes into account the items referred to in sub-
section (b)(2) which are determined with respect to 
such partnership taxable year. 
‘‘(d) DETERMINATION OF DOLLAR VALUE OF SPECI-
FIED TAX BENEFITS.—
‘‘(1) IN GENERAL.—Except in the case of a cov-
ered individual who elects the application of para-
graph (3) for any taxable year, the dollar value of 
any specified tax benefit shall be the sum of—
‘‘(A) the aggregate increase in tax liability 
(and reduction in credit or refund) for taxes de-
scribed in section 275(b)(3)(A) for the taxable 
year and all prior taxable years that would re-
sult if such specified tax benefit were not taken 
into account with respect to such taxes, plus
922
•HR 1 EH1S 
‘‘(B) the deemed value of any carryforward 
of such specified tax benefit (including any tax 
attribute derived from such benefit) to any sub-
sequent taxable year. 
‘‘(2) DEEMED VALUE OF CARRYFORWARDS.—
For purposes of paragraph (1), the deemed value of 
any carryforward is—
‘‘(A) in the case of a credit or refund, the 
amount of such credit or refund, 
‘‘(B) in the case of a deduction or exclu-
sion, the product of—
‘‘(i) the highest rate of tax which may 
be imposed on individuals under the tax re-
ferred to in subsection (e)(3)(B) with re-
spect to the specified tax benefit, multi-
plied by 
‘‘(ii) the amount of such deduction or 
exclusion, and 
‘‘(C) in any other case, an amount deter-
mined in such manner as the Secretary may 
provide consistent with the principles of sub-
paragraphs (A) and (B). 
‘‘(3) ELECTION OF SIMPLIFIED METHOD.—In 
the case of a covered individual who elects the appli-
cation of this paragraph for any taxable year, the
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•HR 1 EH1S 
dollar value of any specified tax benefit shall be de-
termined under the assumptions described in section 
275(b)(5)(B). 
‘‘(e) OTHER DEFINITIONS AND SPECIAL RULES.—
For purposes of this section—
‘‘(1) 
PARTNERSHIP
SPECIFIED
TAX
PAY-
MENT.—The term ‘partnership specified tax pay-
ment’ means any specified tax paid, incurred, or ac-
crued by a partnership. 
‘‘(2) SPECIFIED TAX.—The term ‘specified tax’ 
has the meaning given such term by section 
275(b)(3). 
‘‘(3) SPECIFIED
TAX
BENEFIT.—The term 
‘specified tax benefit’ means any benefit which—
‘‘(A) is determined with respect to a part-
nership specified tax payment, and 
‘‘(B) is allowed against, or determined by 
reference to, a tax described in section 
275(b)(3)(A). 
‘‘(f) REGULATIONS.—The Secretary shall issue such 
regulations or other guidance as may be necessary or ap-
propriate to carry out the purposes of this section, includ-
ing regulations or other guidance preventing avoidance of 
the addition to tax prescribed by this section through part-
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•HR 1 EH1S 
nership allocations that achieve similar tax reductions as 
a State and local tax allocation mismatch.’’. 
(2) CLERICAL AMENDMENT.—The table of sec-
tions for part I of subchapter A of chapter 68 is 
amended by adding at the end the following new 
item:
‘‘Sec. 6659. State and local tax allocation mismatch.’’.
(d) LIMITATION ON CAPITALIZATION OF SPECIFIED 
TAXES.—Section 275, as amended by the preceding provi-
sions of this section, is amended by redesignating sub-
section (c) as subsection (d) and by inserting after sub-
section (b) the following new subsection: 
‘‘(c) LIMITATIONS ON CAPITALIZATION OF SPECI-
FIED TAXES.—Notwithstanding any other provision of 
this chapter, in the case of an individual, specified taxes 
(as defined in subsection (b)) shall not be treated as 
chargeable to capital account.’’. 
(e) REPORTING BY PARTNERSHIPS AND S CORPORA-
TIONS WITH RESPECT TO SPECIFIED SERVICE TRADE OR 
BUSINESS INCOME.—
(1) PARTNERSHIPS.—Section 6031 is amended 
by adding at the end the following new subsection: 
‘‘(g) SPECIFIED SERVICE TRADE OR BUSINESS IN-
COME.—Returns required under subsection (a), and copies 
required to be furnished under subsection (b), shall in-
clude a statement of whether or not the partnership had
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•HR 1 EH1S 
any gross receipts (within the meaning of section 448(c)) 
from a trade or business described in subsection 
199A(d)(2).’’. 
(2) S CORPORATIONS.—Section 6037 is amend-
ed by adding at the end the following new sub-
section: 
‘‘(d) SPECIFIED SERVICE TRADE OR BUSINESS IN-
COME.—Returns required under subsection (a), and copies 
required to be furnished under subsection (b), shall in-
clude a statement of whether or not the S corporation had 
any gross receipts (within the meaning of section 448(c)) 
from a trade or business described in subsection 
199A(d)(2).’’. 
(f) TEMPORARY INCREASE FOR 2025.—
(1) IN GENERAL.—Section 164(b)(6) is amend-
ed by striking ‘‘$10,000 ($5,000 in the case of a 
married individual filing a separate return)’’ and in-
serting ‘‘applicable limitation amount’’. 
(2) APPLICABLE
LIMITATION
AMOUNT.—Sec-
tion 164(b) is amended by adding at the end the fol-
lowing new paragraph: 
‘‘(7) APPLICABLE LIMITATION AMOUNT.—
‘‘(A) IN GENERAL.—For purposes of para-
graph (6), the term ‘applicable limitation 
amount’ means—
926
•HR 1 EH1S 
‘‘(i) $20,000, in the case of a married 
individual filing a separate return, and 
‘‘(ii) $40,000, in the case of any other 
taxpayer. 
‘‘(B) PHASEDOWN
BASED
ON
MODIFIED 
ADJUSTED GROSS INCOME.—
‘‘(i) IN
GENERAL.—Except as pro-
vided in clause (ii), the $20,000 amount in 
subparagraph (A)(i) and the $40,000 
amount in subparagraph (A)(ii) shall each 
be reduced by 30 percent of the excess (if 
any) of the taxpayer’s modified adjusted 
gross income over—
‘‘(I) $250,000, in the case of a 
married individual filing a separate 
return, and 
‘‘(II) $500,000, in the case of 
any other taxpayer. 
‘‘(ii) LIMITATION
ON
REDUCTION.—
The reduction under clause (i) shall not re-
sult in—
‘‘(I) the dollar amount in effect 
under subparagraph (A)(i) being less 
than $5,000, or
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•HR 1 EH1S 
‘‘(II) the dollar amount in effect 
under subparagraph (A)(ii) being less 
than $10,000. 
‘‘(C) MODIFIED
ADJUSTED
GROSS
IN-
COME.—For purposes of this paragraph, the 
term ‘modified adjusted gross income’ means 
adjusted gross income increased by any amount 
excluded from gross income under section 911, 
931, or 933.’’. 
(3) REPEAL AFTER 2025.—Section 164(b), as 
amended by paragraphs (1) and (2), is amended by 
striking paragraphs (6) and (7). 
(g) EFFECTIVE DATE.—
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
this section shall apply to taxable years beginning 
after December 31, 2025. 
(2) TEMPORARY
INCREASE
FOR
2025.—The 
amendments made by paragraphs (1) and (2) of 
subsection (f) shall apply to taxable years beginning 
after December 31, 2024.
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•HR 1 EH1S 
SEC. 112019. EXCESSIVE EMPLOYEE REMUNERATION FROM 
CONTROLLED GROUP MEMBERS AND ALLO-
CATION OF DEDUCTION. 
(a) APPLICATION OF AGGREGATION RULES.—Section 
162(m) is amended by adding at the end the following new 
paragraph: 
‘‘(7) 
REMUNERATION
FROM
CONTROLLED 
GROUP MEMBERS.—
‘‘(A) IN
GENERAL.—In the case of any 
publicly held corporation which is a member of 
a controlled group—
‘‘(i) paragraph (1) shall be applied by 
substituting ‘specified covered employee’ 
for ‘covered employee’, and 
‘‘(ii) if any person which is a member 
of such controlled group (other than such 
publicly held corporation) provides applica-
ble employee remuneration to an individual 
who is a specified covered employee of such 
controlled group and the aggregate amount 
described in subparagraph (B)(ii) with re-
spect to such specified covered employee 
exceeds $1,000,000—
‘‘(I) paragraph (1) shall apply to 
such person with respect to such re-
muneration, and
929
•HR 1 EH1S 
‘‘(II) paragraph (1) shall apply 
to such publicly held corporation and 
to each such related person by sub-
stituting 
‘the 
allocable 
limitation 
amount’ for ‘$1,000,000’. 
‘‘(B) ALLOCABLE LIMITATION AMOUNT.—
For purposes of this paragraph, the term ‘allo-
cable limitation amount’ means, with respect to 
any member of the controlled group referred to 
in subparagraph (A) with respect to any speci-
fied covered employee of such controlled group, 
the amount which bears the same ratio to 
$1,000,000 as—
‘‘(i) the amount of applicable em-
ployee remuneration provided by such 
member with respect to such specified cov-
ered employee, bears to 
‘‘(ii) the aggregate amount of applica-
ble employee remuneration provided by all 
such members with respect to such speci-
fied covered employee. 
‘‘(C) SPECIFIED
COVERED
EMPLOYEE.—
For purposes of this paragraph, the term ‘spec-
ified covered employee’ means, with respect to 
any controlled group—
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•HR 1 EH1S 
‘‘(i) any employee described in sub-
paragraph (A), (B), or (D) of paragraph 
(3), with respect to the publicly held cor-
poration which is a member of such con-
trolled group, and 
‘‘(ii) any employee who would be de-
scribed in subparagraph (C) of paragraph 
(3) if such subparagraph were applied by 
taking into account the employees of all 
members of the controlled group. 
‘‘(D) CONTROLLED GROUP.—For purposes 
of this paragraph, the term ‘controlled group’ 
means any group treated as a single employer 
under subsection (b), (c), (m), or (o) of section 
414.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2025. 
SEC. 112020. EXPANDING APPLICATION OF TAX ON EXCESS 
COMPENSATION WITHIN TAX-EXEMPT ORGA-
NIZATIONS. 
(a) IN GENERAL.—Section 4960(c)(2) is amended to 
read as follows: 
‘‘(2) COVERED
EMPLOYEE.—For purposes of 
this section, the term ‘covered employee’ means any
931
•HR 1 EH1S 
employee (including any former employee) of an ap-
plicable tax-exempt organization.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to taxable years beginning after 
December 31, 2025. 
SEC. 112021. MODIFICATION OF EXCISE TAX ON INVEST-
MENT INCOME OF CERTAIN PRIVATE COL-
LEGES AND UNIVERSITIES. 
(a) IN GENERAL.—Section 4968 is amended to read 
as follows: 
‘‘SEC. 4968. EXCISE TAX BASED ON INVESTMENT INCOME 
OF PRIVATE COLLEGES AND UNIVERSITIES. 
‘‘(a) TAX IMPOSED.—There is hereby imposed on 
each applicable educational institution for the taxable year 
a tax equal to the applicable percentage of the net invest-
ment income of such institution for the taxable year. 
‘‘(b) APPLICABLE PERCENTAGE.—For purposes of 
this section, the term ‘applicable percentage’ means—
‘‘(1) 1.4 percent in the case of an institution 
with a student adjusted endowment in excess of 
$500,000, and not in excess of $750,000, 
‘‘(2) 7 percent in the case of an institution with 
a student adjusted endowment in excess of 
$750,000, and not in excess of $1,250,000,
932
•HR 1 EH1S 
‘‘(3) 14 percent in the case of an institution 
with a student adjusted endowment in excess of 
$1,250,000, and not in excess of $2,000,000, and 
‘‘(4) 21 percent in the case of an institution 
with a student adjusted endowment in excess of 
$2,000,000. 
‘‘(c) APPLICABLE EDUCATIONAL INSTITUTION.—For 
purposes of this subchapter—
‘‘(1) IN GENERAL.—The term ‘applicable edu-
cational institution’ means an eligible educational in-
stitution (as defined in section 25A(f)(2))—
‘‘(A) which had at least 500 tuition-paying 
students during the preceding taxable year, 
‘‘(B) more than 50 percent of the tuition-
paying students of which are located in the 
United States, 
‘‘(C) which is not—
‘‘(i) described in the first sentence of 
section 511(a)(2)(B) (relating to State col-
leges and universities), or 
‘‘(ii) a qualified religious institution, 
and 
‘‘(D) the student adjusted endowment of 
which is at least $500,000.
933
•HR 1 EH1S 
‘‘(2) QUALIFIED RELIGIOUS INSTITUTION.—For 
purposes of this subsection, the term ‘qualified reli-
gious institution’ means any institution—
‘‘(A) established after July 4, 1776, 
‘‘(B) that was established by or in associa-
tion with and has continuously maintained an 
affiliation with an organization described in sec-
tion 170(b)(1)(A)(i), and 
‘‘(C) which maintains a published institu-
tional mission that is approved by the governing 
body of such institution and that includes, re-
fers to, or is predicated upon religious tenets, 
beliefs, or teachings. 
‘‘(d) STUDENT ADJUSTED ENDOWMENT.—For pur-
poses of this section—
‘‘(1) IN GENERAL.—The term ‘student adjusted 
endowment’ means, with respect to any institution 
for any taxable year—
‘‘(A) the aggregate fair market value of 
the assets of such institution (determined as of 
the end of the preceding taxable year), other 
than those assets which are used directly in car-
rying out the institution’s exempt purpose, di-
vided by
934
•HR 1 EH1S 
‘‘(B) the number of eligible students of 
such institution. 
‘‘(2) ELIGIBLE
STUDENT.—For purposes of 
this subsection, the term ‘eligible student’ means a 
student of the institution that meets the student eli-
gibility requirements under section 484(a)(5) of the 
Higher Education Act of 1965. 
‘‘(e) DETERMINATION OF NUMBER OF STUDENTS.—
For purposes of subsections (c)(1) and (d), the number 
of students of an institution (including for purposes of de-
termining the number of students at a particular location) 
shall be based on the daily average number of full-time 
students attending such institution (with part-time stu-
dents taken into account on a full-time student equivalent 
basis). 
‘‘(f) NET INVESTMENT INCOME.—For purposes of 
this section—
‘‘(1) IN
GENERAL.—Net investment income 
shall be determined under rules similar to the rules 
of section 4940(c). 
‘‘(2) OVERRIDE OF CERTAIN REGULATORY EX-
CEPTIONS.—
‘‘(A) STUDENT LOAN INTEREST.—Net in-
vestment income shall be determined by taking 
into account any interest income from a student
935
•HR 1 EH1S 
loan made by the applicable educational institu-
tion (or any related organization) as gross in-
vestment income. 
‘‘(B) FEDERALLY-SUBSIDIZED
ROYALTY 
INCOME.—
‘‘(i) IN GENERAL.—Net investment in-
come shall be determined by taking into 
account any Federally-subsidized royalty 
income as gross investment income. 
‘‘(ii) FEDERALLY-SUBSIDIZED
ROY-
ALTY INCOME.—For purposes of this sub-
paragraph—
‘‘(I) IN
GENERAL.—The term 
‘Federally-subsidized royalty income’ 
means any otherwise-regulatory-ex-
empt royalty income if any Federal 
funds were used in the research, de-
velopment, or creation of the patent, 
copyright, or other intellectual or in-
tangible property from which such 
royalty income is derived. 
‘‘(II) OTHERWISE-REGULATORY-
EXEMPT ROYALTY INCOME.—For pur-
poses of this subparagraph, the term 
‘otherwise-regulatory-exempt 
royalty
936
•HR 1 EH1S 
income’ means royalty income which 
(but for this subparagraph) would not 
be taken into account as gross invest-
ment income by reason of being de-
rived from patents, copyrights, or 
other intellectual or intangible prop-
erty which resulted from the work of 
students or faculty members in their 
capacities as such with the applicable 
educational institution. 
‘‘(III) FEDERAL
FUNDS.—The 
term ‘Federal funds’ includes any 
grant made by, and any payment 
made under any contract with, any 
Federal agency to the applicable edu-
cational institution, any related orga-
nization, or any student or faculty 
member referred to in subclause (II). 
‘‘(g) ASSETS AND NET INVESTMENT INCOME OF RE-
LATED ORGANIZATIONS.—
‘‘(1) IN
GENERAL.—For purposes of sub-
sections (d) and (f), assets and net investment in-
come of any related organization with respect to an 
educational institution shall be treated as assets and
937
•HR 1 EH1S 
net investment income, respectively, of the edu-
cational institution, except that—
‘‘(A) no such amount shall be taken into 
account with respect to more than 1 educational 
institution, and 
‘‘(B) unless such organization is controlled 
by such institution or is described in section 
509(a)(3) with respect to such institution for 
the taxable year, assets and net investment in-
come which are not intended or available for 
the use or benefit of the educational institution 
shall not be taken into account. 
‘‘(2) RELATED ORGANIZATION.—For purposes 
of this subsection, the term ‘related organization’ 
means, with respect to an educational institution, 
any organization which—
‘‘(A) controls, or is controlled by, such in-
stitution, 
‘‘(B) is controlled by 1 or more persons 
which also control such institution, or 
‘‘(C) is a supported organization (as de-
fined in section 509(f)(3)), or an organization 
described in section 509(a)(3), during the tax-
able year with respect to such institution.
938
•HR 1 EH1S 
‘‘(h) REGULATIONS.—The Secretary shall prescribe 
such regulations or other guidance as may be necessary 
to prevent avoidance of the tax under this section, includ-
ing regulations or other guidance to prevent avoidance of 
such tax through the restructuring of endowment funds 
or other arrangements designed to reduce or eliminate the 
value of net investment income or assets subject to the 
tax imposed by this section.’’. 
(b) REQUIREMENT TO REPORT CERTAIN INFORMA-
TION WITH RESPECT TO APPLICATION OF EXCISE TAX 
BASED ON INVESTMENT INCOME OF PRIVATE COLLEGES 
AND UNIVERSITIES.—Section 6033 is amended by redes-
ignating subsection (o) as subsection (p) and by inserting 
after subsection (n) the following new subsection: 
‘‘(o) REQUIREMENT TO REPORT CERTAIN INFORMA-
TION WITH RESPECT TO EXCISE TAX BASED ON INVEST-
MENT INCOME
OF PRIVATE COLLEGES
AND UNIVER-
SITIES.—Each applicable educational institution described 
in section 4968(c) which is subject to the requirements 
of subsection (a) shall include on the return required 
under subsection (a)—
‘‘(1) the number of eligible students taken into 
account under section 4968(c)(1)(D), and 
‘‘(2) the number of students of such institution 
(determined after application of section 4968(e)).’’.
939
•HR 1 EH1S 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2025. 
SEC. 112022. INCREASE IN RATE OF TAX ON NET INVEST-
MENT INCOME OF CERTAIN PRIVATE FOUN-
DATIONS. 
(a) IN GENERAL.—Section 4940(a) is amended by 
striking ‘‘1.39 percent’’ and inserting ‘‘the applicable per-
centage’’. 
(b) APPLICABLE PERCENTAGE.—Section 4940(a) is 
amended—
(1) by striking ‘‘There is hereby’’ and inserting 
the following: 
‘‘(1) IMPOSITION OF TAX.—There is hereby’’, 
and 
(2) by adding at the end the following new 
paragraphs: 
‘‘(2) APPLICABLE PERCENTAGE.—For purposes 
of this subsection, the term ‘applicable percentage’ 
means, with respect to any taxable year—
‘‘(A) in the case of a private foundation 
with assets of less than $50,000,000, 1.39 per-
cent,
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•HR 1 EH1S 
‘‘(B) in the case of a private foundation 
with assets of at least $50,000,000, and less 
than $250,000,000, 2.78 percent, 
‘‘(C) in the case of a private foundation 
with assets of at least $250,000,000, and less 
than $5,000,000,000, 5 percent, and 
‘‘(D) in the case of a private foundation 
with assets of at least $5,000,000,000, 10 per-
cent. 
‘‘(3) ASSETS.—For purposes of this subsection, 
the assets of any private foundation shall be deter-
mined with respect to any taxable year as being the 
aggregate fair market value of all assets of such pri-
vate foundation, as determined as of the close of 
such taxable year. The preceding sentence shall be 
applied without reduction for any liabilities. 
‘‘(4) AGGREGATION.—
‘‘(A) IN GENERAL.—For purposes of this 
subsection and subsection (c), assets and net 
investment income of any related organization 
with respect to a private foundation shall be 
treated as assets and net investment income, 
respectively, of the private foundation, except 
that—
941
•HR 1 EH1S 
‘‘(i) no such amount shall be taken 
into account with respect to more than 1 
private foundation, and 
‘‘(ii) unless such organization is con-
trolled by such private foundation, assets 
and net investment income which are not 
intended or available for the use or benefit 
of the private foundation shall not be 
taken into account. 
‘‘(B) RELATED ORGANIZATION.—For pur-
poses of this paragraph, the term ‘related orga-
nization’ means, with respect to a private foun-
dation, any organization which—
‘‘(i) controls, or is controlled by, such 
private foundation, or 
‘‘(ii) is controlled by 1 or more per-
sons which also control such private foun-
dation.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act.
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•HR 1 EH1S 
SEC. 112023. CERTAIN PURCHASES OF EMPLOYEE-OWNED 
STOCK DISREGARDED FOR PURPOSES OF 
FOUNDATION 
TAX 
ON 
EXCESS 
BUSINESS 
HOLDINGS. 
(a) IN GENERAL.—Section 4943(c)(4)(A) is amended 
by adding at the end the following new clauses: 
‘‘(v) For purposes of clause (i), subpara-
graph (D), and paragraph (2), any voting stock 
which—
‘‘(I) is not readily tradable on an es-
tablished securities market, 
‘‘(II) is purchased by the business en-
terprise on or after January 1, 2020, from 
an employee stock ownership plan (as de-
fined in section 4975(e)(7)) in which em-
ployees of such business enterprise partici-
pate, in connection with a distribution 
from such plan, and 
‘‘(III) is held by the business enter-
prise as treasury stock, cancelled, or re-
tired, 
shall be treated as outstanding voting stock, but 
only to the extent so treating such stock would 
not result in permitted holdings exceeding 49 
percent (determined without regard to this 
clause). The preceding sentence shall not apply
943
•HR 1 EH1S 
with respect to the purchase of stock from a 
plan during the 10-year period beginning on the 
date the plan is established. 
‘‘(vi) Section 4943(c)(4)(A)(ii) shall not 
apply with respect to any decrease in the per-
centage of holdings in a business enterprise by 
reason of the application of clause (v).’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years ending after the 
date of the enactment of this Act and to purchases by 
a business enterprise of voting stock in taxable years be-
ginning after December 31, 2019. 
SEC. 112024. UNRELATED BUSINESS TAXABLE INCOME IN-
CREASED BY AMOUNT OF CERTAIN FRINGE 
BENEFIT EXPENSES FOR WHICH DEDUCTION 
IS DISALLOWED. 
(a) IN GENERAL.—Section 512(a) is amended by 
adding at the end the following new paragraph: 
‘‘(7) INCREASE IN UNRELATED BUSINESS TAX-
ABLE INCOME BY DISALLOWED FRINGE.—
‘‘(A) IN
GENERAL.—Unrelated business 
taxable income of an organization shall be in-
creased by any amount—
‘‘(i) which is paid or incurred by such 
organization for any qualified transpor-
944
•HR 1 EH1S 
tation fringe (as defined in section 132(f)) 
or any parking facility used in connection 
with qualified parking (as defined in sec-
tion 132(f)(5)(C)), 
‘‘(ii) which is not directly connected 
with an unrelated trade or business which 
is regularly carried on by the organization, 
and 
‘‘(iii) for which a deduction is not al-
lowable under this chapter by reason of 
section 274. 
‘‘(B) EXCEPTION FOR CHURCH ORGANIZA-
TIONS.—Subparagraph (A) shall not apply to—
‘‘(i) any organization to which section 
6033(a)(1) does not apply by reason of 
clause (i) or (iii) of section 6033(a)(3)(A), 
and 
‘‘(ii) any church-affiliated organiza-
tion described in section 501(c) which is 
not required to file an annual return under 
section 6033(a)(1) by reason of section 
6033(a)(3)(B). 
‘‘(C) TREATMENT AS INCOME FROM SEPA-
RATE TRADE OR BUSINESS.—For purposes of 
paragraph (6), any increase under subpara-
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•HR 1 EH1S 
graph (A) shall be treated as unrelated business 
taxable income with respect to an unrelated 
trade or business separate from any other unre-
lated trade or business of the organization. 
‘‘(D) REGULATIONS.— The Secretary shall 
issue such regulations or other guidance as may 
be necessary or appropriate to carry out the 
purposes of this paragraph, including regula-
tions or other guidance providing for the appro-
priate allocation of costs with respect to facili-
ties used for parking.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to amounts paid or incurred after 
December 31, 2025. 
SEC. 112025. EXCLUSION OF RESEARCH INCOME LIMITED 
TO PUBLICLY AVAILABLE RESEARCH. 
(a) IN GENERAL.—Section 512(b)(9) is amended by 
striking ‘‘from research’’ and inserting ‘‘from such re-
search’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to amounts received or accrued 
after December 31, 2025.
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SEC. 112026. LIMITATION ON EXCESS BUSINESS LOSSES OF 
NONCORPORATE TAXPAYERS. 
(a) RULE MADE PERMANENT.—Section 461(l)(1) is 
amended by striking ‘‘and before January 1, 2029,’’ each 
place it appears. 
(b) EXCESS BUSINESS LOSS DETERMINED ON A CU-
MULATIVE BASIS WITH RESPECT TO PERIODS AFTER 
2024.—Section 461(l)(2) is amended to read as follows: 
‘‘(2) DISALLOWED LOSS CARRYOVER.—Any loss 
disallowed under paragraph (1) for any taxable year 
shall be treated for purposes of this title as a loss 
attributable to a trade or business of the taxpayer 
(other than a trade or business described in the last 
sentence of paragraph (3)(A)) arising in the subse-
quent taxable year. To the extent provided by the 
Secretary, for purposes of applying section 1341 and 
subtitle F, a loss treated as arising under the pre-
ceding sentence shall be treated (to the extent not 
inconsistent with the purposes of this subsection) in 
a manner similar to the manner in which net oper-
ating losses are treated for purposes of such provi-
sions.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to losses arising (or treated as aris-
ing under section 461(l)(2) of the Internal Revenue Code
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•HR 1 EH1S 
of 1986, as amended by this section) in taxable years be-
ginning after December 31, 2024. 
SEC. 112027. 1-PERCENT FLOOR ON DEDUCTION OF CHARI-
TABLE CONTRIBUTIONS MADE BY CORPORA-
TIONS. 
(a) IN GENERAL.—Section 170(b)(2)(A) is amended 
to read as follows: 
‘‘(A) IN
GENERAL.—Any charitable con-
tribution (other than any contribution to which 
subparagraph (B) or subparagraph (C) applies 
or any contribution for which a deduction is not 
allowable under this section without regard to 
this paragraph) shall be allowed as a deduction 
under this subsection (a) only to the extent that 
the aggregate of such contributions—
‘‘(i) exceeds 1 percent of the tax-
payer’s taxable income, and 
‘‘(ii) does not exceed 10 percent of the 
taxpayer’s taxable income.’’. 
(b) APPLICATION
OF
CARRYFORWARD.—Section 
170(d)(2) is amended to read as follows: 
‘‘(2) CORPORATIONS.—
‘‘(A) IN
GENERAL.—Any charitable con-
tribution taken into account under subsection 
(b)(2)(A) for any taxable year which is not al-
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•HR 1 EH1S 
lowed as a deduction by reason of clause (ii) 
thereof shall be taken into account as a chari-
table contribution for the succeeding taxable 
year, except that, for purposes of determining 
under this subparagraph whether such contribu-
tion is allowed in such succeeding taxable year, 
contributions in such succeeding taxable year 
(determined without regard to this paragraph) 
shall be taken into account under subsection 
(b)(2)(A) before any contribution taken into ac-
count by reason of this paragraph. 
‘‘(B) 5-YEAR CARRYFORWARD.—No chari-
table contribution may be carried forward under 
subparagraph (A) to any taxable year following 
the fifth taxable year after the taxable year in 
which the charitable contribution was first 
taken into account. For purposes of the pre-
ceding sentence, contributions shall be treated 
as allowed on a first-in first-out basis. 
‘‘(C) CONTRIBUTIONS DISALLOWED BY 1-
PERCENT
FLOOR
CARRIED
FORWARD
ONLY 
FROM YEARS IN WHICH 10 PERCENT LIMITA-
TION IS EXCEEDED.—In the case of any taxable 
year from which a charitable contribution is 
carried forward under subparagraph (A) (deter-
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•HR 1 EH1S 
mined without regard this subparagraph), sub-
paragraph (A) shall be applied by substituting 
‘clause (i) or (ii)’ for ‘clause (ii)’. 
‘‘(D) SPECIAL RULE FOR NET OPERATING 
LOSS CARRYOVERS.—The amount of charitable 
contributions carried forward under subpara-
graph (A) shall be reduced to the extent that 
such carryfoward would (but for this subpara-
graph) reduce taxable income (as computed for 
purposes of the second sentence of section 
172(b)(2)) and increase a net operating loss 
carryover under section 172 to a succeeding 
taxable year.’’. 
(c) 
CONFORMING
AMENDMENTS.—Subparagraph 
(B)(ii) and (C)(ii) of section 170(b)(2) are each amended 
by inserting ‘‘other than subparagraph (C) thereof’’ after 
‘‘subsection (d)(2)’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2025. 
SEC. 112028. ENFORCEMENT OF REMEDIES AGAINST UN-
FAIR FOREIGN TAXES. 
(a) IN GENERAL.—Subpart D of part II of sub-
chapter N of chapter 1 is amended by adding at the end 
the following new section:
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‘‘SEC. 899. ENFORCEMENT OF REMEDIES AGAINST UNFAIR 
FOREIGN TAXES. 
‘‘(a) INCREASED RATES OF TAX ON FOREIGN PER-
SONS OF DISCRIMINATORY FOREIGN COUNTRIES.—
‘‘(1) 
TAXES
OTHER
THAN
WITHHOLDING 
TAXES.—
‘‘(A) IN GENERAL.—In the case of any ap-
plicable person, each specified rate of tax (or 
any rate of tax applicable in lieu of such statu-
tory rate) shall be increased by the applicable 
number of percentage points. 
‘‘(B) SPECIFIED RATE OF TAX.—For pur-
poses of this paragraph, the term ‘specified rate 
of tax’ means—
‘‘(i) the rates of tax specified in para-
graphs (1) and (2) of section 871(a), 
‘‘(ii) in the case of any applicable per-
son to which section 871(b) applies, each 
rate of tax in effect under section 1, 
‘‘(iii) the rate of tax specified in sec-
tion 881(a), 
‘‘(iv) in the case of any applicable per-
son to which section 882(a) applies, the 
rate of tax specified in section 11(b), 
‘‘(v) the rate of tax specified in sec-
tion 884(a), and
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•HR 1 EH1S 
‘‘(vi) the rate of tax specified in sec-
tion 4948(a). 
‘‘(C) APPLICATION OF INCREASED RATES 
TO EFFECTIVELY CONNECTED INCOME OF NON-
RESIDENT
ALIEN
INDIVIDUALS
LIMITED
TO 
GAINS ON UNITED STATES REAL PROPERTY IN-
TERESTS.—In the case of any individual to 
whom subparagraph (A) applies, the tax im-
posed under section 1 on such individual (after 
application of subparagraph (A)) shall be re-
duced (but not below zero) by the excess of—
‘‘(i) the tax which would be imposed 
under such section (after application of 
subparagraph (A)) if FIRPTA items were 
not taken into account, over 
‘‘(ii) the tax which would be imposed 
under such section if FIRPTA items were 
not taken into account, and subparagraph 
(A) did not apply. 
For purposes of this clause, the term ‘FIRPTA 
items’ means gains and losses taken into ac-
count under section 871(b)(1) by reason of sec-
tion 897(a)(1)(A). 
‘‘(D) APPLICATION OF INCREASED RATES 
TO CERTAIN FOREIGN GOVERNMENTS.—In the
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•HR 1 EH1S 
case of any applicable person described in sub-
section (b)(1)(A), section 892(a) shall not 
apply. 
‘‘(2) MODIFICATION
OF
BASE
EROSION
AND 
ANTI-ABUSE TAX.—In the case of any corporation 
described in subsection (b)(1)(E) (applied by sub-
stituting ‘corporation’ for ‘foreign corporation’)—
‘‘(A) such corporation shall be treated as 
described in subparagraphs (B) and (C) of sec-
tion 59A(e)(1) for purposes of determining 
whether such corporation is an applicable tax-
payer, 
‘‘(B) section 59A(b)(1) shall be applied 
by—
‘‘(i) substituting ‘12.5 percent’ for 
‘10.1 percent’ in subparagraph (A), and 
‘‘(ii) by treating the amount described 
in section 59A(b)(1)(B)(ii) as being zero, 
‘‘(C) subsections (c)(2)(B), (c)(4)(B)(ii), 
and (d)(5) of section 59A shall not apply, and 
‘‘(D) if any amount (other than the pur-
chase price of depreciable or amortizable prop-
erty or inventory) would have been a base ero-
sion payment described in section 59A(d)(1) 
but for the fact that the taxpayer capitalizes
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•HR 1 EH1S 
the amount, then solely for purposes of calcu-
lating the taxpayer’s base erosion payments 
(within the meaning of section 59A(d)) and 
base erosion tax benefits (within the meaning of 
section 59A(c)(2)), such amount shall be treat-
ed as if it had been deducted rather than cap-
italized. 
‘‘(3) WITHHOLDING TAXES.—
‘‘(A) IN
GENERAL.—In the case of any 
payment to an applicable person, each rate of 
tax specified in section 1441(a) or 1442(a) (or 
any rate of tax applicable in lieu of such statu-
tory rate) shall be increased by the applicable 
number of percentage points. The preceding 
sentence shall not apply to the 14 percent rate 
of tax specified in section 1441(a). 
‘‘(B) DISPOSITION
OF
UNITED
STATES 
REAL PROPERTY INTERESTS.—In the case of 
any disposition of a United States real property 
interest (as defined in section 897(c)) by an ap-
plicable person, the rate of tax specified in sec-
tion 1445(a) (or any rate of tax applicable in 
lieu of such statutory rate) shall be increased 
by the applicable number of percentage points.
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‘‘(C) OTHER DISPOSITIONS AND DISTRIBU-
TIONS
RELATED
TO
UNITED
STATES
REAL 
PROPERTY INTERESTS.—In the case of any dis-
position or distribution described in any para-
graph of section 1445(e), each rate of tax in 
such paragraph (or any rate of tax applicable in 
lieu of such statutory rate) shall be increased 
by the applicable number of percentage points 
if—
‘‘(i) in the case of section 1445(e)(1), 
the foreign person referred to in subpara-
graph (A) or (B) of such section is an ap-
plicable person, 
‘‘(ii) in the case of section 1445(e)(2), 
the foreign corporation referred to in such 
section is an applicable person, 
‘‘(iii) 
in 
the 
case 
of 
section 
1445(e)(3), the foreign shareholder re-
ferred to in such section is an applicable 
person, 
‘‘(iv) in the case of section 1445(e)(4), 
the foreign person referred to in such sec-
tion is an applicable person,
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•HR 1 EH1S 
‘‘(v) in the case of section 1445(e)(5), 
the Secretary issues regulations or other 
guidance providing for such increase, and 
‘‘(vi) in the case of section 1445(e)(6), 
the nonresident alien individual or foreign 
corporation referred to in such section is 
an applicable person. 
‘‘(4) APPLICABLE
NUMBER
OF
PERCENTAGE 
POINTS.—For purposes of this paragraph—
‘‘(A) IN GENERAL.—The term ‘applicable 
number of percentage points’ means, with re-
spect to any discriminatory foreign country—
‘‘(i) with respect to the 1-year period 
beginning on the applicable date with re-
spect to such foreign country, 5 percentage 
points, and 
‘‘(ii) with respect to any period after 
the 1-year period to which clause (i) ap-
plies, the sum of —
‘‘(I) 5 percentage points, plus 
‘‘(II) an additional 5 percentage 
points for each annual anniversary of 
such applicable date which has oc-
curred before the beginning of such 
period.
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•HR 1 EH1S 
‘‘(B) CAP ON INCREASE.—Notwithstanding 
subparagraph (A), the increase in any rate 
under paragraph (1) or (3) shall not result in 
such rate exceeding the amount of the statutory 
rate (determined without regard to any rate ap-
plicable in lieu of such statutory rate) increased 
by 20 percentage points. 
‘‘(C) APPLICABLE DATE.—For purposes of 
this section, the term ‘applicable date’ means, 
with respect to any discriminatory foreign coun-
try, the first day of the first calendar year be-
ginning on or after the latest of—
‘‘(i) 90 days after the date of enact-
ment of this section, 
‘‘(ii) 180 days after the date of enact-
ment of the unfair foreign tax that causes 
such country to be treated as a discrimina-
tory foreign country, or 
‘‘(iii) the first date that an unfair for-
eign tax of such country begins to apply. 
‘‘(D) APPLICATION TO TAXABLE YEARS.—
For purposes of paragraph (1), the applicable 
number of percentage points is the applicable 
number of percentage points in effect for the 
discriminatory foreign country during the tax-
957
•HR 1 EH1S 
payer’s taxable year. If more than one applica-
ble number of percentage points is in effect for 
the discriminatory foreign country during the 
taxpayer’s taxable year, the applicable number 
of percentage points shall be determined by 
using a weighted average rate based on each 
applicable number of percentage points in effect 
during such taxable year and the number of 
days during which it was in effect. For pur-
poses of the prior sentence, the applicable num-
ber of percentage points in effect for the dis-
criminatory foreign country for the period be-
fore the applicable date is treated as zero, and, 
if the taxpayer ceases to be an applicable per-
son during its taxable year, the applicable num-
ber of percentage points in effect for the dis-
criminatory foreign country for the period after 
the taxpayer ceased to be an applicable person 
is treated as zero. 
‘‘(E) 
APPLICATION
TO
WITHHOLDING 
TAXES.—For purposes of paragraph (3), the 
applicable number of percentage points shall be 
determined with respect to the date of the pay-
ment or disposition, as the case may be.
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•HR 1 EH1S 
‘‘(F) MULTIPLE DISCRIMINATORY FOREIGN 
COUNTRIES.—For purposes of paragraphs (1) 
and (3), if, on any day, the taxpayer is an ap-
plicable person with respect to more than one 
discriminatory foreign country, the highest ap-
plicable number of percentage points in effect 
shall apply. 
‘‘(G) INCREASE NOT APPLICABLE TO NON-
DISCRIMINATORY FOREIGN COUNTRIES.—In the 
case of any foreign country which is not a dis-
criminatory foreign country, the applicable 
number of percentage points is zero. 
‘‘(5) YEARS TO WHICH APPLICABLE.—
‘‘(A) TAXABLE YEAR.—In the case of any 
person, paragraphs (1) and (2) shall apply to 
each taxable year beginning—
‘‘(i) after the later of—
‘‘(I) 90 days after the date of en-
actment of this section, 
‘‘(II) 180 days after the date of 
enactment of the unfair foreign tax 
that causes such country to be treated 
as a discriminatory foreign country, 
or
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•HR 1 EH1S 
‘‘(III) the first date that an un-
fair foreign tax of such country begins 
to apply, and 
‘‘(ii) before the last date on which the 
discriminatory foreign country imposes an 
unfair foreign tax. 
‘‘(B) WITHHOLDING.—In the case of any 
person, paragraph (3) shall apply to each cal-
endar year beginning during the period that 
such person is an applicable person. 
‘‘(C) SAFE HARBOR FOR WITHHOLDING.—
Paragraph (3) shall not apply—
‘‘(i) in the case of any applicable per-
son to which clause (ii) does not apply, if 
the discriminatory foreign country with re-
spect to which such person is an applicable 
person is not listed by the Secretary as a 
discriminatory foreign country, and 
‘‘(ii) in the case of any applicable per-
son described in subparagraph (E) or (F) 
of subsection (b)(1), if the discriminatory 
foreign country with respect to which such 
person is an applicable person (and such 
country’s applicable date) has been listed 
in such guidance for less than 90 days.
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•HR 1 EH1S 
‘‘(D) TEMPORARY
SAFE
HARBOR
FOR 
WITHHOLDING AGENTS.—No penalties or inter-
est shall be imposed with respect to failures, be-
fore January 1, 2027, to deduct or withhold 
any amounts by reason of paragraph (3) if the 
person required to deduct or withhold such 
amounts demonstrates to the satisfaction of the 
Secretary that such person made best efforts to 
comply with paragraph (3) in a timely manner. 
‘‘(b) APPLICABLE PERSON.—For purposes of this 
section—
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided by the Secretary, the term ‘applicable person’ 
means—
‘‘(A) any government (within the meaning 
of section 892) of any discriminatory foreign 
country, 
‘‘(B) any individual (other than a citizen 
or resident of the United States) who is tax 
resident of a discriminatory foreign country, 
‘‘(C) any foreign corporation (other than a 
United States-owned foreign corporation, as de-
fined in section 904(h)(6)) which is a tax resi-
dent of a discriminatory foreign country,
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•HR 1 EH1S 
‘‘(D) any private foundation (within the 
meaning of section 4948) created or organized 
in a discriminatory foreign country, 
‘‘(E) any foreign corporation (other than a 
publicly held corporation) if more than 50 per-
cent of—
‘‘(i) the total combined voting power 
of all classes of stock of such corporation 
entitled to vote, or 
‘‘(ii) the total value of the stock of 
such corporation, 
is owned (within the meaning of section 958(a)) 
by persons described in this paragraph, 
‘‘(F) any trust the majority of the bene-
ficial interests of which are held (directly or in-
directly) by persons described in this para-
graph, and 
‘‘(G) foreign partnerships, branches, and 
any other entity identified with respect to a dis-
criminatory foreign country by the Secretary 
for purposes of this subsection. 
‘‘(2) CONTINUATION
OF
TREATMENT
DURING 
CERTAIN PERIODS.—For purposes of this section, if 
a person would cease to be an applicable person for 
a period of less than one year, such person shall con-
962
•HR 1 EH1S 
tinue to be treated as an applicable person during 
such period. 
‘‘(c) UNFAIR FOREIGN TAX.—For purposes of this 
section—
‘‘(1) IN GENERAL.—The term ‘unfair foreign 
tax’ means an undertaxed profits rule (UTPR), dig-
ital services tax, diverted profits tax, and, to the ex-
tent provided by the Secretary, an extraterritorial 
tax, discriminatory tax, or any other tax enacted 
with a public or stated purpose indicating the tax 
will be economically borne, directly or indirectly, dis-
proportionately by United States persons. Such term 
shall not include any tax which neither applies to—
‘‘(A) any United States person (including 
a trade or business of a United States person), 
nor 
‘‘(B) any foreign corporation (including a 
trade or business of such foreign corporation) if 
the foreign corporation is a controlled foreign 
corporation and more than 50 percent of the 
total combined voting power of all classes of 
stock of such corporation entitled to vote, or the 
total value of the stock of such corporation) is 
owned (within the meaning of section 958(a)) 
by United States persons.
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•HR 1 EH1S 
‘‘(2) 
EXTRATERRITORIAL
TAX.—The 
term 
‘extraterritorial tax’ means any tax imposed by a 
foreign country on a corporation (including any 
trade or business of such corporation) which is de-
termined by reference to any income or profits re-
ceived by any person (including any trade or busi-
ness of any person) by reason of such person being 
connected to such corporation through any chain of 
ownership, determined without regard to the owner-
ship interests of any individual, and other than by 
reason of such corporation having a direct or indi-
rect ownership interest in such person. 
‘‘(3) DISCRIMINATORY
TAX.—The term ‘dis-
criminatory tax’ means any tax imposed by a foreign 
country if—
‘‘(A) such tax applies more than inciden-
tally to items of income that would not be con-
sidered to be from sources, or effectively con-
nected to a trade or business, within the foreign 
country under the rules of part I of this sub-
chapter if such part were applied by treating 
such foreign country as though it were the 
United States,
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•HR 1 EH1S 
‘‘(B) such tax is imposed on a base other 
than net income and is not computed by per-
mitting recovery of costs and expenses, 
‘‘(C) such tax is exclusively or predomi-
nantly applicable, in practice or by its terms, to 
nonresident individuals and foreign corporations 
or partnerships (as determined under rules 
similar to paragraphs (4) and (5) of section 
7701(a) by treating the foreign country as 
though it were the United States) because of 
the application of revenue thresholds, exemp-
tions or exclusions for taxpayers subject to such 
foreign country’s corporate income tax, or re-
strictions of scope that ensure that substantially 
all residents (other than foreign corporations 
and partnerships (as so determined)) supplying 
comparable goods or services are excluded from 
the application of such tax, or 
‘‘(D) such tax is not treated as an income 
tax under the laws of such foreign country or 
is otherwise treated by such foreign country as 
outside the scope of any agreements that are in 
force between such foreign country and one or 
more other jurisdictions for the avoidance of 
double taxation with respect to taxes on income.
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•HR 1 EH1S 
‘‘(4) EXCEPTIONS.—Except as otherwise pro-
vided by the Secretary, the terms ‘extraterritorial 
tax’ and ‘discriminatory tax’ shall not include any 
generally applicable tax which constitutes—
‘‘(A) an income tax generally imposed on 
the income of citizens or residents of the for-
eign country, even if the computation of income 
includes payments that would be foreign source 
income under part I of this subchapter, 
‘‘(B) an income tax which would be an un-
fair foreign tax (determined without regard to 
this subparagraph) solely because it is imposed 
on the income of nonresidents attributable to a 
trade or business in such foreign country, 
‘‘(C) an income tax which would be an un-
fair foreign tax (determined without regard to 
this subparagraph) solely because it is imposed 
on citizens or residents of such foreign country 
by reference to the income of a corporate sub-
sidiary of such person, 
‘‘(D) a withholding tax, or other gross 
basis tax, on any amount described in section 
871(a)(1) or 881(a), other than any with-
holding tax, or other gross basis tax, imposed