804 
‘‘(D) any recognized postsecondary creden-
tial as defined in section 3 of the Workforce In-
novation and Opportunity Act (29 U.S.C. 
3102).’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to distributions made after the 
date of the enactment of this Act. 
SEC. 110112. REINSTATEMENT OF PARTIAL DEDUCTION 
FOR CHARITABLE CONTRIBUTIONS OF INDI-
VIDUALS WHO DO NOT ELECT TO ITEMIZE. 
(a) IN GENERAL.—Section 170(p) is amended— 
(1) by striking ‘‘$300 ($600’’ and inserting 
‘‘$150 ($300’’, and 
(2) by striking ‘‘in 2021’’ and inserting ‘‘after 
December 31, 2024, and before January 1, 2029’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2024. 
SEC. 110113. EXCLUSION FOR CERTAIN EMPLOYER PAY-
MENTS OF STUDENT LOANS UNDER EDU-
CATIONAL 
ASSISTANCE 
PROGRAMS 
MADE 
PERMANENT AND ADJUSTED FOR INFLATION. 
(a) IN GENERAL.—Section 127(c)(1)(B) is amended 
by striking ‘‘in the case of payments made before January 
1, 2026,’’. 
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805 
(b) INFLATION
ADJUSTMENT.—Section 127 is 
amended— 
(1) by redesignating subsection (d) as sub-
section (e), and 
(2) by inserting after subsection (c) the fol-
lowing new subsection: 
‘‘(d) INFLATION ADJUSTMENT.— 
‘‘(1) IN GENERAL.—In the case of any taxable 
year beginning after 2026, both of the $5,250 
amounts in subsection (a)(2) shall be increased by 
an amount equal to— 
‘‘(A) such dollar amount, multiplied by 
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for the calendar 
year in which the taxable year begins, deter-
mined by substituting ‘calendar year 2025’ for 
‘calendar year 2016’ in subparagraph (A)(ii) 
thereof. 
‘‘(2) ROUNDING.—If any increase under para-
graph (1) is not a multiple of $50, such increase 
shall be rounded to the nearest multiple of $50.’’. 
(c) EFFECTIVE DATE.—The amendment made by 
this section shall apply to payments made after December 
31, 2025. 
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806 
SEC. 110114. EXTENSION OF RULES FOR TREATMENT OF 
CERTAIN 
DISASTER-RELATED 
PERSONAL 
CASUALTY LOSSES. 
For purposes of applying section 304(b) of the Tax-
payer Certainty and Disaster Tax Relief Act of 2020 (divi-
sion EE of Public Law 116–260), section 301 of such Act 
shall be applied by substituting the date of the enactment 
of this section for ‘‘the date of the enactment of this Act’’ 
each place it appears. 
SEC. 110115. MAGA ACCOUNTS. 
(a) IN GENERAL.—Subchapter F of chapter 1 is 
amended by adding at the end the following new part: 
‘‘PART IX—MAGA ACCOUNTS 
‘‘SEC. 530A. MAGA ACCOUNTS. 
‘‘(a) GENERAL RULE.—A MAGA account shall be ex-
empt from taxation under this subtitle. Notwithstanding 
the preceding sentence, such account shall be subject to 
the taxes imposed by section 511 (relating to imposition 
of tax on unrelated business income of charitable organiza-
tions). 
‘‘(b) MAGA ACCOUNT.—For purposes of this sec-
tion— 
‘‘(1) IN GENERAL.—The term ‘money account 
for growth and advancement’ or ‘MAGA account’ 
means a trust created or organized in the United 
States for the exclusive benefit of an individual and 
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807 
which is designated (in such manner as the Sec-
retary shall prescribe) at the time of the establish-
ment of the trust as a MAGA account, but only if 
the written governing instrument creating the trust 
meets the following requirements: 
‘‘(A) The individual establishing the ac-
count shall provide to the trustee the social se-
curity number of such individual and of the ac-
count beneficiary. 
‘‘(B) Except in the case of a qualified roll-
over contribution described in subsection (e), no 
contribution will be accepted— 
‘‘(i) before January 1, 2026, 
‘‘(ii) unless it is in cash, 
‘‘(iii) unless the account beneficiary 
has not attained age 18, and 
‘‘(iv) if such contribution would result 
in aggregate contributions for the taxable 
year exceeding the contribution limit speci-
fied in subsection (c)(1). 
‘‘(C) No distribution (other than a dis-
tribution of a qualified rollover contribution) 
will be allowed— 
‘‘(i) before the date on which the ac-
count beneficiary attains age 18, or 
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808 
‘‘(ii) in the case of such an account 
the account beneficiary of which has not 
attained age 25, if the aggregate distribu-
tions from such account exceeds the 
amount that is 1⁄2 the cash equivalent 
value of the account on the date on which 
the account beneficiary attains age 18. 
‘‘(D) The account beneficiary has not at-
tained age 8 on the date of the establishment 
of the account. 
‘‘(E) The trustee is a bank (as defined in 
section 408(n)) or another person who dem-
onstrates to the satisfaction of the Secretary 
that the manner in which that person will ad-
minister the trust will be consistent with the re-
quirements of this section or who has so dem-
onstrated with respect to any individual retire-
ment plan. 
‘‘(F) The interest of an individual in the 
balance of his account is nonforfeitable. 
‘‘(G) The assets of the trust shall not be 
commingled with other property except in a 
common trust fund or common investment 
fund. 
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809 
‘‘(H) No part of the trust funds will be in-
vested in any asset other than eligible invest-
ments. 
‘‘(2) ELIGIBLE INVESTMENTS.—The term ‘eligi-
ble investments’ means stock of a regulated invest-
ment company (within the meaning of section 851) 
which— 
‘‘(A) tracks a well-established index of 
United States equities (or which invests in an 
equivalent diversified portfolio of United States 
equities), 
‘‘(B) does not use leverage, 
‘‘(C) minimizes fees and expenses, and 
‘‘(D) meets such other criteria as the Sec-
retary determines appropriate for purposes of 
this section. 
‘‘(3) ACCOUNT
BENEFICIARY.—The term ‘ac-
count beneficiary’ means the individual on whose be-
half the MAGA account was established. 
‘‘(c) TREATMENT OF CONTRIBUTIONS.— 
‘‘(1) CONTRIBUTION LIMIT.—The contribution 
limit for any taxable year is $5,000. 
‘‘(2) CONTRIBUTIONS
FROM
TAX
EXEMPT 
SOURCES
AND
ROLLOVER
CONTRIBUTIONS.—The 
amount contributed to a MAGA account for pur-
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810 
poses of paragraph (1) shall be determined without 
regard to— 
‘‘(A) a qualified rollover contribution, 
‘‘(B) any contribution from the Federal 
Government or any State, local, or tribal gov-
ernment, or 
‘‘(C) any contribution made through the 
program established under subsection (l). 
‘‘(3) COST-OF-LIVING ADJUSTMENT.— 
‘‘(A) IN
GENERAL.—In the case of any 
taxable year beginning in a calendar year after 
2026, the $5,000 amount under paragraph (1) 
shall be increased by an amount equal to— 
‘‘(i) such dollar amount, multiplied by 
‘‘(ii) the cost-of-living adjustment de-
termined under section 1(f)(3) for the cal-
endar year, determined by substituting 
‘calendar year 2025’ for ‘calendar year 
2016’ in subparagraph (A)(ii) thereof. 
‘‘(B) ROUNDING.—If any increase under 
subparagraph (A) is not a multiple of $100, 
such amount shall be rounded to the next lower 
multiple of $100. 
‘‘(d) DISTRIBUTIONS.— 
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811 
‘‘(1) AMOUNTS ALLOCABLE TO INVESTMENT IN 
THE CONTRACT.—A distribution from a MAGA ac-
count of an amount allocable to the investment in 
the contract shall not be includible in the gross in-
come of the distributee. 
‘‘(2) AMOUNTS ALLOCABLE TO INCOME ON THE 
CONTRACT
USED
FOR
QUALIFIED
EXPENSES.—A 
distribution from a MAGA account of an amount al-
locable to income on the contract and which is used 
exclusively to pay for qualified expenses shall be in-
cludible in net capital gain of the distributee under 
section 1(h)(12). 
‘‘(3) AMOUNTS
INCLUDIBLE
IN
GROSS
IN-
COME.—Any distribution from a MAGA account 
which is not described in paragraph (1) or (2) shall 
be includible in the gross income of the distributee. 
‘‘(4) QUALIFIED EXPENSES.—For purposes of 
this subsection, the term ‘qualified expenses’ means 
any of the following expenses paid or incurred for 
the benefit of the account beneficiary: 
‘‘(A) Qualified higher education expenses 
(as defined in section 529(e)(3)) determined 
without regard to section 529(c)(7). 
‘‘(B) Qualified post-secondary credentialing 
expenses (as defined in section 529(f)). 
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812 
‘‘(C) Under regulations provided by the 
Secretary, amounts paid or incurred with re-
spect to any small businesses for which the ben-
eficiary has obtained any small business loan, 
small farm loan, or similar loan. 
‘‘(D) Any amount used for the purchase 
(as defined in section 36(c)(3)) of the principal 
residence (as used in section 121) of the ac-
count beneficiary if such account beneficiary is 
a first-time homebuyer (as defined in section 
36(c)(1)) with respect to such purchase. 
‘‘(5) EXCEPTIONS.—Paragraphs (2) and (3) 
shall not apply to any distribution which is a quali-
fied rollover contribution. 
‘‘(6) ADDITIONAL TAX ON CERTAIN DISTRIBU-
TIONS.—In the case of a distributee who has not at-
tained age 30, the tax imposed by this chapter on 
the account beneficiary for any taxable year in which 
there is a distribution from a MAGA account of such 
beneficiary which is includible in gross income under 
paragraph (3) shall be increased by 10 percent of 
the amount which is so includible. 
‘‘(e) QUALIFIED ROLLOVER CONTRIBUTION.—For 
purposes of this section, the term ‘qualified rollover con-
tribution’ means an amount which is paid in a direct trust-
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813 
ee-to-trustee transfer from a MAGA account maintained 
for the benefit of the account beneficiary to a MAGA ac-
count maintained for such beneficiary. 
‘‘(f) TREATMENT AFTER DEATH OF ACCOUNT BENE-
FICIARY.—Rules similar to the rules of section 223(f)(8) 
shall apply for purposes of this section. 
‘‘(g) DETERMINATIONS OF AGGREGATE DISTRIBU-
TIONS AND INVESTMENT IN CONTRACT IN THE CASE OF 
CERTAIN ROLLOVER CONTRIBUTIONS.—In the case of a 
qualified rollover contribution which is described in sub-
section (e)(2), any determination required under this sec-
tion of the amount of the investment of the contract or 
of aggregate distributions from the MAGA account shall 
be determined with respect to the aggregate of such 
amounts for all MAGA accounts of the same account bene-
ficiary. 
‘‘(h) CUSTODIAL ACCOUNTS.—For purposes of this 
section, a custodial account shall be treated as a trust 
under this section if— 
‘‘(1) the custodial account would, except for the 
fact that it is not a trust, constitute a trust which 
meets the requirements of subsection (b)(1), and 
‘‘(2) the assets of such account are held by a 
bank (as defined in section 408(n)) or another per-
son who demonstrates, to the satisfaction of the Sec-
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814 
retary, that the manner in which he will administer 
the account will be consistent with the requirements 
of this section. 
For purposes of this title, in the case of a custodial ac-
count treated as a trust by reason of the preceding sen-
tence, the person holding the assets of such account shall 
be treated as the trustee thereof. 
‘‘(i) TERMINATION.— 
‘‘(1) AGE 31.—Upon the date on which the ac-
count beneficiary attains age 31, a MAGA account 
shall cease to be a MAGA account and the amount 
in such account shall be treated as distributed for 
purposes of subsection (d). 
‘‘(2) MULTIPLE
ACCOUNTS
OF
ONE
BENE-
FICIARY.— 
‘‘(A) IN GENERAL.—In the case of any du-
plicate MAGA account of any account bene-
ficiary other than a MAGA account which is es-
tablished by the deposit through a qualified roll-
over contribution of the entire amount of an-
other MAGA account of the account bene-
ficiary— 
‘‘(i) such duplicate MAGA account 
shall cease to be a MAGA account and the 
amount in such account shall be treated as 
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815 
distributed for purposes of subsection (d), 
and 
‘‘(ii) there is imposed an excise tax on 
the account beneficiary in an amount equal 
to so much of cash value of the account as 
is allocable to income on the contract. 
‘‘(B) WITHHOLDING
REQUIREMENT.—In 
the case of an account terminated under sub-
paragraph (A), the trustee shall deduct and 
withhold upon the amount to be distributed the 
amount in excess described in subparagraph 
(A)(ii). 
‘‘(C) NOTIFICATION.—The Secretary, upon 
determining that a duplicate account exists, 
shall provide a notice to the account beneficiary 
of such duplicate account (and the account cus-
todian, in the case of a custodial account) and 
to each trustee of any MAGA account of the ac-
count beneficiary of such duplicate account 
which identifies each MAGA account of such 
beneficiary and the trustee of each such ac-
count. 
‘‘(D) DUPLICATE ACCOUNT.—For purposes 
of this paragraph, the term ‘duplicate account’ 
means— 
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816 
‘‘(i) in the case of an account bene-
ficiary for the benefit of whom an account 
was established by the Secretary under 
section 6434, any other MAGA account of 
such account beneficiary, or 
‘‘(ii) in the case of any other account 
beneficiary, any MAGA account established 
after the first MAGA account established 
for the benefit of such account beneficiary. 
‘‘(j) INVESTMENT IN THE CONTRACT.—For purposes 
of this section, rules similar to the rules applied to a quali-
fied tuition program (as defined in section 529(b)) under 
section 72(e)(9) shall apply for purposes of determining 
the investment in the contract, except that such amount 
shall be determined without regard to any contribution 
which is described in subsection (c)(2). 
‘‘(k) REPORTS.—The trustee of a MAGA account 
shall make such reports regarding such account to the 
Secretary and to the beneficiary of the account with re-
spect to contributions, distributions, the amount of invest-
ment in the contract, and such other matters as the Sec-
retary may require. The reports required by this sub-
section shall be filed at such time and in such manner 
and furnished to such individuals at such time and in such 
manner as may be required. 
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817 
‘‘(l) CONTRIBUTIONS
TO PREDOMINATELY UNRE-
LATED CHILDREN.—The Secretary shall establish a pro-
gram through which contributions may be made to the 
MAGA accounts of a large group of account beneficiaries 
if— 
‘‘(1) the contribution is made by any person de-
scribed in any paragraph of section 501(c) and ex-
empt from taxation under section 501(a), 
‘‘(2) such accounts are selected on the basis of 
the location of the residence of the account bene-
ficiaries, the school district in which such bene-
ficiaries attend school, or another basis the Sec-
retary determines appropriate, and 
‘‘(3) all individuals who are account bene-
ficiaries of such an account who meet the selected 
criteria receive an equal portion of the contribu-
tion.’’. 
(b) DISTRIBUTION TAXED AT SAME RATE AS NET 
CAPITAL GAINS.—Section 1(h) is amended by adding at 
the end the following new paragraph: 
‘‘(12) DISTRIBUTIONS
FROM
MAGA
ACCOUNT 
TAXED AS NET CAPITAL GAIN.—For purposes of this 
subsection, the term ‘net capital gain’ means the net 
capital gain (determined without regard to this para-
graph) increased by the amount includible in net 
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818 
capital gain under this paragraph by reason of sec-
tion 530A(d)(2).’’. 
(c) TAX ON EXCESS CONTRIBUTIONS.— 
(1) IN GENERAL.—Section 4973(a) is amended 
by striking ‘‘or’’ at the end of paragraph (5), by in-
serting ‘‘or’’ at the end of paragraph (6), and by in-
serting after paragraph (6) the following new para-
graph: 
‘‘(7) a MAGA account (as defined in section 
530A(b)),’’. 
(2) EXCESS CONTRIBUTION.—Section 4973 is 
amended by adding at the end the following new 
subsection: 
‘‘(i) EXCESS CONTRIBUTIONS
TO
A MAGA AC-
COUNT.—For purposes of this section, in the case of 
MAGA accounts (within the meaning of section 530A), the 
term ‘excess contributions’ means the sum of— 
‘‘(1) the amount by which the amount contrib-
uted for the calendar year to such account (other 
than qualified rollover contributions (as defined in 
section 530A(e))) exceeds the contribution limit 
under section 530A(c)(1) (determined without re-
gard 
to 
contributions 
described 
in 
section 
530A(c)(2)), and 
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819 
‘‘(2) the amount determined under this sub-
section for the preceding calendar year, reduced by 
the excess (if any) of the maximum amount allow-
able as a contribution under section 530A(c)(1) (as 
so determined) for the calendar year over the 
amount contributed to the account for the calendar 
year (other than qualified rollover contributions (as 
so defined)).’’. 
(d) DISCLOSURE OF RETURN INFORMATION TO FA-
CILITATE CERTAIN CONTRIBUTIONS.—Section 6103(l) is 
amended by adding at the end the following new para-
graph: 
‘‘(23) DISCLOSURE OF RETURN INFORMATION 
TO ENABLE CERTAIN CONTRIBUTIONS TO MAGA AC-
COUNTS.—Upon written request signed by the head 
of the bureau or office of the Department of the 
Treasury requesting the inspection or disclosure, the 
Secretary may disclose the following return informa-
tion with respect to a MAGA account (as defined in 
section 503A(b)) to officers and employees of such 
bureau or office to the extent that such disclosure is 
necessary to carry out section 530A(l): 
‘‘(A) Information necessary to identify the 
account holders in a particular class of bene-
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820 
ficiaries identified by a donor as the intended 
recipients. 
‘‘(B) The name, address, and social secu-
rity number of a beneficiary. 
‘‘(C) The account custodian and the ad-
dress of such custodian. 
‘‘(D) The account number. 
‘‘(E) The routing number. 
‘‘(F) To the extent determined by the Sec-
retary in regulations, such other return infor-
mation as the Secretary determines necessary 
to ensure proper routing of funds 
Return information disclosed under this paragraph 
may only be used to identify account holders in a 
particular class of beneficiaries or for the proper 
routing of funds and may not be redisclosed by the 
Secretary.’’. 
(e) FAILURE TO PROVIDE REPORTS ON MAGA AC-
COUNTS.—Section 6693(a)(2) is amended by striking 
‘‘and’’ at the end of subparagraph (E), by striking the 
period at the end of subparagraph (F) and inserting ‘‘, 
and’’, and by adding at the end the following new subpara-
graph: 
‘‘(G) section 530A(h) (relating to MAGA 
accounts).’’. 
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821 
(f) CONFORMING AMENDMENT.—The table of parts 
for subchapter F of chapter 1 is amended by adding at 
the end the following new item: 
‘‘PART IX. MAGA ACCOUNTS’’. 
(g) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2024. 
SEC. 110116. MAGA ACCOUNTS CONTRIBUTION PILOT PRO-
GRAM. 
(a) IN GENERAL.—Subchapter B of chapter 65 is 
amended by adding at the end the following new section: 
‘‘SEC. 6434. MAGA ACCOUNTS CONTRIBUTION PILOT PRO-
GRAM. 
‘‘(a) IN GENERAL.—In the case of any taxpayer with 
respect to whom an eligible individual is a qualifying child, 
there shall be allowed a one-time credit of $1,000 with 
respect to each such eligible individual who is a qualifying 
child of such taxpayer which shall be payable by the Sec-
retary only to the MAGA account with respect to which 
such eligible individual is the account beneficiary. 
‘‘(b) ACCOUNT ESTABLISHED BY SECRETARY.— 
‘‘(1) IN GENERAL.—In the case of any eligible 
individual that the Secretary determines is not the 
account beneficiary of any MAGA account as of the 
qualifying date of such eligible individual, the Sec-
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822 
retary shall establish an account for the benefit of 
such eligible individual. 
‘‘(2) QUALIFYING
DATE.—For purposes of 
paragraph (1), the term ‘qualifying date’ means, 
with respect to an eligible individual, the first date 
on which a return of tax is filed by an individual 
with respect to whom such eligible individual is a 
qualifying child with respect to the taxable year to 
which such return relates. 
‘‘(3) NOTIFICATION.—In the case of any eligible 
individual for the benefit of whom the Secretary es-
tablishes an account under paragraph (1), the Sec-
retary shall— 
‘‘(A) notify any individual with respect to 
whom such eligible individual is a qualifying 
child for the taxable year described in para-
graph (2) of the establishment of such account, 
and 
‘‘(B) shall provide an opportunity to such 
individual to elect to decline the application of 
this subsection to such qualifying child. 
‘‘(4) DETERMINATION
OF
DEFAULT
TRUST-
EE.—For purposes of selecting a trustee for an ac-
count established under paragraph (1), the Sec-
retary shall take into account— 
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823 
‘‘(A) the history of reliability and regu-
latory compliance of such trustee, 
‘‘(B) the customer service experience of 
such trustee, 
‘‘(C) the costs imposed by such trustee on 
the account or account beneficiary, and 
‘‘(D) to the extent practicable, the pref-
erences of any individual described in para-
graph (3)(A) with respect to such eligible indi-
vidual. 
‘‘(c) ELIGIBLE INDIVIDUAL.—For purposes of sub-
section (a), the term eligible individual means an indi-
vidual— 
‘‘(1) who is born after December 31, 2024, and 
before January 1, 2029, and 
‘‘(2) who is a United States citizen at birth. 
‘‘(d) SOCIAL SECURITY NUMBER REQUIRED.— 
‘‘(1) IN GENERAL.—No credit shall be allowed 
under subsection (a) to a taxpayer unless such tax-
payer includes on the return of tax for the taxable 
year— 
‘‘(A) such individual’s social security num-
ber, 
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824 
‘‘(B) if such individual is married, the so-
cial security number of such individual’s spouse, 
and 
‘‘(C) the social security number of the eli-
gible individual with respect to whom such cred-
it is allowed. 
‘‘(2) SOCIAL
SECURITY
NUMBER
DEFINED.— 
For purposes of paragraph (1), the term ‘social se-
curity number’ shall have the meaning given such 
term in section 24(h)(7). 
‘‘(e) DEFINITIONS.—For purposes of this section— 
‘‘(1) QUALIFYING CHILD.—The term qualifying 
child has the meaning given such term in section 
152(c). 
‘‘(2) 
MAGA 
ACCOUNT; 
ACCOUNT
BENE-
FICIARY.—The terms ‘MAGA account’ and ‘account 
beneficiary’ have the meaning given such terms in 
section 530A(b).’’. 
(b) PENALTY FOR NEGLIGENT CLAIM OR FRAUDU-
LENT CLAIM.—Part I of subchapter A of chapter 68 of 
subtitle F is amended by adding at the end the following 
new section: 
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825 
‘‘SEC. 6659. IMPROPER CLAIM FOR MAGA ACCOUNT CON-
TRIBUTION PILOT PROGRAM CREDIT. 
‘‘(a) IN GENERAL.—In the case of any taxpayer that 
makes an excessive claim for a credit under section 
6434— 
‘‘(1) if such excess is a result of negligence or 
disregard of the rules or regulations, there shall be 
imposed a penalty of $500, or 
‘‘(2) if such excess is a result of fraud, there 
shall be imposed a penalty of $1,000. 
‘‘(b) DEFINITIONS.—The terms ‘negligence’ and ‘dis-
regard’ have the same meaning as when such terms are 
used in section 6662.’’. 
(c) OMISSION OF CORRECT SOCIAL SECURITY NUM-
BER TREATED MATHEMATICAL OR CLERICAL ERROR.— 
Section 6213(g)(2), as amended by the preceding provi-
sions of this Act, is amended by striking ‘‘and’’ at the 
end of subparagraph (Y), by striking the period at the 
end of subparagraph (Z) and inserting ‘‘, and’’ , and by 
inserting after subparagraph (Z) the following new sub-
paragraph: 
‘‘(AA) an omission of a correct social secu-
rity number required under section 6434(d)(1) 
(relating to the MAGA accounts contribution 
pilot program).’’. 
(d) CLERICAL AMENDMENTS.— 
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(1) The table of sections for subchapter B of 
chapter 65 is amended by adding at the end the fol-
lowing new item: 
‘‘Sec. 6434. MAGA accounts contribution pilot program.’’. 
(2) The table of sections for part I of sub-
chapter A of chapter 68 of subtitle F is amended by 
inserting after the item relating to section 6658 the 
following new item: 
‘‘Sec. 6659. Improper claim for MAGA account contribution pilot program 
credit.’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2024. 
PART 3—INVESTING IN HEALTH OF AMERICAN 
FAMILIES AND WORKERS 
SEC. 110201. TREATMENT OF HEALTH REIMBURSEMENT AR-
RANGEMENTS 
INTEGRATED 
WITH 
INDI-
VIDUAL MARKET COVERAGE. 
(a) IN GENERAL.—Section 9815(b) is amended— 
(1) by striking ‘‘EXCEPTION.—Notwithstanding 
subsection (a)’’ and inserting the following: ‘‘EXCEP-
TIONS.— 
‘‘(1) SELF-INSURED GROUP HEALTH PLANS.— 
Notwithstanding subsection (a)’’, and 
(2) by adding at the end the following new 
paragraph: 
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‘‘(2) CUSTOM HEALTH OPTION AND INDIVIDUAL 
CARE EXPENSE ARRANGEMENTS.— 
‘‘(A) IN GENERAL.—For purposes of this 
subchapter, a custom health option and indi-
vidual care expense arrangement shall be treat-
ed as meeting the requirements of section 9802 
and sections 2705, 2711, 2713, and 2715 of 
title XXVII of the Public Health Service Act. 
‘‘(B) CUSTOM HEALTH OPTION AND INDI-
VIDUAL
CARE
EXPENSE
ARRANGEMENTS
DE-
FINED.—For purposes of this section, the term 
‘custom health option and individual care ex-
pense arrangement’ means a health reimburse-
ment arrangement— 
‘‘(i) which is an employer-provided 
group health plan funded solely by em-
ployer contributions to provide payments 
or reimbursements for medical care subject 
to a maximum fixed dollar amount for a 
period, 
‘‘(ii) under which such payments or 
reimbursements may only be made for 
medical care provided during periods dur-
ing which the individual is covered— 
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‘‘(I) under individual health in-
surance coverage (other than coverage 
that consists solely of excepted bene-
fits), or 
‘‘(II) under part A and B of title 
XVIII of the Social Security Act or 
part C of such title, 
‘‘(iii) which meets the nondiscrimina-
tion requirements of subparagraph (C), 
‘‘(iv) which meets the substantiation 
requirements of subparagraph (D), and 
‘‘(v) which meets the notice require-
ments of subparagraph (E). 
‘‘(C) NONDISCRIMINATION.— 
‘‘(i) IN
GENERAL.—An arrangement 
meets the requirements of this subpara-
graph if an employer offering such ar-
rangement to an employee within a speci-
fied class of employee— 
‘‘(I) offers such arrangement to 
all employees within such specified 
class on the same terms, and 
‘‘(II) does not offer any other 
group health plan (other than an ac-
count-based group health plan or a 
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group health plan that consists solely 
of excepted benefits) to any employees 
within such specified class. 
In the case of an employer who offers a 
group health plan provided through health 
insurance coverage in the small group mar-
ket (that is subject to section 2701 of the 
Public Health Service Act) to all employees 
within such specified class, subclause (II) 
shall not apply to such group health plan. 
‘‘(ii) 
SPECIFIED
CLASS
OF
EM-
PLOYEE.—For purposes of this subpara-
graph, any of the following may be des-
ignated as a specified class of employee: 
‘‘(I) Full-time employees. 
‘‘(II) Part-time employees. 
‘‘(III) Salaried employees. 
‘‘(IV) Non-salaried employees. 
‘‘(V) Employees whose primary 
site of employment is in the same rat-
ing area. 
‘‘(VI) Employees who are in-
cluded in a unit of employees covered 
under a collective bargaining agree-
ment to which the employer is subject 
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830 
(determined under rules similar to the 
rules of section 105(h)). 
‘‘(VII) Employees who have not 
met a group health plan, or health in-
surance issuer offering group health 
insurance coverage, waiting period re-
quirement that satisfies section 2708 
of the Public Health Service Act. 
‘‘(VIII) Seasonal employees. 
‘‘(IX) Employees who are non-
resident aliens and who receive no 
earned income (within the meaning of 
section 911(d)(2)) from the employer 
which constitutes income from sources 
within the United States (within the 
meaning of section 861(a)(3)). 
‘‘(X) Such other classes of em-
ployees as the Secretary may des-
ignate. 
An employer may designate (in such man-
ner as is prescribed by the Secretary) two 
or more of the classes described in the pre-
ceding subclauses as the specified class of 
employees to which the arrangement is of-
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831 
fered for purposes of applying this sub-
paragraph. 
‘‘(iii) 
SPECIAL
RULE
FOR
NEW 
HIRES.—An employer may designate pro-
spectively so much of a specified class of 
employees as are hired after a date set by 
the employer. Such subclass of employees 
shall be treated as the specified class for 
purposes of applying clause (i). 
‘‘(iv) RULES FOR DETERMINING TYPE 
OF EMPLOYEE.—For purposes for clause 
(ii), any determination of full-time, part- 
time, or seasonal employment status shall 
be made under rules similar to the rules of 
section 105(h) or 4980H, whichever the 
employer elects for the plan year. Such 
election shall apply with respect to all em-
ployees of the employer for the plan year. 
‘‘(v) 
PERMITTED
VARIATION.—For 
purposes of clause (i)(I), an arrangement 
shall not fail to be treated as provided on 
the same terms within a specified class 
merely 
because 
the 
maximum 
dollar 
amount of payments and reimbursements 
which may be made under the terms of the 
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832 
arrangement for the year with respect to 
each employee within such class— 
‘‘(I) increases as additional de-
pendents of the employee are covered 
under the arrangement, and 
‘‘(II) increases with respect to a 
participant as the age of the partici-
pant increases, but not in excess of an 
amount equal to 300 percent of the 
lowest maximum dollar amount with 
respect to such a participant deter-
mined without regard to age. 
‘‘(D) SUBSTANTIATION REQUIREMENTS.— 
An arrangement meets the requirements of this 
subparagraph if the arrangement has reason-
able procedures to substantiate— 
‘‘(i) that the participant and any de-
pendents are, or will be, enrolled in cov-
erage described in subparagraph (B)(ii) as 
of the beginning of the plan year of the ar-
rangement (or as of the beginning of cov-
erage under the arrangement in the case of 
an employee who first becomes eligible to 
participate in the arrangement after the 
date notice is given with respect to the 
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833 
plan under subparagraph (E) (determined 
without regard to clause (iii) thereof), and 
‘‘(ii) any requests made for payment 
or reimbursement of medical care under 
the arrangement and that the participant 
and any dependents remain so enrolled. 
‘‘(E) NOTICE.— 
‘‘(i) IN
GENERAL.—Except as pro-
vided in clause (iii), an arrangement meets 
the requirements of this subparagraph if, 
under the arrangement, each employee eli-
gible to participate is, not later than 60 
days before the beginning of the plan year, 
given written notice of the employee’s 
rights and obligations under the arrange-
ment which— 
‘‘(I) is sufficiently accurate and 
comprehensive to apprise the employee 
of such rights and obligations, and 
‘‘(II) is written in a manner cal-
culated to be understood by the aver-
age employee eligible to participate. 
‘‘(ii) NOTICE
REQUIREMENTS.—Such 
notice shall include such information as the 
Secretary may by regulation prescribe. 
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834 
‘‘(iii) NOTICE
DEADLINE
FOR
CER-
TAIN EMPLOYEES.—In the case of an em-
ployee— 
‘‘(I) who first becomes eligible to 
participate in the arrangement after 
the date notice is given with respect 
to the plan under clause (i) (deter-
mined without regard to this clause), 
or 
‘‘(II) whose employer is first es-
tablished fewer than 120 days before 
the beginning of the first plan year of 
the arrangement, 
the requirements of this subparagraph 
shall be treated as met if the notice re-
quired under clause (i) is provided not 
later than the date the arrangement may 
take effect with respect to such em-
ployee.’’. 
(b) INCLUSION
OF CHOICE ARRANGMENT PER-
MITTED BENEFITS 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 (17), 
by striking the period at the end of paragraph (18) 
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835 
and inserting ‘‘, and’’, and by inserting after para-
graph (18) the following new paragraph: 
‘‘(19) the total amount of permitted benefits for 
enrolled individuals under a custom health option 
and individual care expense arrangement (as defined 
in section 9815(b)(2)) with respect to such em-
ployee.’’. 
(c) TREATMENT OF CURRENT RULES RELATING TO 
CERTAIN ARRANGEMENTS.— 
(1) NO INFERENCE.—To the extent not incon-
sistent with the amendments made by this section— 
(A) no inference shall be made from such 
amendments with respect to the rules pre-
scribed in the Federal Register on June 20, 
2019, (84 Fed. Reg. 28888) relating to health 
reimbursement arrangements and other ac-
count-based group health plans, and 
(B) any reference to custom health option 
and individual care expense arrangements shall 
for purposes of such rules be treated as includ-
ing a reference to individual coverage health re-
imbursement arrangements. 
(2) OTHER CONFORMING OF RULES.—The Sec-
retary of the Treasury, the Secretary of Health and 
Human Services, and the Secretary of Labor shall 
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836 
modify such rules as may be necessary to conform 
to the amendments made by this section. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to plan years beginning after De-
cember 31, 2025. 
SEC. 110202. PARTICIPANTS IN CHOICE ARRANGEMENT ELI-
GIBLE FOR PURCHASE OF EXCHANGE INSUR-
ANCE UNDER CAFETERIA PLAN. 
(a) IN GENERAL.—Section 125(f)(3) is amended by 
adding at the end the following new subparagraph: 
‘‘(C) EXCEPTION
FOR
PARTICIPANTS
IN 
CHOICE ARRANGEMENT.—Subparagraph (A) 
shall not apply in the case of an employee par-
ticipating in a custom health option and indi-
vidual care expense arrangement (within the 
meaning of section 9815(b)(2)) offered by the 
employee’s employer.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2025. 
SEC. 110203. EMPLOYER CREDIT FOR CHOICE ARRANGE-
MENT. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 is amended by adding at the end 
the following new section: 
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837 
‘‘SEC. 45BB. EMPLOYER CREDIT FOR CHOICE ARRANGE-
MENT. 
‘‘(a) IN GENERAL.—For purposes of section 38, in 
the case of an eligible employer, the CHOICE arrange-
ment credit determined under this section for any taxable 
year is an amount, with respect to each employee enrolled 
during the credit period in a CHOICE arrangement main-
tained by the employer, equal to— 
‘‘(1) $100 multiplied by the number of months 
for which the employee is so enrolled during the first 
year in the credit period, and 
‘‘(2) one-half of the dollar amount in effect 
under paragraph (1) for the taxable year, multiplied 
by the number of months for which the employee is 
so enrolled during the second year of the credit pe-
riod. 
‘‘(b) ARRANGEMENT MUST CONSTITUTE MINIMUM 
ESSENTIAL COVERAGE.—An employee shall not be taken 
into account under subsection (a) unless such employee’s 
eligibility for the CHOICE arrangement (determined with-
out regard to the employee being enrolled) would cause 
the employee to be treated under section 36B(c)(2) as 
being eligible for minimum essential coverage consisting 
of an eligible employer-sponsored plan (as defined in sec-
tion 5000A(f)(2)). 
‘‘(c) DEFINITIONS.—For purposes of this section— 
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838 
‘‘(1) 
CHOICE 
ARRANGEMENT.—The 
term 
‘CHOICE arrangement’ means a custom health op-
tion and individual care expense arrangement (as de-
fined in section 9815(b)(2)(B)). 
‘‘(2) CREDIT PERIOD.—The credit period with 
respect to an eligible employer is the first 2 one-year 
periods beginning with the month during which the 
employer first establishes a CHOICE arrangement 
on behalf of employees of the employer. 
‘‘(3) ELIGIBLE EMPLOYER.—The term ‘eligible 
employer’ means, with respect to any taxable year 
beginning in a calendar year, an employer who is not 
an applicable large employer for the calendar year 
under section 4980H. 
‘‘(d) INFLATION ADJUSTMENT.— 
‘‘(1) IN GENERAL.—In the case of any taxable 
year beginning in a calendar year after 2026, the 
dollar amount in subsection (a) shall be increased by 
an amount equal to— 
‘‘(A) such dollar amount, multiplied by 
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for the calendar 
year in which such taxable year begins by sub-
stituting ‘calendar year 2025’ for ‘calendar year 
2016’ in subparagraph (A)(ii) thereof. 
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839 
‘‘(2) ROUNDING.—If any amount after adjust-
ment under paragraph (1) is not a multiple of $10, 
such amount shall be rounded to the next lower mul-
tiple of $10.’’. 
(b) CREDIT MADE PART OF GENERAL BUSINESS 
CREDIT.—Section 38(b) is amended by striking ‘‘plus’’ at 
the end of paragraph (40), by striking the period at the 
end of paragraph (41) and inserting ‘‘, plus’’, and by add-
ing at the end the following new paragraph: 
‘‘(42) the CHOICE arrangement credit deter-
mined under section 45BB(a).’’. 
(c) CREDIT ALLOWED AGAINST ALTERNATIVE MIN-
IMUM TAX.—Section 38(c)(4)(B) is amended— 
(1) by redesignating clauses (x), (xi), and (xii) 
as clauses (xi), (xii), and (xiii), respectively, and 
(2) by inserting after clause (ix) the following 
new clause: 
‘‘(x) the credit determined under sec-
tion 45BB,’’. 
(d) CLERICAL AMENDMENT.—The table of sections 
for subpart D of part IV of subchapter A of chapter 1 
is amended by adding at the end the following new item: 
‘‘Sec. 45BB. Employer credit for CHOICE arrangement.’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2025. 
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840 
SEC. 110204. INDIVIDUALS ENTITLED TO PART A OF MEDI-
CARE BY REASON OF AGE ALLOWED TO CON-
TRIBUTE TO HEALTH SAVINGS ACCOUNTS. 
(a) IN GENERAL.—Section 223(c)(1)(B) is amended 
by striking ‘‘and’’ at the end of clause (ii), by striking 
the period at the end of clause (iii) and inserting ‘‘, and’’, 
and by adding at the end the following new clause: 
‘‘(iv) entitlement to hospital insurance 
benefits under part A of title XVIII of the 
Social Security Act by reason of section 
226(a) of such Act.’’. 
(b) TREATMENT
OF
HEALTH
INSURANCE
PUR-
CHASED FROM ACCOUNT.—Section 223(d)(2)(C)(iv) is 
amended by inserting ‘‘and who is not an eligible indi-
vidual’’ after ‘‘who has attained the age specified in sec-
tion 1811 of the Social Security Act’’. 
(c) COORDINATION WITH PENALTY ON DISTRIBU-
TIONS
NOT
USED
FOR
QUALIFIED
MEDICAL
EX-
PENSES.—Section 223(f)(4)(C) is amended by striking 
‘‘Subparagraph (A)’’ and inserting ‘‘Except in the case of 
an eligible individual, subparagraph (A)’’ 
(d) CONFORMING AMENDMENT.—Section 223(b)(7) 
is amended by inserting ‘‘(other than an entitlement to 
benefits described in subsection (c)(1)(B)(iv))’’ after ‘‘So-
cial Security Act’’. 
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841 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to months beginning after Decem-
ber 31, 2025. 
SEC. 110205. TREATMENT OF DIRECT PRIMARY CARE SERV-
ICE ARRANGEMENTS. 
(a) IN GENERAL.—Section 223(c)(1) is amended by 
adding at the end the following new subparagraph: 
‘‘(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 
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842 
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 
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, 
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843 
‘‘(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, 
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-
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844 
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’.’’.’’. 
(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.’’. 
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845 
(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: 
‘‘(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). 
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846 
‘‘(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. 
‘‘(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-
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847 
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 
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 
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848 
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— 
‘‘(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 
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849 
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 
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, 
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850 
‘‘(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. 
‘‘(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-
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851 
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 
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 
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852 
‘‘(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. 
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-
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853 
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 
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-
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854 
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.’’. 
(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 
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855 
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 
‘‘(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 
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856 
(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 
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-
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857 
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 
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 (18), 
by striking the period at the end of paragraph (19) 
and inserting ‘‘, and’’, and by inserting after para-
graph (19) the following new paragraph: 
‘‘(20) 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. 
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