1977 
‘‘(i) IN GENERAL.—In the case of a 
taxable year with respect to which a plan 
is approved under subparagraph (B), this 
section (other than this subsection) shall 
not apply to any individual eligible for a 
distribution under such plan. 
‘‘(ii) APPLICATION
OF
SECTION
IN 
EVENT
OF
ABSENCE
OF
APPROVED 
PLAN.—In the case of a taxable year with 
respect to which a plan is not approved 
under subparagraph (B), subsection (d) 
shall be applied by substituting ‘, Puerto 
Rico, or American Samoa’ for ‘or Puerto 
Rico’. 
‘‘(4) TREATMENT
OF
PAYMENTS.—For pur-
poses of section 1324 of title 31, United States 
Code, the payments under this subsection shall be 
treated in the same manner as a refund due from 
a credit provision referred to in subsection (b)(2) of 
such section. 
‘‘(j) REGULATIONS.—The Secretary shall issue such 
regulations or other guidance as the Secretary determines 
necessary or appropriate to carry out the purposes of this 
section, including regulations or other guidance— 
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1978 
‘‘(1) for determining whether an individual re-
ceives care from a taxpayer for purposes of sub-
section (c)(1), and 
‘‘(2) to coordinate or modify the application of 
this section and section 24, 7527A, and 7527B in 
the case of any taxpayer— 
‘‘(A) whose taxable year is other than a 
calendar year, 
‘‘(B) whose filing status for a taxable year 
is different from the status used for deter-
mining one or more monthly payments under 
section 7527B during such taxable year, or 
‘‘(C) whose principal place of abode for 
any month is different from the principal place 
of abode used for determining the monthly pay-
ment under section 7527B for such month. 
‘‘(k) TERMINATION.—This section shall not apply to 
taxable years beginning after December 31, 2025. 
‘‘SEC. 24B. CREDIT FOR CERTAIN OTHER DEPENDENTS. 
‘‘(a) IN GENERAL.—There shall be allowed as a cred-
it against the tax imposed by this chapter for the taxable 
year an amount equal to $500 with respect to each speci-
fied dependent of such taxpayer for such taxable year. 
‘‘(b) LIMITATION BASED ON MODIFIED ADJUSTED 
GROSS INCOME.— 
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1979 
‘‘(1) IN GENERAL.—The amount of the credit 
allowable under subsection (a) shall be reduced (but 
not below zero) by $50 for each $1,000 (or fraction 
thereof) by which the taxpayer’s modified adjusted 
gross income exceeds the threshold amount. 
‘‘(2) THRESHOLD AMOUNT.—For purposes of 
this 
subsection, 
the 
term 
‘threshold 
amount’ 
means— 
‘‘(A) $400,000, in the case of a joint re-
turn or surviving spouse (as defined in section 
2(a)), 
‘‘(B) $300,000, in the case of a head of 
household (as defined in section 2(b)), and 
‘‘(C) $200,000, in any other case. 
‘‘(3) MODIFIED
ADJUSTED
GROSS
INCOME.— 
For purposes of this subsection, the term ‘modified 
adjusted gross income’ means adjusted gross income 
increased by any amount excluded from gross in-
come under section 911, 931, or 933. 
‘‘(c) SPECIFIED DEPENDENT.—For purposes of this 
section, the term ‘specified dependent’ means, with respect 
to any taxpayer for any taxable year, any dependent of 
such taxpayer for such taxable year unless such depend-
ent— 
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1980 
‘‘(1) is a specified child of the taxpayer, or any 
other taxpayer, for any month during such taxable 
year, or 
‘‘(2) would not be a dependent if subparagraph 
(A) of section 152(b)(3) were applied without regard 
to all that follows ‘resident of the United States’. 
‘‘(d) IDENTIFICATION REQUIREMENTS.—Rules simi-
lar to the rules of section 24(e) shall apply for purposes 
of this section. 
‘‘(e) TAXABLE YEAR MUST BE FULL TAXABLE 
YEAR.—Except in the case of a taxable year closed by rea-
son of the death of the taxpayer, no credit shall be allow-
able under this section in the case of a taxable year cov-
ering a period of less than 12 months. 
‘‘(f) INFLATION ADJUSTMENT.— 
‘‘(1) IN GENERAL.—In the case of any taxable 
year beginning after December 31, 2022, the $500 
amount in subsection (a) shall be increased by an 
amount equal to— 
‘‘(A) such dollar amount, multiplied by 
‘‘(B) the percentage (if any) by which— 
‘‘(i) the CPI (as defined in section 
1(f)(4)) for the calendar year preceding 
the calendar year in which such taxable 
year begins, exceeds 
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1981 
‘‘(ii) the CPI (as so defined) for cal-
endar year 2020. 
‘‘(2) ROUNDING.—If the increase determined 
under paragraph (1) is not a multiple of $10, such 
increase shall be rounded to the nearest multiple of 
$10. 
‘‘(g) REGULATIONS.—The Secretary shall issue such 
regulations or other guidance as the Secretary determines 
necessary or appropriate to carry out the purposes of this 
section. 
‘‘(h) TERMINATION.—This section shall not apply to 
taxable years beginning after December 31, 2025.’’. 
(b) MONTHLY PAYMENT OF CHILD TAX CREDIT.— 
Chapter 77 is amended by inserting after section 7527A 
the following new section: 
‘‘SEC. 7527B. MONTHLY PAYMENTS OF CHILD TAX CREDIT. 
‘‘(a) IN GENERAL.—The Secretary shall establish a 
program for making payments to taxpayers with respect 
to each calendar month equal to the monthly advance child 
payment determined with respect to such taxpayer for 
such month. 
‘‘(b) MONTHLY ADVANCE CHILD PAYMENT.—For 
purposes of this section and except as otherwise provided 
in this section, the term ‘monthly advance child payment’ 
means, with respect to any taxpayer for any calendar 
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1982 
month, the amount (if any) which is estimated by the Sec-
retary as being equal to the monthly specified child allow-
ance which would be determined under section 24A(b) 
with respect to such taxpayer for such calendar month if— 
‘‘(1) unless determined by the Secretary based 
on any information known to the Secretary, the only 
specified children of such taxpayer for such calendar 
month are the specified children of such taxpayer for 
the reference month, 
‘‘(2) unless determined by the Secretary based 
on any information known to the Secretary, the ages 
of such children (and the status of such children as 
specified children) are determined for such calendar 
month by taking into account the passage of time 
since such reference month, 
‘‘(3) the limitations of section 24A(b)(2) were 
applied with respect to the reference taxable year 
rather than with respect to the applicable taxable 
year, and 
‘‘(4) unless determined by the Secretary based 
on any information known to the Secretary, no 
monthly specified child allowance were determined 
with respect to such taxpayer for such calendar 
month unless the taxpayer (in the case of a joint re-
turn, either spouse) has a principal place of abode 
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1983 
(determined as provided in section 32) in the United 
States or Puerto Rico for more than one-half of the 
reference month. 
‘‘(c) PRESUMPTIVE ELIGIBILITY.— 
‘‘(1) IN
GENERAL.—An individual shall be 
treated as a specified child of a taxpayer for pur-
poses of determining any monthly advance child pay-
ment under this section only if such month is part 
of the period of presumptive eligibility determined by 
the Secretary under this subsection with respect to 
such specified child and such taxpayer (determined 
by treating the month described in subclause (I) of 
paragraph (2)(A)(ii) as being the first month begin-
ning after the determination described in such sub-
clause). 
‘‘(2) PERIOD OF PRESUMPTIVE ELIGIBILITY.— 
For purposes of this section— 
‘‘(A) IN GENERAL.—Except as otherwise 
provided by the Secretary, the term ‘period of 
presumptive eligibility’ means the period— 
‘‘(i) beginning with the month for 
which presumptive eligibility is established, 
and 
‘‘(ii) ending with the earliest of— 
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1984 
‘‘(I) the beginning of the month 
described in clause (i) if the Secretary 
determines that the taxpayer com-
mitted fraud or intentionally dis-
regarded rules or regulations in estab-
lishing or maintaining presumptive 
eligibility, 
‘‘(II) in the case of any notifica-
tion from the Secretary that the pe-
riod of presumptive eligibility has 
been terminated or suspended by rea-
son of any question regarding eligi-
bility of the taxpayer for monthly ad-
vance child payments with respect to 
such child, the month specified in 
such notice as the month on which 
such termination or suspension be-
gins, and 
‘‘(III) the month following any 
failure of the taxpayer to make the re-
quired annual renewal of presumptive 
eligibility by such date as the Sec-
retary may provide. 
‘‘(B) ESTABLISHING PRESUMPTIVE ELIGI-
BILITY.—A taxpayer shall establish presumptive 
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1985 
eligibility with respect to any specified child for 
any month at such time and in such manner as 
the Secretary may provide. Except as otherwise 
provided by the Secretary, in order to establish 
a period of presumptive eligibility the taxpayer 
must express a reasonable expectation and in-
tent that the taxpayer will continue to be eligi-
ble with respect to such specified child for at 
least the two months following the month for 
which presumptive eligibility is to be estab-
lished. 
‘‘(C) METHOD
OF
ESTABLISHING
PRE-
SUMPTIVE
ELIGIBILITY.—The Secretary shall 
ensure information to establish presumptive eli-
gibility under this paragraph may be provided 
on the return of tax for the taxable year ending 
before the calendar year which includes the 
month for which such eligibility is to be estab-
lished, through the on-line portal described in 
subsection (c), or in such other manner as the 
Secretary may provide. 
‘‘(D) INCLUSION
OF
AUTOMATIC
GRACE 
PERIODS AND PERIODS OF HARDSHIP.—The pe-
riod of presumptive eligibility shall include any 
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1986 
period to which paragraph (1) or (2) of sub-
section (g) applies. 
‘‘(E) AUTOMATIC ELIGIBILITY FOR BIRTH 
OF CHILD.—The Secretary shall issue regula-
tions or other guidance to establish procedures 
pursuant to which, to the maximum extent ad-
ministratively practicable— 
‘‘(i) a parent of a child born during a 
calendar month shall be treated as auto-
matically establishing presumptive eligi-
bility with respect to such child, 
‘‘(ii) the period of such automatic pre-
sumptive eligibility is determined, and 
‘‘(iii) the first monthly advance child 
payment with respect to such child is ad-
justed to properly take into account each 
month in the taxable year preceding such 
birth. 
‘‘(F) PRESUMPTIVE
ELIGIBILITY
BASED 
ON
CERTAIN
GOVERNMENT
PROGRAMS.—The 
Secretary shall issue regulations or other guid-
ance to establish procedures under which— 
‘‘(i) based on information provided to 
the Secretary by one or more government 
entities, a parent or specified relative of a 
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1987 
child is treated as automatically estab-
lishing presumptive eligibility with respect 
to such child, and 
‘‘(ii) the period for which such auto-
matic presumptive eligibility is determined 
(including any additional circumstances 
under which such period will terminate). 
‘‘(G) 
COORDINATION
WITH
PRESUMP-
TION.—For purposes of determining the status 
of any individual as a specified child for pur-
poses of determining presumptive eligibility 
with respect to any period, section 24A(c) shall 
be applied without regard to paragraph (7) 
thereof. 
‘‘(3) NOTICE OF TERMINATION OF PRESUMP-
TIVE ELIGIBILITY BY REASON OF FAILURE TO MAKE 
ANNUAL RENEWAL.—If a taxpayer’s period of pre-
sumptive eligibility with respect to any specified 
child 
terminates 
by 
reason 
of 
paragraph 
(2)(A)(ii)(IV), the Secretary shall provide the tax-
payer a written notice of such termination. 
‘‘(d) DETERMINATION OF REFERENCE MONTH AND 
REFERENCE TAXABLE YEAR.—For purposes of this sec-
tion— 
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1988 
‘‘(1) REFERENCE MONTH.—The term ‘reference 
month’ means, with respect to any taxpayer for any 
calendar month, the most recent of— 
‘‘(A) in the case of a taxpayer who filed a 
return of tax for the last taxable year ending 
before such calendar month, the last month of 
such taxable year, 
‘‘(B) in the case of a taxpayer who filed a 
return of tax for the taxable year preceding the 
taxable year described in subparagraph (A), the 
last month of such preceding taxable year, and 
‘‘(C) in the case of a taxpayer who pro-
vides, through a specified alternative mecha-
nism, information which is sufficient to esti-
mate the taxpayer’s monthly advance child pay-
ment for such month, such month. 
‘‘(2) REFERENCE TAXABLE YEAR.—The term 
‘reference taxable year’ means, with respect to any 
taxpayer for any calendar month, the most recent 
of— 
‘‘(A) the taxable year described in subpara-
graph (A) or (B) of paragraph (1), or 
‘‘(B) in the case of a taxpayer who pro-
vides, through a specified alternative mecha-
nism, information which is sufficient to esti-
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1989 
mate the taxpayer’s modified adjusted gross in-
come for the taxable year which includes such 
month, such taxable year. 
‘‘(3) AVAILABILITY
OF
INFORMATION.—Any 
month or year referred to in subparagraphs (A), 
(B), or (C) of paragraph (1) or subparagraph (A) or 
(B) of paragraph (2) shall not be taken into account 
in determining the reference month or reference tax-
able year with respect to any calendar month unless 
all relevant information with respect to such month 
or year is available to the Secretary and the Sec-
retary has adequate time to make estimates under 
this section on the basis of such information before 
the beginning of such calendar month. 
‘‘(4) TREATMENT OF INSUFFICIENT INFORMA-
TION.—Except as otherwise provided by the Sec-
retary— 
‘‘(A) if a taxpayer is not described in sub-
paragraph (A), (B), or (C) of paragraph (1) 
with respect to any calendar month, the month-
ly advance child payment with respect to such 
taxpayer for such calendar month shall be 
treated as zero unless the Secretary determines 
that the Secretary can make the estimate de-
scribed in subsection (b) on the basis of infor-
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1990 
mation known to the Secretary which the Sec-
retary determines is reasonably reliable, and 
‘‘(B) if the taxpayer is not described in 
paragraph (1)(C) and the information on the 
return of tax referred to in subparagraph (A) 
or (B) of paragraph (1) does not establish the 
status of the taxpayer (in the case of a joint re-
turn, either spouse) as having a principal place 
of abode (determined as provided in section 32) 
in the United States or Puerto Rico for more 
than one-half of the reference month, the Sec-
retary shall determine such status based on in-
formation known to the Secretary. 
‘‘(5) TRANSITION RULE.—In any case with re-
spect to which section 24A was not in effect for the 
taxable year described in subparagraph (A), (B), or 
(C) of paragraph (1) (whichever is applicable), sub-
section (b)(1) shall be applied by substituting ‘the 
qualifying children of such taxpayer for the taxable 
year which includes the reference month’ for ‘the 
specified children of such taxpayer for the reference 
month’. 
‘‘(e) ON-LINE INFORMATION PORTAL; SPECIFIED AL-
TERNATIVE MECHANISMS.— 
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1991 
‘‘(1) ON-LINE
INFORMATION
PORTAL.—The 
Secretary shall establish an on-line portal which al-
lows taxpayers to— 
‘‘(A) subject to such restrictions as the 
Secretary may provide, elect to begin or cease 
receiving payments under this section, and 
‘‘(B) provide information to the Secretary 
which is relevant in determining the monthly 
advance child payment and the taxpayer’s eligi-
bility for such payment, including information 
regarding— 
‘‘(i) the number of the taxpayer’s 
specified children, including by reason of 
the birth of a child, 
‘‘(ii) the taxpayer’s marital status, 
‘‘(iii) the taxpayer’s modified adjusted 
gross income, 
‘‘(iv) the taxpayer’s principal place of 
abode, and 
‘‘(v) any other factor which the Sec-
retary may provide. 
‘‘(2) SPECIFIED ALTERNATIVE MECHANISM.— 
For purposes of this section, the term ‘specified al-
ternative mechanism’ means the on-line portal estab-
lished under paragraph (1), the on-line portal estab-
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1992 
lished under section 7527A, and any other mecha-
nism or method established by the Secretary to allow 
taxpayer’s to provide the information described in 
paragraph (1) (including in connection with the fil-
ing of any return of tax). 
‘‘(f) SPECIFIED CHILD
OF MORE THAN 1 TAX-
PAYER.— 
‘‘(1) IN GENERAL.—In the event that (without 
regard to this paragraph and determined without re-
gard to any election under subsection (e)(1)) any 
specified child would be taken into account in deter-
mining the monthly advance child payment of more 
than one taxpayer for the same calendar month— 
‘‘(A) except as provided in subparagraph 
(B), such child shall be so taken into account 
only with respect to the taxpayer with the most 
recent reference month, and 
‘‘(B) if any such taxpayer is described in 
subsection (d)(1)(C) (or more than 1 taxpayer 
is described in subparagraph (A) of this para-
graph), the Secretary shall establish procedures 
under which the Secretary expeditiously adju-
dicates the taxpayer’s competing claims of pre-
sumptive eligibility with respect to the same 
child. 
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1993 
‘‘(2) PROVISIONS
RELATED
TO
ADJUDICA-
TION.— 
‘‘(A) EXPEDITED
PROCESS; APPEALS.— 
The procedures established under paragraph 
(1)(B) shall include— 
‘‘(i) an expedited process for tax-
payers who meet such requirements as the 
Secretary may establish for such expedited 
process, and 
‘‘(ii) procedures for adjudicating an 
appeal of an adverse decision. 
‘‘(B) INFORMATION RECEIPT AND COORDI-
NATION.—The Secretary may enter into agree-
ments to receive information from, and other-
wise coordinate with— 
‘‘(i) Federal agencies (including the 
Social Security Administration and the De-
partment of Agriculture), 
‘‘(ii) any State, local government, 
Tribal government, or possession of the 
United States, and 
‘‘(iii) any other individual or entity 
that the Secretary determines to be appro-
priate for purposes of adjudicating a com-
peting claim described in paragraph (1). 
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1994 
‘‘(C) ADJUDICATION NOT TREATED AS AS-
SESSMENT.—An adjudication under the proce-
dures established under paragraph (1)(B) (in-
cluding the adjudication of any appeal) shall 
not be treated as an assessment described in 
section 6201. 
‘‘(D) ADJUDICATION NOT TREATED AS IN-
SPECTION
OF
TAXPAYER’S
BOOKS
OF
AC-
COUNT.—The inspection of a taxpayer’s books 
of account in connection with any adjudication 
under the procedures established under para-
graph (1)(B) (including the adjudication of any 
appeal) shall not be treated as an examination 
or inspection of a taxpayer’s books of account 
for purposes of section 7605(b). 
‘‘(3) RETROACTIVE PAYMENTS.—If, pursuant to 
the procedures established under paragraph (1)(B), 
the Secretary determines that a child is a specified 
child of a taxpayer and the Secretary did not make 
payments to such taxpayer with respect to such child 
for any portion of the period during which the deter-
mination was made, the Secretary may make a one- 
time payment to the taxpayer with respect to which 
such child is the specified child in an amount equal 
to the aggregate amount by which the monthly ad-
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1995 
vance child payments to such taxpayer would have 
increased during such period if such determination 
had been made immediately. 
‘‘(4) RECAPTURE OF PAYMENTS.—If, pursuant 
to the procedures established under paragraph 
(1)(B), the Secretary makes payments with respect 
to the child during the period during which the de-
termination is made— 
‘‘(A) the Secretary shall provide each tax-
payer which receives such payments notice that 
such payments may be subject to recapture, 
and 
‘‘(B) upon making such determination, the 
Secretary shall determine on the basis of the 
facts and circumstances of each such taxpayer 
whether any such payments should be subject 
to recapture and shall so notify each such tax-
payer. 
‘‘(g) RULES RELATED
TO GRACE PERIODS
AND 
HARDSHIPS.— 
‘‘(1) AUTOMATIC GRACE PERIOD.— 
‘‘(A) IN GENERAL.—Notwithstanding sub-
section (f), in the case of any failure or delay 
in establishing a period of presumptive eligi-
bility with respect to which the taxpayer elects 
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1996 
the application of this subparagraph, credit 
under section 24A or retroactive payment under 
this section (similar to the payment described in 
subsection (f)(3)) shall be allowed or made with 
respect to so much of the period of such failure 
or delay as does not exceed 3 months. The pre-
ceding sentence shall not apply if the Secretary 
determines that such failure or delay was due 
to fraud or reckless or intentional disregard of 
rules and regulations. 
‘‘(B) 
LIMITATION.—Subparagraph 
(A) 
shall not apply with respect to any taxpayer 
more than once during any 36-month period. 
‘‘(2) HARDSHIP.—Notwithstanding subsection 
(f), if the Secretary determines that a failure or 
delay in establishing a period of presumptive eligi-
bility with respect to any specified child was due to 
domestic violence, serious illness, natural disaster, or 
any other hardship, credit under section 24A or ret-
roactive payment under this section (similar to the 
payment described in subsection (f)(3)) shall be al-
lowed or made with respect to so much of the period 
of such failure or delay as does not exceed 6 months. 
‘‘(h) PROVISIONS RELATED TO FORM, MANNER, AND 
TREATMENT OF PAYMENTS.— 
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1997 
‘‘(1) APPLICATION OF ELECTRONIC FUNDS PAY-
MENT REQUIREMENT.—The payments made by the 
Secretary under subsection (a) shall be made by 
electronic funds transfer to the same extent and in 
the same manner as if such payments were Federal 
payments not made under this title. 
‘‘(2) APPLICATION OF CERTAIN RULES.—Rules 
similar to the rules of subparagraphs (B) and (C) of 
section 6428A(f)(3) shall apply for purposes of this 
section, applied by substituting ‘January 1, 2022’ 
for ‘January 1, 2019’ in clauses (i) and (ii) of such 
subparagraph (B). 
‘‘(3) EXCEPTION
FROM
REDUCTION
OR
OFF-
SET.—Any payment made to any individual under 
this section shall not be— 
‘‘(A) subject to reduction or offset pursu-
ant to subsection (c), (d), (e), or (f) of section 
6402 or any similar authority permitting offset, 
or 
‘‘(B) reduced or offset by other assessed 
Federal taxes that would otherwise be subject 
to levy or collection. 
‘‘(4) APPLICATION OF ADVANCE PAYMENTS IN 
THE POSSESSIONS OF THE UNITED STATES.— 
‘‘(A) PUERTO RICO.— 
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‘‘(i) For application of child tax credit 
to residents of Puerto Rico, see section 
24A(d). 
‘‘(ii) For application of monthly ad-
vance child payments to residents of Puer-
to Rico, see subsection (b)(4). 
‘‘(B) MIRROR CODE POSSESSIONS.—In the 
case of any possession of the United States with 
a mirror code tax system (as defined in section 
24A(i)(1)(C)), this section shall not be treated 
as part of the income tax laws of the United 
States for purposes of determining the income 
tax law of such possession unless such posses-
sion elects to have this section be so treated. 
‘‘(C) ADMINISTRATIVE EXPENSES OF AD-
VANCE PAYMENTS.— 
‘‘(i) MIRROR CODE POSSESSIONS.—In 
the case of any possession described in 
subparagraph (B) which makes the elec-
tion described in such subparagraph, the 
amount otherwise paid by the Secretary to 
such possession under section 24A(i)(1)(A) 
with respect to taxable years beginning in 
2023, 2024, and 2025 shall each be in-
creased by $300,000 if such possession has 
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a plan, which has been approved by the 
Secretary, for making monthly advance 
child payments consistent with such elec-
tion. 
‘‘(ii) 
AMERICAN
SAMOA.— 
The 
amount otherwise paid by the Secretary to 
American Samoa under subparagraph (A) 
of section 24A(i)(3) with respect to taxable 
years beginning in 2023, 2024, and 2025 
shall each be increased by $300,000 if the 
plan described in subparagraph (B) of 
such section includes a program, which has 
been approved by the Secretary, for mak-
ing monthly advance child payments under 
rules similar to the rules of this section. 
‘‘(iii) TIMING
OF
PAYMENT.—The 
Secretary may pay, upon the request of the 
possession of the United States to which 
the payment is to be made, the amount of 
the increase determined under clause (i) or 
(ii), respectively, immediately upon ap-
proval of the plan with respect to which 
such payment relates. 
‘‘(i) APPLICATION OF CERTAIN DEFINITIONS AND 
RULES APPLICABLE TO CHILD TAX CREDIT.— 
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2000 
‘‘(1) DEFINITIONS.—Except as otherwise pro-
vided in this section, terms used in this section 
which are also used in section 24A shall have the 
same respective meanings as when used in section 
24A. 
‘‘(2) TREATMENT
OF
CERTAIN
DEATHS.—A 
child shall not be taken into account in determining 
the monthly advance child payment for any calendar 
month if the death of such child before the begin-
ning of the calendar year which includes such month 
is known to the Secretary as of date on which the 
Secretary estimates such payment. 
‘‘(3) IDENTIFICATION
REQUIREMENTS.—Rules 
similar to the rules which apply under section 
24A(e) shall apply for purposes of this section ex-
cept that such rules shall apply with respect to the 
return of tax for the reference taxable year or, in the 
case of information provided through a specified al-
ternative mechanism, with respect to the information 
provided through such mechanism. 
‘‘(4) RESTRICTIONS ON TAXPAYERS WHO IM-
PROPERLY CLAIMED CREDIT OR MONTHLY ADVANCE 
CHILD
PAYMENTS.—For restrictions on taxpayers 
who improperly claimed credit or monthly advance 
child payments, see section 24A(f). 
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‘‘(j) NOTICE OF PAYMENTS.— 
‘‘(1) IN GENERAL.—Not later than January 31 
of the calendar year following any calendar year dur-
ing which the Secretary makes one or more pay-
ments to any taxpayer under this section, the Sec-
retary shall provide such taxpayer with a written no-
tice which includes— 
‘‘(A) the taxpayer’s taxpayer identity (as 
defined in section 6103(b)(6)), 
‘‘(B) the aggregate amount of such pay-
ments made to such taxpayer during such cal-
endar year, and 
‘‘(C) such other information as the Sec-
retary determines appropriate. 
‘‘(2) CERTAIN PAYMENTS SUBJECT TO RECAP-
TURE.—In the case of any payments made to a tax-
payer which the Secretary has determined are sub-
ject to recapture, the notice provided under para-
graph (1) to such taxpayer shall include the amount 
of such payments. 
‘‘(k) REGULATIONS.—The Secretary shall issue such 
regulations or other guidance as the Secretary determines 
necessary or appropriate to carry out the purposes of this 
section. 
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‘‘(l) TERMINATION.—No payments shall be made 
under the program established under subsection (a) with 
respect to any month beginning after December 31, 
2025.’’. 
(c) SUSPENSION OF CHILD TAX CREDIT DURING PE-
RIOD THAT MONTHLY CHILD TAX CREDIT IS IN EF-
FECT.—Section 24 is amended by adding at the end the 
following new subsection: 
‘‘(l) COORDINATION WITH MONTHLY CHILD TAX 
CREDIT.—This section shall not apply to (and no payment 
shall be made under subsection (k) with respect to) any 
taxable year beginning after December 31, 2022, and be-
fore January 1, 2026.’’. 
(d) CONFORMING AMENDMENTS.— 
(1) Section 26(b)(2) is amended by striking 
‘‘and’’ at the end of subparagraph (Y), by striking 
the period at the end of subparagraph (Z) and in-
serting ‘‘, and’’, and by adding at the end the fol-
lowing new subparagraph: 
‘‘(AA) section 24A(g)(2) (relating to recap-
ture of certain monthly advance child pay-
ments).’’. 
(2) Section 152(f)(6)(B)(ii) is amended to read 
as follows: 
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‘‘(ii) the credits under sections 24, 
24A, and 24B and the payments under 
sections 7527A and 7527B,’’. 
(3) Section 3402(f)(1)(C) is amended by insert-
ing ‘‘or section 24A (determined after application of 
subsection (g) thereof)’’ after ‘‘section 24 (deter-
mined after application of subsection (j) thereof)’’. 
(4) Section 6103(l)(13)(A)(v) is amended by in-
sert ‘‘or section 24A, as the case may be’’ after 
‘‘section 24’’. 
(5) Section 6211(b)(4)(A) is amended by insert-
ing ‘‘24A by reason of subsection (d) thereof,’’ after 
‘‘24 by reason of subsections (d) and (i)(1) there-
of,’’. 
(6) Section 6213(g)(2)(I) is amended by insert-
ing ‘‘or section 24A(e) (relating to monthly child tax 
credit)’’ after ‘‘section 24(e) (relating to child tax 
credit)’’. 
(7) Section 6213(g)(2)(L) is amended by insert-
ing ‘‘24A,’’ after ‘‘24,’’. 
(8) Section 6213(g)(2)(P) is amended— 
(A) by inserting ‘‘or 24A(f)(2)’’ after ‘‘sec-
tion 24(g)(2)’’, 
(B) by inserting ‘‘or 24A’’ after ‘‘under 
section 24’’, and 
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(C) by striking ‘‘subsection (g)(1) thereof’’ 
and inserting ‘‘section 24(g)(1) or section 
24A(f)(1), respectively’’. 
(9) Section 6695(g)(2) is amended by inserting 
‘‘24A,’’ after ‘‘24,’’. 
(10) Paragraph (2) of section 1324(b) of title 
31, United States Code, as amended by the pre-
ceding provisions of this Act, is amended— 
(A) by inserting ‘‘24A,’’ after ‘‘24,’’, and 
(B) by inserting ‘‘7527B,’’ after ‘‘7527A,’’. 
(11) The table of sections for subpart A of part 
IV of subchapter A of chapter 1 is amended by in-
serting after the item relating to section 24 the fol-
lowing new items: 
‘‘Sec. 24A. Monthly child tax credit. 
‘‘Sec. 24B. Credit for certain other dependents.’’. 
(12) The table of sections for chapter 77 is 
amended by inserting after the item relating to sec-
tion 7527A the following new item: 
‘‘Sec. 7527B. Monthly payments of child tax credit.’’. 
(e) EFFECTIVE DATES.— 
(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, 2022. 
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(2) MONTHLY
ADVANCE
CHILD
PAYMENTS.— 
The amendments made by subsection (b) shall apply 
to payments made for calendar months beginning 
after December 31, 2022. 
SEC. 137104. REFUNDABLE CHILD TAX CREDIT AFTER 2025. 
(a) IN GENERAL.—Section 24, as amended by the 
preceding provisions of this Act, is amended by adding at 
the end the following new subsection: 
‘‘(m) REFUNDABLE CREDIT AFTER 2025.—In the 
case of any taxable year beginning after December 31, 
2025, if the taxpayer (in the case of a joint return, either 
spouse) has a principal place of abode in the United States 
(determined as provided in section 32) for more than one- 
half of the taxable year or is a bona fide resident of Puerto 
Rico (within the meaning of section 937(a)) for such tax-
able year— 
‘‘(1) subsection (d) shall not apply, and 
‘‘(2) the credit determined under subsection (a) 
(after application of paragraph (1)) shall be allowed 
under subpart C (and not allowed under this sub-
part).’’. 
(b) CONFORMING AMENDMENTS RELATED TO POS-
SESSIONS OF THE UNITED STATES.— 
(1) PUERTO RICO.—Section 24(k)(2) is amend-
ed— 
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2006 
(A) in subparagraph (B) (as amended by 
the preceding provisions of this Act)— 
(i) by inserting ‘‘and before January 
1, 2026,’’ after ‘‘December 31, 2022,’’, 
and 
(ii) by inserting ‘‘AND BEFORE 2026’’ 
after ‘‘AFTER 2022’’, and 
(B) by adding at the end the following new 
subparagraph: 
‘‘(C) APPLICATION
TO
TAXABLE
YEARS 
AFTER
2025.—For application of refundable 
credit to residents of Puerto Rico for taxable 
years after 2025, see subsection (m).’’. 
(2) AMERICAN SAMOA.—Section 24(k)(3)(C)(ii), 
as amended by the preceding provisions of this Act, 
is amended— 
(A) in subclause (I), by striking ‘‘and’’ at 
the end, 
(B) in subclause (II)— 
(i) by inserting ‘‘and before January 
1, 2026,’’ after ‘‘after December 31, 
2022,’’, and 
(ii) by striking the period at the end 
and inserting ‘‘, and’’, and 
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(C) by adding at the end the following new 
subclause: 
‘‘(III) if such taxable year begins 
after December 31, 2025, subsection 
(m) shall be applied by substituting 
‘Puerto Rico or American Samoa’ for 
‘Puerto Rico’.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2025. 
SEC. 137105. APPROPRIATIONS. 
Immediately upon the enactment of this Act, in addi-
tion to amounts otherwise available, there are appro-
priated out of any money in the Treasury not otherwise 
appropriated: 
(1) $9,000,000,000 to remain available until 
September 30, 2026, for necessary expenses for the 
Internal Revenue Service to administer the Child 
Tax Credit, and advance payments of the Child Tax 
Credit, including the costs of disbursing such pay-
ments, which shall supplement and not supplant any 
other appropriations that may be available for this 
purpose, and 
(2) $1,000,000,000 is appropriated to the De-
partment of the Treasury, to remain available until 
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September 30, 2026, to support efforts to increase 
enrollment of eligible families in the Child Tax Cred-
it, for advance payments of the Child Tax Credit, 
and for other tax benefits, including but not limited 
to program outreach, costs of data sharing arrange-
ments, systems changes, forms changes, and related 
efforts, and efforts by federal agencies to facilitate 
the cross-enrollment of beneficiaries of other pro-
grams in the Child Tax Credit, and for advance pay-
ments of the Child Tax Credit, including by estab-
lishing intergovernmental cooperative agreements 
with states and local governments, tribal govern-
ments, and possessions of the United States: Pro-
vided, that such amount shall be available in addi-
tion to any amounts otherwise available: Provided 
further, that these funds may be awarded by federal 
agencies to state and local governments, tribal gov-
ernments, and possessions of the United States, and 
private entities, including organizations dedicated to 
free tax return preparation. 
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PART 2—CHILD AND DEPENDENT CARE TAX 
CREDIT 
SEC. 137201. CERTAIN IMPROVEMENTS TO THE CHILD AND 
DEPENDENT CARE CREDIT MADE PERMA-
NENT. 
(a) CREDIT REFUNDABLE FOR TAXPAYERS WITH 
PRINCIPAL PLACE OF ABODE IN THE UNITED STATES.— 
Section 21(g) is amended to read as follows; 
‘‘(g) CREDIT REFUNDABLE FOR TAXPAYERS WITH 
PRINCIPAL PLACE OF ABODE IN THE UNITED STATES.— 
If the taxpayer (in the case of a joint return, either 
spouse) has a principal place of abode in the United States 
(determined as provided in section 32) for more than one- 
half of the taxable year, the credit allowed under sub-
section (a) shall be treated as a credit allowed under sub-
part C (and not allowed under this subpart).’’. 
(b) INCREASE IN DOLLAR LIMIT ON AMOUNT CRED-
ITABLE.—Section 21(c) is amended— 
(1) by striking ‘‘$3,000’’ in paragraph (1) and 
inserting ‘‘$8,000’’, and 
(2) by striking ‘‘$6,000’’ in paragraph (2) and 
inserting ‘‘$16,000’’. 
(c) INCREASE IN APPLICABLE PERCENTAGE.—Sec-
tion 21(a)(2) is amended— 
(1) by striking ‘‘35 percent’’ and inserting ‘‘50 
percent’’, and 
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(2) by striking ‘‘$15,000’’ and inserting 
‘‘$125,000’’. 
(d) APPLICATION OF INCREASED DOLLAR LIMITA-
TION TO SPOUSES WHO ARE STUDENTS OR INCAPABLE 
OF
CARING
FOR
THEMSELVES.—Section 21(d)(2) is 
amended by striking ‘‘of not less than—’’ and all that fol-
lows through ‘‘In the case of’’ and inserting ‘‘of not less 
than 1⁄12 of the dollar amount in effect under paragraph 
(1) or (2) of subsection (c) (whichever is applicable to the 
taxpayer for the taxable year). In the case of’’. 
(e) INFLATION
ADJUSTMENT.—Section 21(e) is 
amended by adding at the end the following new para-
graph: 
‘‘(11) INFLATION ADJUSTMENT.— 
‘‘(A) IN
GENERAL.—In the case of any 
taxable year beginning after December 31, 
2021, the $125,000 amount in subsection 
(a)(2), the $8,000 amount in subsection (c)(1), 
and the $16,000 amount in subsection (c)(2) 
shall each be increased by an amount equal 
to— 
‘‘(i) such dollar amount, multiplied by 
‘‘(ii) the cost-of-living adjustment de-
termined under section 1(f)(3) for the cal-
endar year in which the taxable year be-
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gins, determined by substituting ‘calendar 
year 2020’ for ‘calendar year 2016’ in sub-
paragraph (A)(ii) thereof. 
‘‘(B) ROUNDING.— 
‘‘(i) LIMITATION BASED ON ADJUSTED 
GROSS
INCOME.—If any increase deter-
mined under subparagraph (A) of the 
$125,000 dollar amount in subsection 
(a)(2) is not a multiple of $5,000, such 
amount shall be rounded to the nearest 
multiple of $5,000. 
‘‘(i) DOLLAR
LIMITATIONS.—If any 
increase determined under subparagraph 
(A) of any dollar amount in subsection (c) 
is not a multiple of $100, such amount 
shall be rounded to the nearest multiple of 
$100.’’. 
(f) APPLICATION OF PHASEOUT TO HIGH INCOME 
INDIVIDUALS.— 
(1) IN GENERAL.—Section 21(a)(2) is amended 
by striking ‘‘20 percent’’ and inserting ‘‘the phase-
out percentage’’. 
(2) PHASEOUT PERCENTAGE.—Section 21(a) is 
amended by adding at the end the following new 
paragraph: 
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‘‘(3) PHASEOUT
PERCENTAGE.—For purposes 
of paragraph (2), the term ‘phaseout percentage’ 
means 20 percent reduced (but not below zero) by 
1 percentage point for each $2,000 (or fraction 
thereof) by which the taxpayer’s adjusted gross in-
come for the taxable year exceeds $400,000.’’. 
(g) APPLICATION OF CREDIT IN POSSESSIONS.—Sec-
tion 21(h) is amended— 
(1) in paragraph (1)— 
(A) by striking ‘‘The Secretary’’ and in-
serting ‘‘With respect to taxable years begin-
ning in or with calendar years after 2020, the 
Secretary’’, and 
(B) by striking ‘‘with respect to taxable 
years beginning in or with 2021’’, 
(2) in paragraph (2)— 
(A) by striking ‘‘The Secretary’’ and in-
serting ‘‘With respect to taxable years begin-
ning in or with calendar years after 2020, the 
Secretary’’, and 
(B) by striking ‘‘with respect to taxable 
years beginning in or with 2021’’, and 
(3) in paragraph (3), by striking ‘‘in or with 
2021’’ and inserting ‘‘after December 31, 2020’’. 
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(h) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2021. 
SEC. 137202. INCREASE IN EXCLUSION FOR EMPLOYER- 
PROVIDED DEPENDENT CARE ASSISTANCE 
MADE PERMANENT. 
(a) IN GENERAL.—Section 129(a)(2)(A) is amended 
by striking ‘‘$5,000 ($2,500’’ and inserting ‘‘$10,500 
(half such dollar amount’’. 
(b) INFLATION ADJUSTMENT.—Section 129(e) is 
amended by adding at the end the following new para-
graph: 
‘‘(10) INFLATION ADJUSTMENT.— 
‘‘(A) IN
GENERAL.—In the case of any 
taxable year beginning after December 31, 
2021, the $10,500 amount in subsection 
(a)(2)(A) shall be increased by an amount equal 
to— 
‘‘(i) such dollar amount, multiplied by 
‘‘(ii) the cost-of-living adjustment de-
termined under section 1(f)(3) for the cal-
endar year in which the taxable year be-
gins, determined by substituting ‘calendar 
year 2020’ for ‘calendar year 2016’ in sub-
paragraph (A)(ii) thereof. 
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‘‘(B) ROUNDING.—If any increase deter-
mined under subparagraph (A) is not a multiple 
of $100, such amount shall be rounded to the 
nearest multiple of $100.’’. 
(c) CONFORMING AMENDMENT.—Section 129(a)(2) 
is amended by striking subparagraph (D). 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2021. 
(e) RETROACTIVE PLAN AMENDMENTS.—A plan that 
otherwise satisfies all applicable requirements of sections 
125 and 129 of the Internal Revenue Code of 1986 (in-
cluding any rules or regulations thereunder) shall not fail 
to be treated as a cafeteria plan or dependent care assist-
ance program merely because such plan is amended pursu-
ant to a provision under this subsection and such amend-
ment is retroactive, if— 
(1) such amendment is adopted no later than 
the last day of the plan year in which the amend-
ment is effective, and 
(2) the plan is operated consistent with the 
terms of such amendment during the period begin-
ning on the effective date of the amendment and 
ending on the date the amendment is adopted. 
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PART 3—SUPPORTING CAREGIVERS 
SEC. 137301. PAYROLL TAX CREDIT FOR CHILD CARE 
WORKERS. 
(a) IN GENERAL.—Subchapter D of chapter 21 is 
amended by adding at the end the following: 
‘‘SEC. 3135. PAYROLL CREDIT FOR CERTAIN WAGES PAID 
TO CHILD CARE WORKERS. 
‘‘(a) IN GENERAL.—In the case of an eligible child 
care employer, there shall be allowed as a credit against 
applicable employment taxes for each calendar quarter an 
amount equal to 50 percent of the qualified child care 
wages paid with respect to each eligible employee of such 
employer for such calendar quarter. 
‘‘(b) LIMITATIONS AND REFUNDABILITY.— 
‘‘(1) LIMITATION ON WAGES TAKEN INTO AC-
COUNT.—The amount of qualified child care wages 
with respect to any eligible employee which may be 
taken into account under subsection (a) by the eligi-
ble child care employer for any calendar quarter 
shall not exceed $2,500. 
‘‘(2) CREDIT
LIMITED
TO
CERTAIN
EMPLOY-
MENT TAXES.—The credit allowed by subsection (a) 
with respect to any calendar quarter shall not exceed 
the applicable employment taxes (reduced by any 
credits allowed under sections 3131, 3132, 3134, 
and 6432) on the wages paid with respect to the em-
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ployment of all the employees of the eligible child 
care employer for such calendar quarter. 
‘‘(3) REFUNDABILITY OF EXCESS CREDIT.— 
‘‘(A) CREDIT
IS
REFUNDABLE.—If the 
amount of the credit under subsection (a) ex-
ceeds the limitation of paragraph (2) for any 
calendar quarter, such excess shall be treated 
as an overpayment that shall be refunded under 
sections 6402(a) and 6413(b). 
‘‘(B) ADVANCING CREDIT.—In anticipation 
of the credit, including the refundable portion 
under subparagraph (A), the credit shall be ad-
vanced, according to forms and instructions 
provided by the Secretary, up to an amount cal-
culated under subsection (a), subject to the lim-
its under paragraph (1), all calculated through 
the end of the most recent payroll period in the 
quarter. 
‘‘(c) ELIGIBLE CHILD CARE EMPLOYER.—For pur-
poses of this section, the term ‘eligible child care employer’ 
means any employer which operates one or more qualified 
child care facilities. 
‘‘(d) QUALIFIED CHILD CARE FACILITY.—For pur-
poses of this section, the term ‘qualified child care facility’ 
means any facility which is certified as an HHS Partici-
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pating Child Care Provider by the Secretary of Health and 
Human Services under section 418A(c) of the Social Secu-
rity Act. 
‘‘(e) ELIGIBLE EMPLOYEE.—For purposes of this 
section, the term ‘eligible employee’ means, with respect 
to any eligible child care employer for any calendar quar-
ter, any employee of such employer if— 
‘‘(1) the aggregate wages paid to such employee 
for such quarter do not exceed 25 percent of the dol-
lar amount in effect for such quarter under section 
414(q)(1)(B)(i) (relating to highly compensated em-
ployees), and 
‘‘(2) the aggregate wages paid to such employee 
for the 1-year period ending with the close of such 
quarter do not exceed 100 percent of such dollar 
amount. 
‘‘(f) QUALIFIED CHILD CARE WAGES.—For purposes 
of this section— 
‘‘(1) IN GENERAL.—The term ‘qualified child 
care wages’ means, with respect to any eligible em-
ployee for any calendar quarter, so much of the child 
care wages paid by the eligible child care employer 
to such employee during such quarter as are paid at 
a rate in excess of the applicable minimum rate. 
Such term shall not include any wages paid by an 
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eligible child care employer during any period during 
which the certification described in subsection (d) is 
not in effect. 
‘‘(2) APPLICABLE MINIMUM RATE.—The term 
‘applicable minimum rate’ means, with respect to 
wages paid to any eligible employee, the rate of basic 
pay which is payable for GS-3, step 1 of the General 
Schedule under subchapter III of chapter 53 of title 
5, United States Code (including any applicable lo-
cality-based comparability payment under section 
5304 of such title, or similar authority) at the time 
such wages are paid and determined with respect to 
the locality in which the services are provided. 
‘‘(3) CHILD
CARE
WAGES.—The term ‘child 
care wages’ means wages paid for the services of the 
employee to provide child care at a qualified child 
care facility or to provide support services for such 
a facility. 
‘‘(4) EXCEPTION.—The term ‘child care wages’ 
shall not include any wages taken into account 
under section 41, 45A, 45P, 45R, 51, 1396, 3131, 
3132, 3134, or 6432. 
‘‘(g) OTHER DEFINITIONS AND SPECIAL RULES.— 
For purposes of this section— 
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‘‘(1) APPLICABLE EMPLOYMENT TAXES.—The 
term ‘applicable employment taxes’ means the fol-
lowing: 
‘‘(A) The taxes imposed under section 
3111(b). 
‘‘(B) So much of the taxes imposed under 
section 3221(a) as are attributable to the rate 
in effect under section 3111(b). 
‘‘(2) WAGES.— 
‘‘(A) IN
GENERAL.—The term ‘wages’ 
means wages (as defined in section 3121(a)), 
determined without regard to paragraphs (1) 
through (22) of section 3121(b)) and compensa-
tion (as defined in section 3231(e), determined 
without regard to the sentence in paragraph (1) 
thereof which begins ‘Such term does not in-
clude remuneration’). 
‘‘(B) ALLOWANCE FOR CERTAIN HEALTH 
PLAN EXPENSES.— 
‘‘(i) IN
GENERAL.—Such term shall 
include amounts paid by the eligible child 
care employer to provide and maintain a 
group health plan (as defined in section 
5000(b)(1)), but only to the extent that 
such amounts are excluded from the gross 
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income of employees by reason of section 
106(a). 
‘‘(ii) ALLOCATION RULES.—For pur-
poses of this section, amounts treated as 
wages under clause (i) shall be treated as 
paid with respect to any eligible employee 
(and with respect to any period) to the ex-
tent that such amounts are properly allo-
cable to such employee (and to such pe-
riod) in such manner as the Secretary may 
prescribe. Except as otherwise provided by 
the Secretary, such allocation shall be 
treated as properly made if made on the 
basis of being pro rata among periods of 
coverage. 
‘‘(3) OTHER TERMS.—Any term used in this 
section which is also used in this chapter or chapter 
22 shall have the same meaning as when used in 
such chapter. 
‘‘(4) DENIAL OF DOUBLE BENEFIT.—For pur-
poses of chapter 1, the gross income of the em-
ployer, for the taxable year which includes the last 
day of any calendar quarter with respect to which a 
credit is allowed under this section, shall be in-
creased by the amount of such credit. 
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‘‘(5) ELECTION TO NOT TAKE CERTAIN WAGES 
INTO ACCOUNT.—This section shall not apply to so 
much of the qualified child care wages paid by an 
eligible child care employer as such employer elects 
(at such time and in such manner as the Secretary 
may prescribe) to not take into account for purposes 
of this section. 
‘‘(6) CERTAIN GOVERNMENTAL EMPLOYERS.— 
No credit shall be allowed under this section to the 
Government of the United States or to any agency 
or instrumentality thereof. The preceding sentence 
shall not apply to any organization described in sec-
tion 501(c)(1) and exempt from tax under section 
501(a). 
‘‘(7) COORDINATION
WITH
CERTAIN
PRO-
GRAMS.— 
‘‘(A) IN GENERAL.—This section shall not 
apply to so much of the qualified child care 
wages paid by an eligible child care employer as 
are taken into account as payroll costs in con-
nection with— 
‘‘(i) a covered loan under section 
7(a)(37) or 7A of the Small Business Act, 
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‘‘(ii) a grant under section 324 of the 
Economic Aid to Hard-Hit Small Busi-
nesses, Non-Profits, and Venues Act, or 
‘‘(iii) a restaurant revitalization grant 
under section 5003 of the American Res-
cue Plan Act of 2021. 
‘‘(B) APPLICATION
WHERE
PPP
LOANS 
NOT
FORGIVEN.—The Secretary shall issue 
guidance providing that payroll costs paid dur-
ing the covered period shall not fail to be treat-
ed as qualified child care wages under this sec-
tion by reason of subparagraph (A)(i) to the ex-
tent that— 
‘‘(i) a covered loan of the taxpayer 
under section 7(a)(37) of the Small Busi-
ness Act is not forgiven by reason of a de-
cision under section 7(a)(37)(J) of such 
Act, or 
‘‘(ii) a covered loan of the taxpayer 
under section 7A of the Small Business 
Act is not forgiven by reason of a decision 
under section 7A(g) of such Act. 
Terms used in the preceding sentence which are 
also used in section 7A(g) or 7(a)(37)(J) of the 
Small Business Act shall, when applied in con-
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nection with either such section, have the same 
meaning as when used in such section, respec-
tively. 
‘‘(8) AGGREGATION RULE.—All persons treated 
as a single employer under subsection (a) or (b) of 
section 52, or subsection (m) or (o) of section 414, 
shall be treated as one employer for purposes of this 
section. 
‘‘(9) THIRD
PARTY
PAYORS.—Any credit al-
lowed under this section shall be treated as a credit 
described in section 3511(d)(2). 
‘‘(10) INFLATION ADJUSTMENT.—In the case of 
any taxable year beginning after December 31, 
2022, the $2,500 amount in subsection (b)(1) 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 2021’ for 
‘calendar year 2016’ in subparagraph (A)(ii) 
thereof. 
If any amount as adjusted under the preceding sen-
tence is not a multiple of $100, such amount shall 
be rounded to the nearest multiple of $100. 
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‘‘(h) REGULATIONS.—The Secretary shall prescribe 
such regulations or other guidance as may be necessary 
to carry out the purposes of this section, including— 
‘‘(1) regulations or other guidance to prevent 
the avoidance of the purposes of the limitations 
under this section, 
‘‘(2) regulations or other guidance to minimize 
compliance and record-keeping burdens under this 
section, 
‘‘(3) regulations or other guidance providing for 
waiver of penalties for failure to deposit amounts in 
anticipation of the allowance of the credit allowed 
under this section, 
‘‘(4) regulations or other guidance for recap-
turing the benefit of credits determined under this 
section in cases where there is a subsequent adjust-
ment to the credit determined under subsection (a), 
‘‘(5) regulations or other guidance to permit the 
advancement of the credit determined under sub-
section (a), and 
‘‘(6) regulations or other guidance for applying 
subsection (f) with respect to eligible employees not 
paid at a single rate of pay.’’. 
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(b) REFUNDS.—Paragraph (2) of section 1324(b) of 
title 31, United States Code, is amended by inserting 
‘‘3135,’’ after ‘‘3134,’’. 
(c) CLERICAL AMENDMENT.—The table of sections 
for subchapter D of chapter 21 is amended by adding at 
the end the following: 
‘‘Sec. 3135. Payroll credit for certain wages paid to child care workers.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to calendar quarters beginning 
after December 31, 2021. 
SEC. 137302. CREDIT FOR CAREGIVER EXPENSES. 
(a) IN GENERAL.—Subpart A of part IV of sub-
chapter A of chapter 1 is amended by inserting after sec-
tion 25D the following new section: 
‘‘SEC. 25E. CREDIT FOR CAREGIVER EXPENSES. 
‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in-
dividual for whom there are 1 or more qualified care re-
cipients, there shall be allowed as a credit against the tax 
imposed by this chapter for the taxable year an amount 
equal to 50 percent of the qualified expenses paid or in-
curred by such individual during the taxable year (and not 
compensated for by insurance or otherwise). 
‘‘(b) QUALIFIED CARE RECIPIENT.—For purposes of 
this section— 
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‘‘(1) IN GENERAL.—The term ‘qualified care re-
cipient’ means, with respect to any taxable year, any 
individual who— 
‘‘(A) is the spouse of the taxpayer, or any 
other person who bears a relationship to the 
taxpayer described in any of subparagraphs (A) 
through (H) of section 152(d)(2), 
‘‘(B) has been certified, before the due 
date for filing the return of tax for the taxable 
year, by a licensed health care practitioner (as 
defined in section 7702B(c)(4)) as being an in-
dividual with long-term care needs (as defined 
in paragraph (3)) for a period— 
‘‘(i) which is expected to be at least 
180 consecutive days, and 
‘‘(ii) a portion of which occurs within 
the taxable year, and 
‘‘(C) resides in a personal residence and 
not an institutional care facility. 
‘‘(2) PERIOD
FOR
MAKING
CERTIFICATION.— 
Notwithstanding paragraph (1)(B), a certification 
shall not be treated as valid unless it is made within 
the 18-month period ending on such due date (or 
such other period as the Secretary prescribes). 
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‘‘(3) INDIVIDUALS
WITH
LONG-TERM
CARE 
NEEDS.—For purposes of this subsection, the term 
‘individual with long-term care needs’ means any in-
dividual who meets the requirements of any of the 
following subparagraphs: 
‘‘(A) The individual is at least 6 years of 
age and— 
‘‘(i) is unable to perform (without 
substantial assistance from another indi-
vidual) at least 2 activities of daily living 
(as defined in section 7702B(c)(2)(B)) due 
to a loss of functional capacity, or 
‘‘(ii) requires substantial supervision 
to protect such individual from threats to 
health and safety due to severe cognitive 
impairment and is unable to perform, with-
out reminding or cuing assistance, at least 
1 activity of daily living (as so defined) or, 
to the extent provided in regulations pre-
scribed by the Secretary (in consultation 
with the Secretary of Health and Human 
Services), is unable to engage in age ap-
propriate activities. 
‘‘(B) The individual is at least 2 but not 
6 years of age and is unable, due to a loss of 
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functional capacity, to perform (without sub-
stantial assistance from another individual) at 
least 2 of the following activities: 
‘‘(i) Eating. 
‘‘(ii) Transferring. 
‘‘(iii) Mobility. 
‘‘(C) The individual is under 2 years of age 
and requires specific durable medical equipment 
by reason of a severe health condition or re-
quires a skilled practitioner trained to address 
the individual’s condition to be available if the 
individual’s parents or guardians are absent. 
‘‘(4) INSTITUTIONAL CARE FACILITY.—For pur-
poses of paragraph (1)(C), an institutional care fa-
cility (including two or more places, establishments, 
or institutions owned by the same legal entity) in-
cludes any congregate, protected living residential 
arrangement that provides or coordinates personal 
or health care services, including assistance with the 
activities of daily living and social care, for two or 
more adults who are aged, infirm, or disabled 
‘‘(c) QUALIFIED EXPENSES.—For purposes of this 
section— 
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‘‘(1) IN
GENERAL.—The term ‘qualified ex-
penses’ means expenses for goods, services, and sup-
ports described in paragraph (2) which— 
‘‘(A) assist a qualified care recipient with 
accomplishing activities of daily living (as de-
fined in section 7702B(c)(2)(B)) and instru-
mental activities of daily living (as defined in 
section 1915(k)(6)(F) of the Social Security 
Act), and 
‘‘(B) are provided solely for use by such 
qualified care recipient. 
‘‘(2) ITEMS DESCRIBED.—The goods, services, 
and supports described in this paragraph are— 
‘‘(A) human assistance, supervision, cuing, 
and standby assistance, 
‘‘(B) health maintenance tasks (such as 
medication management), 
‘‘(C) respite care, 
‘‘(D) assistive technologies and devices (in-
cluding remote health monitoring), 
‘‘(E) accessibility modifications of the 
qualified care recipient’s residence, 
‘‘(F) counseling, support groups, or train-
ing relating to caring for a qualified care recipi-
ent, and 
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‘‘(G) any other items which directly relate 
to the health and safety of a qualified care re-
cipient, as determined by the Secretary after 
consultation with the Secretary of Health and 
Human Services. 
‘‘(3) DOLLAR LIMITATION.—The amount taken 
into account as qualified expenses for any taxable 
year shall not exceed $4,000. 
‘‘(4) DENIAL OF DOUBLE BENEFIT.—Amounts 
taken into account for purposes of section 21, 129, 
213, or 223(f), or such other circumstances as may 
be provided by the Secretary, shall not be taken into 
account as qualified expenses. 
‘‘(5) DOCUMENTATION REQUIREMENT.—An ex-
pense shall not be treated as a qualified expense un-
less the taxpayer substantiates such expense under 
such regulations or guidance as the Secretary shall 
provide. 
‘‘(d) CREDIT PHASEOUT.—The 50 percent rate under 
subsection (a) shall be reduced by 1 percentage point for 
every $2,500 or fraction thereof by which the taxpayer’s 
adjusted gross income exceeds $75,000. 
‘‘(e) SPECIAL RULES.—For purposes of this sec-
tion— 
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‘‘(1) PAYMENTS TO RELATED INDIVIDUALS.— 
Rules similar to the rules of section 21(e)(6) shall 
apply. 
‘‘(2) 
LICENSED
HEALTH
CARE
PRACTI-
TIONER.— 
‘‘(A) IN
GENERAL.—The licensed health 
care practitioner making the certification for 
purposes of subsection (b)(1)(B)— 
‘‘(i) shall not be related (within the 
meaning of section 51(i)(1)) to the tax-
payer or the qualified care recipient, or 
have a conflict of interest (as determined 
under regulations provided by the Sec-
retary) with respect to the taxpayer or the 
qualified care recipient, 
‘‘(ii) shall be licensed and eligible 
under applicable State law to certify limi-
tations in performing activities of daily liv-
ing, and 
‘‘(iii) shall be a participant in the 
Medicaid program, pursuant to sections 
1902(a)(77) and 1932(d)(6) of the Social 
Security Act, or the State Children’s 
Health Insurance Program under section 
2107(e)(1)(G) of such Act. 
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‘‘(B) IDENTIFICATION REQUIREMENT.— 
‘‘(i) IN GENERAL.—No credit shall be 
allowed with respect to any qualified care 
recipient unless the taxpayer includes the 
name and specified provider identification 
number of such licensed health care practi-
tioner on the return of tax for the taxable 
year. 
‘‘(ii) SPECIFIED
PROVIDER
IDENTI-
FICATION
NUMBER.—The term ‘specified 
provider identification number’ means a 
valid National Provider Identifier as au-
thorized in section 1173 of the Social Se-
curity Act. 
‘‘(3) INDIVIDUAL
MAY
NOT
BE
CLAIMED
BY 
MORE THAN 1 TAXPAYER.—An individual shall be 
treated as a qualified care recipient with respect to 
only 1 taxpayer, as determined by the Secretary, for 
any taxable year. 
‘‘(4) 
IDENTIFICATION
REQUIREMENT.—No 
credit shall be allowed with respect to any qualified 
care recipient unless the taxpayer includes the name 
and taxpayer identification number of the qualified 
care recipient on the return of tax for the taxable 
year. 
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‘‘(f) TERMINATION.—No credit shall be allowed 
under this section for any taxable year beginning after De-
cember 31, 2025.’’. 
(b) MATH ERROR AUTHORITY.—Section 6213(g)(2), 
as amended by the preceding provisions of this Act, is 
amended by striking ‘‘and’’ at the end of subparagraph 
(T), by striking the period at the end of subparagraph 
(U) and inserting ‘‘, and’’, and by inserting after subpara-
graph (U) the following new subparagraph: 
‘‘(V) an omission of a correct TIN re-
quired under section 25E(e)(4) or a correct 
specified provider identification number re-
quired under section 25E(e)(2)(B).’’. 
(c) CLERICAL AMENDMENT.—The table of sections 
for subpart A of part IV of subchapter A of chapter 1 
is amended by inserting after the item relating to section 
25D the following new item: 
‘‘Sec. 25E. Credit for caregiver expenses.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2021. 
PART 4—EARNED INCOME TAX CREDIT 
SEC. 137401. CERTAIN IMPROVEMENTS TO THE EARNED IN-
COME TAX CREDIT MADE PERMANENT. 
(a) DECREASE IN MINIMUM AGE REQUIREMENT.— 
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(1) IN GENERAL.—Section 32(c)(1)(A)(ii)(II) is 
amended by striking ‘‘age 25’’ and inserting ‘‘the 
applicable minimum age’’. 
(2) APPLICABLE MINIMUM AGE.—Section 32(c) 
is amended by adding at the end the following new 
paragraph: 
‘‘(5) APPLICABLE MINIMUM AGE.— 
‘‘(A) IN GENERAL.—The term ‘applicable 
minimum age’ means— 
‘‘(i) except as otherwise provided in 
this subparagraph, age 19, 
‘‘(ii) in the case of a specified student 
(other than a qualified former foster youth 
or a qualified homeless youth), age 24, and 
‘‘(iii) in the case of a qualified former 
foster youth or a qualified homeless youth, 
age 18. 
‘‘(B) SPECIFIED STUDENT.—For purposes 
of this paragraph, the term ‘specified student’ 
means, with respect to any taxable year, an in-
dividual who is an eligible student (as defined 
in section 25A(b)(3)) during at least 5 calendar 
months during the taxable year. 
‘‘(C) 
QUALIFIED
FORMER
FOSTER 
YOUTH.—For purposes of this paragraph, the 
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term ‘qualified former foster youth’ means an 
individual who— 
‘‘(i) on or after the date that such in-
dividual attained age 14, was in foster care 
provided under the supervision or adminis-
tration of an entity administering (or eligi-
ble to administer) a plan under part B or 
part E of title IV of the Social Security 
Act (without regard to whether Federal as-
sistance was provided with respect to such 
child under such part E), and 
‘‘(ii) provides (in such manner as the 
Secretary may provide) consent for entities 
which administer a plan under part B or 
part E of title IV of the Social Security 
Act to disclose to the Secretary informa-
tion related to the status of such individual 
as a qualified former foster youth. 
‘‘(D) QUALIFIED HOMELESS YOUTH.—For 
purposes of this paragraph, the term ‘qualified 
homeless youth’ means, with respect to any tax-
able year, an individual who certifies, in a man-
ner as provided by the Secretary, that such in-
dividual is either an unaccompanied youth who 
is a homeless child or youth, or is unaccom-
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panied, at risk of homelessness, and self-sup-
porting.’’. 
(b) ELIMINATION OF MAXIMUM AGE FOR CREDIT.— 
Section 32(c)(1)(A)(ii)(II) is amended by striking ‘‘but 
not attained age 65’’. 
(c) INCREASE IN CREDIT AND PHASEOUT PERCENT-
AGES.—The table contained in section 32(b)(1) is amend-
ed by striking ‘‘7.65’’ each place it appears therein and 
inserting ‘‘15.3’’. 
(d) INCREASE IN EARNED INCOME AND PHASEOUT 
AMOUNTS.— 
(1) IN GENERAL.—The table contained in sec-
tion 32(b)(2)(A) is amended— 
(A) by striking ‘‘$4,220’’ and inserting 
‘‘$9,820’’, and 
(B) by striking ‘‘$5,280’’ and inserting 
‘‘$11,610’’. 
(2) APPLICATION
OF
INFLATION
ADJUST-
MENT.—Section 32(j)(1) is amended— 
(A) by striking ‘‘(2021 in the case of the 
dollar amount in subsection (i)(1))’’ and insert-
ing ‘‘(2021 in the case of the $9,820 and 
$11,610 amounts in subsection (b)(2)(A) and 
the $10,000 amount in subsection (i)(1))’’, 
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(B) in subparagraph (B)(i), by inserting 
‘‘(other 
than 
the 
$9,820 
and 
$11,610 
amounts)’’ after ‘‘subsection (b)(2)(A)’’, and 
(C) in subparagraph (B)(iii), by inserting 
‘‘the $9,820 and $11,610 amounts in sub-
section (b)(2)(A) and’’ before ‘‘the $10,000 
amount in subsection (i)(1)’’. 
(e) Section 32, as amended by subsection (f), is 
amended by adding at the end the following new sub-
section: 
‘‘(n) ELECTION TO DETERMINE EARNED INCOME 
BASED ON PRIOR TAXABLE YEAR.— 
‘‘(1) IN GENERAL.—In the case of a taxpayer 
whose earned income for any taxable year is less 
than the earned income of such taxpayer for the pre-
ceding taxable year, if such taxpayer elects (at such 
time and in such manner as the Secretary may pro-
vide) the application of this subsection for such tax-
able year, the earned income of such taxpayer for 
such taxable year shall be treated for purposes of 
this section as being equal to the earned income of 
such taxpayer for such preceding taxable year. 
‘‘(2) JOINT
RETURNS.—For purposes of this 
subsection, in the case of a joint return, the earned 
income of the taxpayer for the preceding taxable 
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year shall be the sum of the earned income of each 
spouse for the preceding taxable year. 
‘‘(3) TREATMENT AS MATHEMATICAL OR CLER-
ICAL ERROR.—In the case of a taxpayer described in 
paragraph (1) who makes the election described in 
such paragraph, the use on the return for purposes 
of this section of an amount of earned income for 
the preceding taxable year which differs from the 
amount of such earned income as shown in the elec-
tronic files of the Internal Revenue Service shall be 
treated as a mathematical or clerical error for pur-
poses of section 6213. 
‘‘(4) TREATMENT OF REFERENCES.—Any pro-
vision of this title which defines or determines 
earned income by reference to this section shall be 
applied without regard to this subsection unless such 
provision specifically provides otherwise.’’. 
(f) REPEAL OF TEMPORARY PROVISIONS.—Section 
32 is amended by striking subsection (n). 
(g) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2021. 
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SEC. 137402. FUNDS FOR ADMINISTRATION OF EARNED IN-
COME TAX CREDITS IN THE TERRITORIES. 
(a) PUERTO RICO.—Section 7530(a)(1) is amended 
by striking ‘‘plus’’ at the end of subparagraph (A), by 
striking the period at the end of subparagraph (B) and 
inserting ‘‘, plus’’, and by adding at the end the following 
new subparagraph: 
‘‘(C) reasonable administrative costs asso-
ciated with the provision of the earned income 
tax credit not in excess of $4,000,000.’’. 
(b) POSSESSIONS WITH MIRROR CODE TAX SYS-
TEMS.—Section 7530(b)(1) is amended by striking ‘‘plus’’ 
at the end of subparagraph (A), by striking the period 
at the end of subparagraph (B) and inserting ‘‘, plus’’, 
and by adding at the end the following new subparagraph: 
‘‘(C) reasonable administrative costs asso-
ciated with the provision of the earned income 
tax credit not in excess of $200,000.’’. 
(c) 
AMERICAN
SAMOA.—Section 
7530(c)(1) 
is 
amended by striking ‘‘plus’’ at the end of subparagraph 
(A), by striking the period at the end of subparagraph 
(B) and inserting ‘‘, plus’’, and by adding at the end the 
following new subparagraph: 
‘‘(C) reasonable administrative costs asso-
ciated with the provision of the earned income 
tax credit not in excess of $200,000.’’. 
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(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to payments made for calendar 
years beginning after December 31, 2021. 
PART 5—EXPANDING ACCESS TO HEALTH 
COVERAGE AND LOWERING COSTS 
SEC. 137501. IMPROVE AFFORDABILITY AND REDUCE PRE-
MIUM COSTS OF HEALTH INSURANCE FOR 
CONSUMERS. 
(a) INCREASE IN APPLICABLE PERCENTAGE MADE 
PERMANENT.—Section 36B(b)(3)(A) is amended to read 
as follows: 
‘‘(A) APPLICABLE PERCENTAGE.—The ap-
plicable percentage for any taxable year shall be 
the percentage such that the applicable percent-
age for any taxpayer whose household income is 
within an income tier specified in the following 
table shall increase, on a sliding scale in a lin-
ear manner, from the initial premium percent-
age to the final premium percentage specified in 
such table for such income tier: 
‘‘In the case of household 
income (expressed as 
a percent of poverty line) 
within the following income tier: 
The initial 
premium 
percentage is— 
The final 
premium 
percentage is— 
Up to 150.0 percent ...................................
150.0 percent up to 200.0 percent .............
200.0 percent up to 250.0 percent .............
250.0 percent up to 300.0 percent .............
300.0 percent up to 400.0 percent .............
8.5
400.0 percent and higher ...........................
8.5 
8.5’’. 
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(b) CREDIT
ALLOWED
TO
TAXPAYERS
WHOSE 
HOUSEHOLD INCOME EXCEEDS 400 PERCENT OF THE 
POVERTY LINE.— 
(1) IN
GENERAL.—Section 36B(c)(1)(A) is 
amended by striking ‘‘but does not exceed 400 per-
cent’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
36B(c)(1) is amended by striking subparagraph (E). 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2021. 
SEC. 137502. MODIFICATION OF EMPLOYER-SPONSORED 
COVERAGE AFFORDABILITY TEST IN HEALTH 
INSURANCE PREMIUM TAX CREDIT. 
(a) IN GENERAL.—Section 36B(c)(2)(C) is amend-
ed— 
(1) in clause (i)(II), by striking ‘‘9.5 percent’’ 
and inserting ‘‘8.5 percent’’, and 
(2) by striking clause (iv). 
(b) QUALIFIED SMALL EMPLOYER HEALTH REIM-
BURSEMENT
ARRANGEMENTS.—Section 36B(c)(4) is 
amended— 
(1) in subparagraph (C)(ii), by striking ‘‘9.5 
percent’’ and inserting ‘‘8.5 percent’’, and 
(2) by striking subparagraph (F). 
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(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2021. 
SEC. 137503. TREATMENT OF LUMP-SUM SOCIAL SECURITY 
BENEFITS IN DETERMINING HOUSEHOLD IN-
COME. 
(a) IN GENERAL.—Section 36B(d)(2) is amended by 
adding at the end the following new subparagraph: 
‘‘(C) EXCLUSION OF PORTION OF LUMP- 
SUM SOCIAL SECURITY BENEFITS.— 
‘‘(i) IN GENERAL.—The term ‘modi-
fied adjusted gross income’ shall not in-
clude so much of any lump-sum social se-
curity benefit payment as is attributable to 
months ending before the beginning of the 
taxable year. 
‘‘(ii) LUMP-SUM
SOCIAL
SECURITY 
BENEFIT PAYMENT.—For purposes of this 
subparagraph, the term ‘lump-sum social 
security benefit payment’ means any pay-
ment of social security benefits (as defined 
in section 86(d)(1)) which constitutes more 
than 1 month of such benefits. 
‘‘(iii) ELECTION
TO
INCLUDE
EX-
CLUDABLE AMOUNT.—With respect to any 
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taxable year beginning on or after the ter-
mination date (as defined in subsection 
(h)(2)), a taxpayer may elect (at such time 
and in such manner as the Secretary may 
provide) to have this subparagraph not 
apply for such taxable year.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2021. 
SEC. 137504. TEMPORARY EXPANSION OF HEALTH INSUR-
ANCE PREMIUM TAX CREDITS FOR CERTAIN 
LOW-INCOME POPULATIONS. 
(a) IN GENERAL.—Section 36B is amended by redes-
ignating subsection (h) as subsection (i) and by inserting 
after subsection (g) the following new subsection: 
‘‘(h) CERTAIN TEMPORARY RULES BEGINNING IN 
2022.— 
‘‘(1) IN GENERAL.—With respect to any taxable 
year beginning after December 31, 2021, and before 
the termination date— 
‘‘(A) ELIGIBILITY FOR CREDIT NOT LIM-
ITED
BASED
ON
INCOME.—Section 
36B(c)(1)(A) shall be disregarded in deter-
mining whether a taxpayer is an applicable tax-
payer. 
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‘‘(B) CREDIT ALLOWED TO CERTAIN LOW- 
INCOME EMPLOYEES OFFERED EMPLOYER-PRO-
VIDED
COVERAGE.—Subclause (II) of sub-
section (c)(2)(C)(i) shall not apply if the tax-
payer’s household income does not exceed 138 
percent of the poverty line for a family of the 
size involved. Subclause (II) of subsection 
(c)(2)(C)(i) shall also not apply to an individual 
described in the last sentence of such subsection 
if the taxpayer’s household income does not ex-
ceed 138 percent of the poverty line for a fam-
ily of the size involved. 
‘‘(C) CREDIT ALLOWED TO CERTAIN LOW- 
INCOME
EMPLOYEES
OFFERED
QUALIFIED 
SMALL
EMPLOYER
HEALTH
REIMBURSEMENT 
ARRANGEMENTS.—A qualified small employer 
health reimbursement arrangement shall not be 
treated as constituting affordable coverage for 
an employee (or any spouse or dependent of 
such employee) for any months of a taxable 
year if the employee’s household income for 
such taxable year does not exceed 138 percent 
of the poverty line for a family of the size in-
volved. 
‘‘(D) LIMITATIONS ON RECAPTURE.— 
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‘‘(i) IN GENERAL.—In the case of a 
taxpayer whose household income is less 
than 200 percent of the poverty line for 
the size of the family involved for the tax-
able year, the amount of the increase 
under subsection (f)(2)(A) shall in no 
event exceed $300 (one-half of such 
amount in the case of a taxpayer whose 
tax is determined under section 1(c) for 
the taxable year). 
‘‘(ii) LIMITATION ON INCREASE FOR 
CERTAIN NON-FILERS.—In the case of any 
taxpayer who would not be required to file 
a return of tax for the taxable year but for 
any requirement to reconcile advance cred-
it payments under subsection (f), if an Ex-
change established under title I of the Pa-
tient Protection and Affordable Care Act 
has determined that— 
‘‘(I) such taxpayer is eligible for 
advance payments under section 1412 
of such Act for any portion of such 
taxable year, and 
‘‘(II) such taxpayer’s household 
income for such taxable year is pro-
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jected to not exceed 138 percent of 
the poverty line for a family of the 
size involved, 
subsection (f)(2)(A) shall not apply to such 
taxpayer for such taxable year and such 
taxpayer shall not be required to file such 
return of tax. 
‘‘(iii) INFORMATION PROVIDED BY EX-
CHANGE.—The information required to be 
provided by an Exchange to the Secretary 
and to the taxpayer under subsection (f)(3) 
shall include such information as is nec-
essary to determine whether such Ex-
change has made the determinations de-
scribed in subclauses (I) and (II) of clause 
(ii) with respect to such taxpayer. 
‘‘(2) TERMINATION
DATE.—For purposes of 
this subsection, the term ‘termination date’ means 
the later of— 
‘‘(A) January 1, 2025, or 
‘‘(B) the date on which the Secretary of 
Health and Human Services makes a written 
certification to the Secretary that the Secretary 
of Health and Human Services has fully imple-
mented the program described in section 1948 
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of the Social Security Act (relating to Federal 
Medicaid program to close coverage gap in non-
expansion States).’’. 
(b) EMPLOYER SHARED RESPONSIBILITY PROVISION 
NOT APPLICABLE WITH RESPECT TO CERTAIN LOW-IN-
COME TAXPAYERS RECEIVING PREMIUM ASSISTANCE.— 
Section 4980H(c)(3) is amended to read as follows: 
‘‘(3) APPLICABLE PREMIUM TAX CREDIT AND 
COST-SHARING REDUCTION.— 
‘‘(A) IN GENERAL.—The term ‘applicable 
premium tax credit and cost-sharing reduction’ 
means— 
‘‘(i) any premium tax credit allowed 
under section 36B, 
‘‘(ii) any cost-sharing reduction under 
section 1402 of the Patient Protection and 
Affordable Care Act, and 
‘‘(iii) any advance payment of such 
credit or reduction under section 1412 of 
such Act. 
‘‘(B) EXCEPTION WITH RESPECT TO CER-
TAIN
LOW-INCOME
TAXPAYERS.—Such term 
shall not include any premium tax credit, cost- 
sharing reduction, or advance payment other-
wise described in subparagraph (A) if such 
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credit, reduction, or payment is allowed or paid 
for a taxable year of an employee (beginning 
after December 31, 2021, and before the termi-
nation date, as defined in section 36B(h)(2)) 
with respect to which— 
‘‘(i) an Exchange established under 
title I of the Patient Protection and Af-
fordable Care Act has determined that 
such employee’s household income for such 
taxable year is projected to not exceed 138 
percent of the poverty line for a family of 
the size involved, or 
‘‘(ii) such employee’s household in-
come for such taxable year does not exceed 
138 percent of the poverty line for a family 
of the size involved.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2021. 
SEC. 137505. ENSURING AFFORDABILITY OF COVERAGE 
FOR CERTAIN LOW-INCOME POPULATIONS. 
(a) REDUCING COST SHARING UNDER QUALIFIED 
HEALTH PLANS.—Section 1402 of the Patient Protection 
and Affordable Care Act (42 U.S.C. 18071) is amended— 
(1) in subsection (b)— 
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(A) in paragraph (2), by inserting ‘‘(or, 
with respect to plan years 2023 and 2024, 
whose household income does not exceed 400 
percent of the poverty line for a family of the 
size involved)’’ before the period; and 
(B) in the matter following paragraph (2), 
by adding at the end the following new sen-
tence: ‘‘In the case of an individual with a 
household income of less than 138 percent of 
the poverty line for a family of the size involved 
for any month occurring during the period be-
ginning on January 1, 2022, and ending on De-
cember 31, 2022, such individual shall, for such 
month and for each succeeding month during 
such period, be treated as having household in-
come equal to 100 percent for purposes of ap-
plying this section.’’; and 
(2) in subsection (c)— 
(A) in paragraph (1)(A), in the matter 
preceding clause (i), by inserting ‘‘, with respect 
to eligible insureds (other than, with respect to 
plan years 2023 and 2024, specified enrollees 
(as defined in paragraph (6)(C))),’’ after ‘‘first 
be achieved’’; 
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(B) in paragraph (2), in the matter pre-
ceding subparagraph (A), by inserting ‘‘with re-
spect to eligible insureds (other than, with re-
spect to plan years 2023 and 2024, specified 
enrollees)’’ after ‘‘under the plan’’; 
(C) in paragraph (3)— 
(i) in subparagraph (A), by striking 
‘‘this subsection’’ and inserting ‘‘paragraph 
(1) or (2)’’; and 
(ii) in subparagraph (B), by striking 
‘‘this section’’ and inserting ‘‘paragraphs 
(1) and (2)’’; and 
(D) by adding at the end the following new 
paragraph: 
‘‘(6) SPECIAL RULE FOR SPECIFIED ENROLL-
EES.— 
‘‘(A) IN
GENERAL.—The Secretary shall 
establish procedures under which the issuer of 
a qualified health plan to which this section ap-
plies shall reduce cost-sharing under the plan 
with respect to months occurring during plan 
years 2023 and 2024 for enrollees who are 
specified enrollees (as defined in subparagraph 
(C)) in a manner sufficient to increase the 
plan’s share of the total allowed costs of bene-
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fits provided under the plan to 99 percent of 
such costs. 
‘‘(B) METHODS
FOR
REDUCING
COST 
SHARING.— 
‘‘(i) IN
GENERAL.—An issuer of a 
qualified health plan making reductions 
under this paragraph shall notify the Sec-
retary of such reductions and the Sec-
retary shall, out of funds made available 
under clause (ii), make periodic and timely 
payments to the issuer equal to 12 percent 
of the total allowed costs of benefits pro-
vided under each such plan to specified en-
rollees during plan years 2023 and 2024. 
‘‘(ii) APPROPRIATION.—There are ap-
propriated, out of any monies in the Treas-
ury not otherwise appropriated, such sums 
as may be necessary to the Secretary for 
purposes of making payments under clause 
(i). 
‘‘(C) SPECIFIED
ENROLLEE
DEFINED.— 
For purposes of this section, the term ‘specified 
enrollee’ means, with respect to a month occur-
ring during a plan year, an eligible insured with 
a household income of less than 138 percent of 
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the poverty line for a family of the size involved 
during such month. Such insured shall be 
deemed to be a specified enrollee for each suc-
ceeding month in such plan year.’’. 
(b) OPEN ENROLLMENTS APPLICABLE TO CERTAIN 
LOWER-INCOME POPULATIONS.—Section 1311(c) of the 
Patient Protection and Affordable Care Act (42 U.S.C. 
18031(c)) is amended— 
(1) in paragraph (6)— 
(A) in subparagraph (C), by striking at the 
end ‘‘and’’; 
(B) in subparagraph (D), by striking the 
period at the end and inserting ‘‘; and’’; and 
(C) by adding at the end the following new 
subparagraph: 
‘‘(E) with respect to a qualified health plan 
with respect to which section 1402 applies, for 
months occurring during the period beginning 
on January 1, 2022, and ending on December 
31, 2024, enrollment periods described in sub-
paragraph (A) of paragraph (8) for individuals 
described in subparagraph (B) of such para-
graph.’’; and 
(2) by adding at the end the following new 
paragraph: 
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‘‘(8) SPECIAL ENROLLMENT PERIOD FOR CER-
TAIN LOW-INCOME POPULATIONS.— 
‘‘(A) IN GENERAL.—The enrollment period 
described in this paragraph is, in the case of an 
individual described in subparagraph (B), the 
continuous period beginning on the first day 
that such individual is so described. 
‘‘(B) INDIVIDUAL
DESCRIBED.—For pur-
poses of subparagraph (A), an individual de-
scribed in this subparagraph is an individual— 
‘‘(i) with a household income of less 
than 138 percent of the poverty line for a 
family of the size involved; and 
‘‘(ii) who is not eligible for minimum 
essential coverage (as defined in section 
5000A(f) of the Internal Revenue Code of 
1986), other than for coverage described in 
any of subparagraphs (B) through (E) of 
paragraph (1) of such section.’’. 
(c) ADDITIONAL BENEFITS FOR CERTAIN LOW-IN-
COME INDIVIDUALS
FOR PLAN YEAR 2024.—Section 
1301(a) of the Patient Protection and Affordable Care Act 
(42 U.S.C. 18021(a)) is amended— 
(1) in paragraph (1)— 
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(A) in subparagraph (B), by striking 
‘‘and’’ at the end; 
(B) in subparagraph (C)(iv), by striking 
the period and inserting ‘‘; and’’; and 
(C) by adding at the end the following new 
subparagraph: 
‘‘(D) provides, with respect to a plan of-
fered in the silver level of coverage to which sec-
tion 1402 applies during plan year 2024, for 
benefits described in paragraph (5) in the case 
of an individual who, for a month during such 
plan year, has a household income of less than 
138 percent of the poverty line for a family of 
the size involved, and who is eligible to receive 
cost-sharing reductions under section 1402.’’; 
and 
(2) by adding at the end the following new 
paragraph: 
‘‘(5) ADDITIONAL
BENEFITS
FOR
CERTAIN 
LOW-INCOME INDIVIDUALS FOR PLAN YEAR 2024.— 
‘‘(A) IN GENERAL.—For purposes of para-
graph (1)(D), the benefits described in this 
paragraph to be provided by a qualified health 
plan are benefits consisting of non-emergency 
medical transportation services and services de-
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scribed in subsection (a)(4)(C) of section 1905 
of the Social Security Act, without any restric-
tion on the choice of a qualified provider from 
whom such an individual so enrolled in such 
plan may receive such services described in such 
subsection, and without any imposition of cost 
sharing, which are not otherwise provided under 
such plan as part of the essential health bene-
fits package described in section 1302(a). 
‘‘(B) PAYMENTS FOR ADDITIONAL BENE-
FITS.— 
‘‘(i) IN
GENERAL.—An issuer of a 
qualified health plan making payments for 
services described in subparagraph (A) fur-
nished to individuals described in para-
graph (1)(D) during plan year 2024 shall 
notify the Secretary of such payments and 
the Secretary shall, out of funds made 
available under clause (ii), make periodic 
and timely payments to the issuer equal to 
payments for such services so furnished. 
‘‘(ii) APPROPRIATION.—There is ap-
propriated, out of any monies in the Treas-
ury not otherwise appropriated, such sums 
as may be necessary to the Secretary for 
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purposes of making payments under clause 
(i).’’. 
(d) EDUCATION AND OUTREACH ACTIVITIES.—— 
(1) IN GENERAL.—Section 1321(c) of the Pa-
tient Protection and Affordable Care Act (42 U.S.C. 
18041(c)) is amended by adding at the end the fol-
lowing new paragraph: 
‘‘(3) OUTREACH
AND
EDUCATIONAL
ACTIVI-
TIES.— 
‘‘(A) IN GENERAL.—In the case of an Ex-
change established or operated by the Secretary 
within a State pursuant to this subsection, the 
Secretary shall carry out outreach and edu-
cational activities for purposes of informing in-
dividuals 
described 
in 
section 
1902(a)(10)(A)(i)(VIII) of the Social Security 
Act who reside in States that have not ex-
pended amounts under a State plan (or waiver 
of such plan) under title XIX of such Act for 
all such individuals about qualified health plans 
offered through the Exchange, including by in-
forming such individuals of the availability of 
coverage under such plans and financial assist-
ance for coverage under such plans. Such out-
reach and educational activities shall be pro-
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vided in a manner that is culturally and linguis-
tically appropriate to the needs of the popu-
lations being served by the Exchange (including 
hard-to-reach populations, such as racial and 
sexual minorities, limited English proficient 
populations, individuals residing in areas where 
the unemployment rates exceeds the national 
average unemployment rate, individuals in rural 
areas, veterans, and young adults). 
‘‘(B) LIMITATION ON USE OF FUNDS.—No 
funds appropriated under this paragraph shall 
be used for expenditures for promoting non- 
ACA compliant health insurance coverage. 
‘‘(C) NON-ACA COMPLIANT HEALTH INSUR-
ANCE
COVERAGE.—For purposes of subpara-
graph (B): 
‘‘(i) The term ‘non-ACA compliant 
health insurance coverage’ means health 
insurance coverage, or a group health plan, 
that is not a qualified health plan. 
‘‘(ii) Such term includes the following: 
‘‘(I) An association health plan. 
‘‘(II) Short-term limited duration 
insurance. 
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‘‘(D) FUNDING.—There are appropriated, 
out of any monies in the Treasury not other-
wise appropriated, $15,000,000 for fiscal year 
2022, and $30,000,000 for each of fiscal years 
2023 and 2024, to carry out this paragraph. 
Funds appropriated under this subparagraph 
shall remain available until expended.’’. 
(2) NAVIGATOR PROGRAM.—Section 1311(i)(6) 
of the Patient Protection and Affordable Care Act 
(42 U.S.C. 18031(i)(6)) is amended— 
(A) 
by 
striking 
‘‘FUNDING.—Grants 
under’’ and inserting ‘‘FUNDING.— 
‘‘(A) STATE EXCHANGES.—Grants under’’; 
and 
(B) by adding at the end the following new 
subparagraph: 
‘‘(B) FEDERAL
EXCHANGES.—For pur-
poses of carrying out this subsection, with re-
spect to an Exchange established and operated 
by the Secretary within a State pursuant to sec-
tion 1321(c), the Secretary shall obligate 
$10,000,000 out of amounts collected through 
the user fees on participating health insurance 
issuers pursuant to section 156.50 of title 45, 
Code of Federal Regulations (or any successor 
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regulations) 
for 
fiscal 
year 
2022, 
and 
$20,000,000 for each of fiscal years 2023 and 
2024. Such amount so obligated for a fiscal 
year shall remain available until expended.’’. 
SEC. 137506. ESTABLISHING A HEALTH INSURANCE AF-
FORDABILITY FUND. 
(a) IN GENERAL.—Subtitle D of title I of the Patient 
Protection and Affordable Care Act is amended by insert-
ing after part 5 (42 U.S.C. 18061 et seq.) the following 
new part: 
‘‘PART 6—IMPROVE HEALTH INSURANCE 
AFFORDABILITY FUND 
‘‘SEC. 1351. ESTABLISHMENT OF PROGRAM. 
‘‘There is hereby established the ‘Improve Health In-
surance Affordability Fund’ to be administered by the Sec-
retary of Health and Human Services, acting through the 
Administrator of the Centers for Medicare & Medicaid 
Services (in this section referred to as the ‘Adminis-
trator’), to provide funding, in accordance with this part, 
to the 50 States and the District of Columbia (each re-
ferred to in this section as a ‘State’) beginning on January 
1, 2023, for the purposes described in section 1352. 
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‘‘SEC. 1352. USE OF FUNDS. 
‘‘(a) IN GENERAL.—A State shall use the funds allo-
cated to the State under this part for one of the following 
purposes: 
‘‘(1) To provide reinsurance payments to health 
insurance issuers with respect to individuals enrolled 
under individual health insurance coverage (other 
than through a plan described in subsection (b)) of-
fered by such issuers. 
‘‘(2) To provide assistance (other than through 
payments described in paragraph (1)) to reduce out- 
of-pocket costs, such as copayments, coinsurance, 
premiums, and deductibles, of individuals enrolled 
under qualified health plans offered on the indi-
vidual market through an Exchange and of individ-
uals enrolled under standard health plans offered 
through a basic health program established under 
section 1331. 
‘‘(b) EXCLUSION
OF CERTAIN GRANDFATHERED 
PLANS, 
TRANSITIONAL
PLANS, 
STUDENT
HEALTH 
PLANS, AND EXCEPTED BENEFITS.—For purposes of 
subsection (a), a plan described in this subsection is the 
following: 
‘‘(1) A grandfathered health plan (as defined in 
section 1251). 
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‘‘(2) A plan (commonly referred to as a ‘transi-
tional plan’) continued under the letter issued by the 
Centers for Medicare & Medicaid Services on No-
vember 14, 2013, to the State Insurance Commis-
sioners outlining a transitional policy for coverage in 
the individual and small group markets to which sec-
tion 1251 does not apply, and under the extension 
of the transitional policy for such coverage set forth 
in the Insurance Standards Bulletin Series guidance 
issued by the Centers for Medicare & Medicaid Serv-
ices on March 5, 2014, February 29, 2016, Feb-
ruary 13, 2017, April 9, 2018, March 25, 2019, 
January 31, 2020, and January 19, 2021, or under 
any subsequent extensions thereof. 
‘‘(3) Student health insurance coverage (as de-
fined in section 147.145 of title 45, Code of Federal 
Regulations, or any successor regulation). 
‘‘(4) Excepted benefits (as defined in section 
2791(c) of the Public Health Service Act). 
‘‘SEC. 1353. STATE ELIGIBILITY AND APPROVAL; DEFAULT 
SAFEGUARD. 
‘‘(a) ENCOURAGING STATE OPTIONS FOR ALLOCA-
TIONS.— 
‘‘(1) IN GENERAL.—Subject to subsection (b), 
to be eligible for an allocation of funds under this 
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part for a year (beginning with 2023), a State shall 
submit to the Administrator an application at such 
time (but, in the case of allocations for 2023, not 
later than 120 days after the date of the enactment 
of this part and, in the case of allocations for a sub-
sequent year, not later than January 1 of the pre-
vious year) and in such form and manner as speci-
fied by the Administrator containing— 
‘‘(A) a description of how the funds will be 
used; and 
‘‘(B) such other information as the Admin-
istrator may require. 
‘‘(2) AUTOMATIC APPROVAL.—An application so 
submitted is approved (as outlined in the terms of 
the plan) unless the Administrator notifies the State 
submitting the application, not later than 90 days 
after the date of the submission of such application, 
that the application has been denied for not being in 
compliance with any requirement of this part and of 
the reason for such denial. 
‘‘(3) 5-YEAR
APPLICATION
APPROVAL.—If an 
application of a State is approved for a purpose de-
scribed in section 1352 for a year, such application 
shall be treated as approved for such purpose for 
each of the subsequent 4 years. 
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‘‘(4) OVERSIGHT AUTHORITY AND AUTHORITY 
TO REVOKE APPROVAL.— 
‘‘(A) OVERSIGHT.—The Secretary may 
conduct periodic reviews of the use of funds 
provided to a State under this section, with re-
spect to a purpose described in section 1352, to 
ensure the State uses such funds for such pur-
pose and otherwise complies with the require-
ments of this section. 
‘‘(B) REVOCATION
OF
APPROVAL.—The 
approval of an application of a State, with re-
spect to a purpose described in section 1352, 
may be revoked if the State fails to use funds 
provided to the State under this section for 
such purpose or otherwise fails to comply with 
the requirements of this section. 
‘‘(b) DEFAULT FEDERAL SAFEGUARD FOR 2023 AND 
2024 FOR CERTAIN STATES.— 
‘‘(1) IN GENERAL.—For 2023 and 2024, in the 
case of a State described in paragraph (5), with re-
spect to such year, the State shall not be eligible to 
submit an application under subsection (a), and the 
Administrator, in consultation with the applicable 
State authority, shall from the amount calculated 
under paragraph (3) for such year, carry out the 
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purpose described in paragraph (2) in such State for 
such year. 
‘‘(2) SPECIFIED USE.—The amount described 
in paragraph (3), with respect to a State described 
in paragraph (5) for 2023 or 2024, shall be used to 
carry 
out 
the 
purpose 
described 
in 
section 
1352(a)(1) in such State for such year, as applica-
ble, by providing reinsurance payments to health in-
surance issuers with respect to attachment range 
claims (as defined in section 1354(b)(2), using the 
dollar amounts specified in subparagraph (B) of 
such section for such year) in an amount equal to, 
subject to paragraph (4), the percentage (specified 
for such year by the Secretary under such subpara-
graph) of the amount of such claims. 
‘‘(3) AMOUNT
DESCRIBED.—The amount de-
scribed in this paragraph, with respect to 2023 or 
2024, is the amount equal to the total sum of 
amounts that the Secretary would otherwise esti-
mate under section 1354(b)(2)(A)(i) for such year 
for each State described in paragraph (5) for such 
year, as applicable, if each such State were not so 
described for such year. 
‘‘(4) ADJUSTMENT.—For purposes of this sub-
section, the Secretary may apply a percentage under 
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paragraph (3) with respect to a year that is less 
than the percentage otherwise specified in section 
1354(b)(2)(B) for such year, if the cost of paying 
the total eligible attachment range claims for States 
described in paragraph (5) for such year at such 
percentage otherwise specified would exceed the 
amount calculated under paragraph (3) for such 
year. 
‘‘(5) STATE DESCRIBED.—A State described in 
this paragraph, with respect to years 2023 and 
2024, is a State that, as of January 1 of 2022 or 
2023, respectively, was not expending amounts 
under the State plan (or waiver of such plan) for all 
individuals 
described 
in 
section 
1902(a)(10)(A)(i)(VIII) during such year. 
‘‘SEC. 1354. ALLOCATIONS. 
‘‘(a) APPROPRIATION.—For the purpose of providing 
allocations for States under subsection (b) and payments 
under section 1353(b) there is appropriated, out of any 
money in the Treasury not otherwise appropriated, 
$10,000,000,000 for 2023 and each subsequent year. 
‘‘(b) ALLOCATIONS.— 
‘‘(1) PAYMENT.— 
‘‘(A) IN GENERAL.—From amounts appro-
priated under subsection (a) for a year, the 
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Secretary shall, with respect to a State not de-
scribed in section 1353(b) for such year and 
not later than the date specified under subpara-
graph (B) for such year, allocate for such State 
the amount determined for such State and year 
under paragraph (2). 
‘‘(B) SPECIFIED DATE.—For purposes of 
subparagraph (A), the date specified in this 
subparagraph is— 
‘‘(i) for 2023, the date that is 90 days 
after the date of the enactment of this 
part; and 
‘‘(ii) for 2024 or a subsequent year, 
January 1 of the previous year. 
‘‘(C) 
NOTIFICATIONS
OF
ALLOCATION 
AMOUNTS.—For 2024 and each subsequent 
year, the Secretary shall notify each State of 
the amount determined for such State under 
paragraph (2) for such year by not later than 
January 1 of the previous year. 
‘‘(2) 
ALLOCATION
AMOUNT
DETERMINA-
TIONS.— 
‘‘(A) IN GENERAL.—For purposes of para-
graph (1), the amount determined under this 
paragraph for a year for a State described in 
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paragraph (1)(A) for such year is the amount 
equal to— 
‘‘(i) the amount that the Secretary es-
timates would be expended under this part 
for such year on attachment range claims 
of individuals residing in such State if such 
State used such funds only for the purpose 
described in paragraph (1) of section 
1352(a) at the dollar amounts and per-
centage specified under subparagraph (B) 
for such year; minus 
‘‘(ii) the amount, if any, by which the 
Secretary determines— 
‘‘(I) the estimated amount of 
premium tax credits under section 
36B of the Internal Revenue Code of 
1986 that would be attributable to in-
dividuals residing in such State for 
such year without application of this 
part; exceeds 
‘‘(II) the estimated amount of 
premium tax credits under section 
36B of the Internal Revenue Code of 
1986 that would be attributable to in-
dividuals residing in such State for 
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such year if section 1353(b) applied 
for such year and applied with respect 
to such State for such year. 
For purposes of the previous sentence and sec-
tion 1353(b)(3), the term ‘attachment range 
claims’ means, with respect to an individual, the 
claims for such individual that exceed a dollar 
amount specified by the Secretary for a year, 
but do not exceed a ceiling dollar amount speci-
fied by the Secretary for such year, under sub-
paragraph (B). 
‘‘(B) SPECIFICATIONS.—For purposes of 
subparagraph (A) and section 1353(b)(3), the 
Secretary shall determine the dollar amounts 
and the percentage to be specified under this 
subparagraph for a year in a manner to ensure 
that the total amount of expenditures under 
this part for such year is estimated to equal the 
total amount appropriated for such year under 
subsection (a) if such expenditures were used 
solely for the purpose described in paragraph 
(1) of section 1352(a) for attachment range 
claims at the dollar amounts and percentage so 
specified for such year. 
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‘‘(3) AVAILABILITY.—Funds allocated to a 
State under this subsection for a year shall remain 
available through the end of the subsequent year.’’. 
(b) BASIC HEALTH PROGRAM FUNDING ADJUST-
MENTS.—Section 1331 of the Patient Protection and Af-
fordable Care Act (42 U.S.C. 18051) is amended— 
(1) in subsection (a), by adding at the end the 
following new paragraph: 
‘‘(3) PROVISION OF INFORMATION ON QUALI-
FIED HEALTH PLAN PREMIUMS.— 
‘‘(A) IN GENERAL.—For plan years begin-
ning on or after January 1, 2023, the program 
described in paragraph (1) shall provide that a 
State may not establish a basic health program 
unless such State furnishes to the Secretary, 
with respect to each qualified health plan of-
fered in such State during a year that receives 
any reinsurance payment from funds made 
available under part 6 for such year, the ad-
justed premium amount (as defined in subpara-
graph (B)) for each such plan and year. 
‘‘(B) ADJUSTED
PREMIUM
AMOUNT
DE-
FINED.—For purposes of subparagraph (A), the 
term ‘adjusted premium amount’ means, with 
respect to a qualified health plan and a year, 
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the monthly premium for such plan and year 
that would have applied had such plan not re-
ceived any payments described in subparagraph 
(A) for such year.’’; and 
(2) in subsection (d)(3)(A)(ii), by adding at the 
end the following new sentence: ‘‘In making such de-
termination, the Secretary shall calculate the value 
of such premium tax credits that would have been 
provided to such individuals enrolled through a basic 
health program established by a State during a year 
using the adjusted premium amounts (as defined in 
subsection (a)(3)(B)) for qualified health plans of-
fered in such State during such year.’’. 
SEC. 137507. SPECIAL RULE FOR INDIVIDUALS RECEIVING 
UNEMPLOYMENT COMPENSATION. 
(a) EXTENSION.—Section 36B(g)(1) is amended by 
striking ‘‘during 2021,’’ and inserting ‘‘after December 
31, 2020, and before January 1, 2026,’’. 
(b) MODIFICATION OF INCOME NOT TAKEN INTO AC-
COUNT.—Section 36B(g)(1)(B) is amended by striking 
‘‘133 percent’’ and inserting ‘‘150 percent’’. 
(c) CONFORMING AMENDMENT.—Section 36B(g) by 
inserting ‘‘THROUGH 2025’’ after ‘‘2021’’ in the heading 
thereof. 
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PART 6—PATHWAY TO PRACTICE TRAINING 
PROGRAMS 
SEC. 137601. ESTABLISHING RURAL AND UNDERSERVED 
PATHWAY 
TO 
PRACTICE 
TRAINING 
PRO-
GRAMS 
FOR 
POST-BACCALAUREATE 
STU-
DENTS AND MEDICAL STUDENTS. 
(a) PROGRAM.— 
(1) IN GENERAL.—Title XVIII of the Social Se-
curity Act (42 U.S.C. 1395 et seq.) is amended by 
adding at the end the following new section: 
‘‘SEC. 1899C. RURAL AND UNDERSERVED PATHWAY TO 
PRACTICE TRAINING PROGRAM FOR POST- 
BACCALAUREATE AND MEDICAL STUDENTS. 
‘‘(a) IN GENERAL.—Not later than October 1, 2023, 
the Secretary shall, subject to the succeeding provisions 
of this section, carry out the ‘Rural and Underserved 
Pathway to Practice Training Program for Post-Bacca-
laureate and Medical Students’ (in this section, referred 
to as the ‘Program’) under which the Secretary awards 
Pathway to Practice medical scholarship vouchers to quali-
fying students described in subsection (b) for the purpose 
of increasing the number of physicians practicing in rural 
and underserved communities. 
‘‘(b) QUALIFYING STUDENT DESCRIBED.—For pur-
poses of this section, a qualifying student described in this 
subsection is an individual who— 
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‘‘(1) attests he or she— 
‘‘(A) is or will be a first-generation student 
of a 4-year college, graduate school, or profes-
sional school; 
‘‘(B) was a Pell Grant recipient; or 
‘‘(C) lived in a medically underserved area, 
rural area, or health professional shortage area 
for a period of 4 or more years prior to attend-
ing an undergraduate program; 
‘‘(2) has accepted enrollment in— 
‘‘(A) a post-baccalaureate program that is 
not more than 2 years and intends to enroll in 
a qualifying medical school within 2 years after 
completion of such program; or 
‘‘(B) a qualifying medical school; 
‘‘(3) will practice medicine in a health profes-
sional shortage area, medically underserved area, 
public hospital, rural area, or as required under sub-
section (d)(5); and 
‘‘(4) submits an application and a signed copy 
of the agreement described under subsection (c). 
‘‘(c) APPLICATIONS.— 
‘‘(1) IN GENERAL.—To be eligible to receive a 
Pathway to Practice medical scholarship voucher 
under this section, a qualifying student described in 
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subsection (b) shall submit to the Secretary an ap-
plication at such time, in such manner, and con-
taining such information as the Secretary may re-
quire. 
‘‘(2) INFORMATION
TO
BE
INCLUDED.—As a 
part of the application described in paragraph (1), 
the Secretary shall include a notice of the items 
which are required to be agreed to under subsection 
(d)(4) for the purpose of notifying the qualifying 
student of the terms of the Rural and Underserved 
Pathway to Practice Training Program. 
‘‘(d) PATHWAY TO PRACTICE MEDICAL SCHOLAR-
SHIP VOUCHER DETAILS.— 
‘‘(1) NUMBER.—On an annual basis, the Sec-
retary may award a Pathway to Practice medical 
scholarship voucher under the Program to not more 
than 1,000 qualifying students described in sub-
section (b). 
‘‘(2) PRIORITIZATION
CRITERIA.—In deter-
mining whether to award a Pathway to Practice 
medical scholarship voucher under the Program to 
qualifying students described in subsection (b), the 
Secretary shall prioritize applications from any such 
student who attests that he or she— 
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‘‘(A) was a participant in the Health Re-
sources and Services Administration Health Ca-
reers Opportunity Program or an Area Health 
Education Center scholar; 
‘‘(B) is a disadvantaged student (as de-
fined by the National Health Service Corps of 
the Health Resources & Services Administration 
of the Department of Health and Human Serv-
ices); or 
‘‘(C) attended a historically black college 
or other minority serving institution (as defined 
in section 1067q of title 20, United States 
Code). 
‘‘(3) DURATION.—Each Pathway to Practice 
medical scholarship voucher awarded to a qualifying 
student pursuant to paragraph (1) shall be so 
awarded to such a student on an annual basis for 
each year of enrollment in a post-baccalaureate pro-
gram and a qualifying medical school (as appro-
priate). 
‘‘(4) AMOUNT.—Subject to paragraph (5), each 
Pathway to Practice medical scholarship voucher 
awarded under the Program shall include amounts 
for— 
‘‘(A) tuition; 
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‘‘(B) academic fees (as determined by the 
qualifying medical school); 
‘‘(C) required textbooks and equipment; 
‘‘(D) a monthly stipend equal to the 
amount provided for individuals under the 
health professions scholarship and financial as-
sistance program described in section 2121(c) 
of title 10, United States Code; and 
‘‘(E) any other educational expenses nor-
mally incurred by students at the post-bacca-
laureate program or qualifying medical school 
(as appropriate). 
‘‘(5) REQUIRED
AGREEMENT.—No amounts 
under paragraph (4) may be provided a qualifying 
student awarded a Pathway to Practice medical 
scholarship voucher under the Program, unless the 
qualifying student submits to the Secretary an 
agreement to— 
‘‘(A) complete a post-baccalaureate pro-
gram that is not more than 2 years (if applica-
ble pursuant to the option under subsection 
(b)(2)(A)); 
‘‘(B) graduate from a qualifying medical 
school; 
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‘‘(C) complete a residency program in an 
approved residency training program (as de-
fined in section 1886(h)(5)(A)); 
‘‘(D) complete an initial residency period 
or the period of board eligibility; 
‘‘(E) practice medicine for at least the 
number of years of the Pathway to Practice 
medical scholarship voucher awarded under 
paragraph (2) after a residency program in a 
health professional shortage area, a medically 
underserved area, a public hospital, or a rural 
area, and during such period annually submit 
documentation with respect to whether the 
qualifying student practices medicine in such an 
area and where; 
‘‘(F) for the purpose of determining com-
pliance with subparagraph (E), not later than 
180 days after the date on which qualifying stu-
dent completes a residency program, provide to 
the Secretary information with respect to where 
the qualifying student is practicing medicine 
following the period described in such subpara-
graph; 
‘‘(G) except in the case of a waiver for 
hardship pursuant to section 1892(f)(3), be lia-
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ble to the United States pursuant to section 
1892 for any amounts received under this Pro-
gram that is determined a past-due obligation 
under subsection (b)(3) of such section in the 
case qualifying student fails to complete all of 
the requirements of this agreement under this 
subsection; and 
‘‘(H) for the purpose of determining the 
amount of Pathway to Practice medical scholar-
ship vouchers paid or incurred by a qualifying 
medical school or any provider of a post-bacca-
laureate program referred to in subsection 
(b)(2)(A) for the costs of tuition under para-
graph (4)(A), consent to any personally identi-
fying information being shared with the Sec-
retary of the Treasury. 
‘‘(6) RESPONSIBILITIES
OF
PARTICIPATING 
EDUCATIONAL INSTITUTIONS.—Each annual award 
of an amount of Pathway to Practice medical schol-
arship voucher under paragraph (2) shall be made 
with respect to a specific qualifying medical school 
or post-baccalaureate program that is not more than 
2 years and such school or program shall (as a con-
dition of, and prior to, such award being made with 
respect to such school or program)— 
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‘‘(A) submit to the Secretary such infor-
mation as the Secretary may require to deter-
mine the amount of such award on the basis of 
the costs of the costs of the items specified 
under paragraph (4) (except for subparagraph 
(D)) with respect to such school or program, 
and 
‘‘(B) enter into an agreement with the Sec-
retary under which such school or provider will 
verify (in such manner as the Secretary may 
provide) that amounts paid by such school or 
provider to the qualifying student are used for 
such costs. 
‘‘(e) DEFINITIONS.—In this section: 
‘‘(1) 
HEALTH
PROFESSIONAL
SHORTAGE 
AREA.—The team ‘health professional shortage area’ 
has the meaning given such term in subparagraphs 
(A) or (B) of section 332(a)(1) of the Public Health 
Service Act. 
‘‘(2) INITIAL
RESIDENCY
PERIOD.—The term 
‘initial residency period’ has the meaning given such 
term in section 1886(h)(5)(F). 
‘‘(3) MEDICALLY
UNDERSERVED
AREA.—The 
term ‘medically underserved area’ means an area 
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designated pursuant to section 330(b)(3)(A) of the 
Public Health Service Act. 
‘‘(4) PELL GRANT RECIPIENT.—The term ‘Pell 
Grant recipient’ has the meaning given such term in 
section 322(3) of the Higher Education Act of 1965. 
‘‘(5) PERIOD
OF
BOARD
ELIGIBILITY.—The 
term ‘period of board eligibility’ has the meaning 
given such term in section 1886(h)(5)(G). 
‘‘(6) QUALIFYING MEDICAL SCHOOL.—The term 
‘qualifying medical school’ means a school of medi-
cine accredited by the Liaison Committee on Medical 
Education of the American Medical Association and 
the Association of American Medical Colleges (or ap-
proved by such Committee as meeting the standards 
necessary for such accreditation) or a school of oste-
opathy accredited by the American Osteopathic As-
sociation, or approved by such Association as meet-
ing the standards necessary for such accreditation 
which— 
‘‘(A) for each academic year, enrolls at 
least 10 qualifying students who are in enrolled 
in such a school; 
‘‘(B) requires qualifying students to enroll 
in didactic coursework and clinical experience 
applicable to practicing medicine in health pro-
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fessional shortage areas, medically underserved 
areas, or rural areas, including— 
‘‘(i) clinical rotations in such areas in 
applicable specialties (as applicable and as 
available); 
‘‘(ii) coursework or training experi-
ences focused on medical issues prevalent 
in such areas and cultural and structural 
competency; and 
‘‘(C) is located in a State (as defined in 
section 210(h)). 
‘‘(7) RURAL AREA.—The term ‘rural area’ has 
the 
meaning 
given 
such 
term 
in 
section 
1886(d)(2)(D). 
‘‘(f) PENALTY FOR FALSE INFORMATION.—Any per-
son who knowingly and willfully obtains by fraud, false 
statement, or forgery, or fails to refund any funds, assets, 
or property provided under this section or attempts to so 
obtain by fraud, false statement or forgery, or fail to re-
fund any funds, assets, or property, received pursuant to 
this section shall be fined not more than $20,000 or im-
prisoned for not more than 5 years, or both.’’. 
(2) AGREEMENTS.—Section 1892 of the Social 
Security Act (42 U.S.C. 1395ccc) is amended— 
(A) in subsection (a)(1)(A)— 
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(i) by striking ‘‘, or the’’ and inserting 
‘‘, the’’; and 
(ii) by inserting ‘‘or the Rural and 
Underserved Pathway to Practice Training 
Program for Post- Baccalaureate and Med-
ical Students under section 1899C’’ before 
‘‘, owes a past-due obligation’’; 
(B) in subsection (b)— 
(i) in paragraph (1), by striking at 
the end ‘‘or’’; 
(ii) in paragraph (2), by striking the 
period at the end and inserting ‘‘; or’’; and 
(iii) by adding the end the following 
new paragraph: 
‘‘(3) subject to subsection (f), owed by an indi-
vidual to the United States by breach of an agree-
ment under section 1899C(c) and which payment 
has not been paid by the individual for any amounts 
received under the Rural and Underserved Pathway 
to Practice Training Program for Post-Bacca-
laureate and Medical Students (and accrued interest 
determined in accordance with subsection (f)(4)) in 
the case such individual fails to complete the re-
quirements of such agreement.’’; and 
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(C) by adding at the end the following new 
subsection: 
‘‘(f) AUTHORITIES WITH RESPECT TO THE COLLEC-
TION UNDER
THE PATHWAY
TO PRACTICE TRAINING 
PROGRAM.—The Secretary— 
‘‘(1) shall require payment to the United States 
for any amount of damages that the United States 
is entitled to recover under subsection (b)(3), within 
the 5-year period beginning on the date an eligible 
individual fails to complete the requirements of such 
agreement under section 1899C(d)(5) (or such 
longer period beginning on such date as specified by 
the Secretary), and any such amounts not paid with-
in such period shall be subject to collection through 
deductions in Medicare payments pursuant to sub-
section (e); 
‘‘(2) may allow payments described in para-
graph (1) to be paid in installments over such 5-year 
period, which shall accrue interest in an amount de-
termined pursuant to paragraph (5); 
‘‘(3) may waive the requirement for an indi-
vidual to pay a past-due obligation under subsection 
(b)(3) in the case of hardship (as determined by the 
Secretary); 
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‘‘(4) may not disclose any past-due obligation 
under subsection (b)(3) that is owed to the United 
States to any credit reporting agency that the 
United States entitled to be recovered the United 
States under this section; and 
‘‘(5) shall make a final determination of wheth-
er the amount of payment under section 1899C 
made to a qualifying student (as described in sub-
section (b) of such section) was in excess of or less 
than the amount of payment that is due, and pay-
ment of such excess or deficit is not made (or ef-
fected by offset) within 90 days of the date of the 
determination, and interest shall accrue on the bal-
ance of such excess or deficit not paid or offset (to 
the extent that the balance is owed by or owing to 
the provider) at a rate determined in accordance 
with the regulations of the Secretary of the Treasury 
applicable to charges for late payments.’’. 
SEC. 137602. FUNDING FOR THE RURAL AND UNDERSERVED 
PATHWAY 
TO 
PRACTICE 
TRAINING 
PRO-
GRAMS 
FOR 
POST-BACCALAUREATE 
STU-
DENTS AND MEDICAL STUDENTS. 
(a) IN GENERAL.—Subpart C of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
1986, as amended by the preceding provisions of this Act, 
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is amended by inserting after section 36F the following 
new section: 
‘‘SEC. 36G. PATHWAY TO PRACTICE MEDICAL SCHOLAR-
SHIP VOUCHER CREDIT. 
‘‘(a) IN GENERAL.—In the case of a qualified edu-
cational institution, there shall be allowed as a credit 
against the tax imposed by this subtitle for any taxable 
year an amount equal to the aggregate amount paid or 
incurred by such institution during such taxable year pur-
suant to any Pathway to Practice medical scholarship 
voucher awarded to a qualifying student with respect to 
such institution. 
‘‘(b) DETERMINATION OF AMOUNTS PAID PURSUANT 
TO QUALIFIED SCHOLARSHIP VOUCHERS, ETC.—For pur-
poses of this section— 
‘‘(1) an amount shall be treated as paid or in-
curred pursuant to an annual award of a Pathway 
to Practice medical scholarship voucher only if such 
amount is paid or incurred in reimbursement, or an-
ticipation of, an expense described in subparagraphs 
(A) through (E) of paragraph (4) of section 
1899C(d) of the Social Security Act and is subject 
to verification in such manner as the Secretary of 
Health and Human Services may provide under 
paragraph (6) of such section, and 
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‘‘(2) in the case of any amount credited by a 
qualified educational institution against a liability 
owed by the qualifying student to such institution, 
such amount shall be treated as paid by such insti-
tution to such student as of the date that such liabil-
ity would otherwise be due. 
‘‘(c) DEFINITIONS.—For purposes of this section— 
‘‘(1) QUALIFIED EDUCATIONAL INSTITUTION.— 
The term ‘qualified educational institution’ means, 
with respect to any annual award of a Pathway to 
Practice medical scholarship voucher— 
‘‘(A) any qualifying medical school (as de-
fined in subsection (e)(6) of section 1899C of 
the Social Security Act), and 
‘‘(B) any provider of a post-baccalaureate 
program referred to in subsection (b)(2)(A) of 
such section, 
which meets the requirements of subsection (d)(6) of 
such section. 
‘‘(2) QUALIFYING STUDENT.—The term ‘quali-
fying student’ means any student to whom the Sec-
retary of Health and Human Services has made an 
annual award of a Pathway to Practice medical 
scholarship voucher under section 1899C of the So-
cial Security Act. 
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‘‘(3) ANNUAL AWARD OF A PATHWAY TO PRAC-
TICE MEDICAL SCHOLARSHIP VOUCHER.—The term 
‘annual award of a Pathway to Practice medical 
scholarship voucher’ means the annual award of a 
Pathway to Practice medical scholarship voucher re-
ferred to in section 1899C(d)(3) of the Social Secu-
rity Act. 
‘‘(d) COORDINATION OF ACADEMIC AND TAXABLE 
YEARS.—The credit allowed under subsection (a) with re-
spect to any Pathway to Practice medical scholarship 
voucher shall not exceed the amount of such voucher which 
is for expenses described in subparagraphs (A) through 
(E) of section 1899C(d)(4) of the Social Security Act, re-
duced by any amount of such voucher with respect to 
which credit was allowed under this section for any prior 
taxable year. 
‘‘(e) REGULATIONS.—The Secretary shall issue such 
regulations or other guidance as are necessary or appro-
priate to carry out the purposes of this section.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 6211(b)(4)(A), as amended by the 
preceding provisions of this Act, is amended by in-
serting ‘‘36G,’’ after ‘‘36F,’’. 
(2) Paragraph (2) of section 1324(b) of title 
31, United States Code, as amended by the pre-
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ceding provisions of this Act, is amended by insert-
ing ‘‘36G,’’ after ‘‘36F,’’. 
(3) The table of sections for subpart C of part 
IV of subchapter A of chapter 1 of the Internal Rev-
enue Code of 1986, and amended by the preceding 
provisions of this Act, is amended by inserting after 
the item relating to section 36F the following new 
item: 
‘‘Sec. 36G. Pathway to Practice medical scholarship voucher credit.’’. 
(c) INFORMATION
SHARING.—The Secretary of 
Health and Human Services shall annually provide the 
Secretary of the Treasury such information regarding the 
program under section 1899C of the Social Security Act 
as the Secretary of the Treasury may require to admin-
ister the tax credits determined under section 36G of the 
Internal Revenue Code of 1986, including information to 
identify qualifying students and the qualified educational 
institutions at which such students are enrolled and the 
amount of the annual award of the Pathway to Practice 
medical scholarship voucher awarded to each such student 
with respect to such institution. Terms used in this sub-
paragraph shall have the same meaning as when used is 
such section 36G. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years ending after the 
date of the enactment of this Act. 
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SEC. 137603. ESTABLISHING RURAL AND UNDERSERVED 
PATHWAY 
TO 
PRACTICE 
TRAINING 
PRO-
GRAMS FOR MEDICAL RESIDENTS. 
Section 1886 of the Social Security Act (42 U.S.C. 
1395ww) is amended— 
(1) in subsection (d)(5)(B)(v), by inserting 
‘‘(h)(4)(H)(vii),’’ after ‘‘The provisions of sub-
sections (h)(4)(H)(vi),’’; and 
(2) in subsection (h)(4)(H), by adding at the 
end the following new clause: 
‘‘(vii) INCREASE IN FULL-TIME EQUIV-
ALENT LIMITATION FOR HOSPITALS IMPLE-
MENTING
PATHWAY
TRAINING
PRO-
GRAMS.— 
‘‘(I) IN GENERAL.—For cost re-
porting periods beginning on or after 
October 1, 2026, during which a resi-
dent trains in an applicable hospital 
or hospitals (as defined in subclause 
(II) in an approved medical residency 
training 
program), 
the 
Secretary 
shall, after any adjustment made 
under any preceding provision of this 
paragraph or under any of paragraphs 
(7) through (9), subject to subclause 
(III), increase the limitation under 
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subparagraph (F) for such cost re-
porting period by the number of full- 
time equivalent residents so trained 
under such program during such pe-
riod (in this clause, referred to as the 
‘Rural and Underserved Pathway to 
Practice Training Programs for Med-
ical Residents’ or ‘Program’). 
‘‘(II) APPLICABLE HOSPITAL OR 
HOSPITALS
DEFINED.—For purposes 
of this clause, the term ‘applicable 
hospital or hospitals’ means any hos-
pital that has been recognized by the 
Accreditation Council for Graduate 
Medical Education as meeting at least 
the following requirements for their 
approved medical residency training 
programs: 
‘‘(aa) The programs provide 
mentorships for residents. 
‘‘(bb) The programs include 
cultural 
and 
structural 
com-
petency as part of the training of 
residents under the programs. 
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‘‘(cc) The programs have a 
demonstrated record of training 
medical residents in medically 
underserved areas, rural areas, or 
health 
professional 
shortage 
areas. 
‘‘(dd) The hospital agrees to 
promote community-based train-
ing of residents under their pro-
grams, as appropriate. 
‘‘(III) ANNUAL LIMITATION FOR 
NUMBER
OF
RESIDENTS
IN
PRO-
GRAM.—The Secretary shall ensure 
that, during any 1-year period and 
across all approved medical residency 
training programs described in sub-
clause (I), not more than 1,000 full- 
time equivalent residents are trained 
each year. 
‘‘(IV) OTHER DEFINITIONS.— 
‘‘(aa) 
HEALTH
PROFES-
SIONAL
SHORTAGE
AREA.—The 
team ‘health professional short-
age area’ has the meaning given 
such term in subparagraphs (A) 
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or (B) of section 332(a)(1) of the 
Public Health Service Act. 
‘‘(bb) 
MEDICAL
UNDER-
SERVED AREA.—The term ‘medi-
cally underserved area’ means an 
area designated pursuant to sec-
tion 330(b)(3)(A) of the Public 
Health Service Act. 
‘‘(cc) QUALIFYING MEDICAL 
SCHOOL.—The term ‘qualifying 
medical school’ has the meaning 
given 
such 
term 
in 
section 
1899C(e)(6). 
‘‘(dd) QUALIFYING MEDICAL 
STUDENT.—The term ‘qualifying 
medical student’ has the meaning 
given 
such 
term 
in 
section 
1899C(b). 
‘‘(ee) RURAL
AREA.—The 
term ‘rural area’ has the mean-
ing given such term in section 
1886(d)(2)(D).’’. 
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SEC. 137604. ADMINISTRATIVE FUNDING OF THE RURAL 
AND UNDERSERVED PATHWAY TO PRACTICE 
TRAINING 
PROGRAMS 
FOR 
POST-BACCA-
LAUREATE STUDENTS, MEDICAL STUDENTS, 
AND MEDICAL RESIDENTS. 
The Secretary shall provide for the transfer of 
$6,000,000 from the Hospital Insurance Trust Fund es-
tablished under section 1817 of the Social Security Act 
(42 U.S.C. 1395i) and the Federal Supplementary Med-
ical Insurance Trust Fund under section 1841 of such Act 
(42 U.S.C. 1395t), in addition to amounts otherwise avail-
able to remain available until expended, to carry out the 
administration of the Rural and Underserved Pathway to 
Practice Training Program for Post-Baccalaureate and 
Medical Students under section 1899C of such Act (42 
U.S.C. 1395mmm) and the Rural and Underserved Path-
way to Practice Training Programs for Medical Residents 
under section 1886(h)(4)(H)(vii) of such Act (42 U.S.C. 
1395ww(h)(4)(H)(vii)). 
PART 7—HIGHER EDUCATION 
SEC. 137701. CREDIT FOR PUBLIC UNIVERSITY RESEARCH 
INFRASTRUCTURE. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1, as amended by the preceding pro-
visions of this Act, is amended by adding at the end the 
following new section: 
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‘‘SEC. 45AA. PUBLIC UNIVERSITY RESEARCH INFRASTRUC-
TURE CREDIT. 
‘‘(a) ALLOWANCE OF CREDIT.—For purposes of sec-
tion 38, the public university research infrastructure cred-
it determined under this section for a taxable year is an 
amount equal to 40 percent of the qualified cash contribu-
tions made by a taxpayer during such taxable year. 
‘‘(b) QUALIFIED CASH CONTRIBUTION.— 
‘‘(1) IN GENERAL.— 
‘‘(A) DEFINED.—For purposes of sub-
section (a), the qualified cash contribution for 
any taxable year is the aggregate amount con-
tributed in cash by a taxpayer during such tax-
able year to a certified educational institution 
in connection with a qualifying project that, but 
for this section, would be treated as a charitable 
contribution for purposes of section 170(c). 
‘‘(B) QUALIFIED
CASH
CONTRIBUTIONS 
TAKEN
INTO
ACCOUNT
FOR
PURPOSES
OF 
CHARITABLE
CONTRIBUTION
LIMITATIONS.— 
Any qualified cash contributions made by a tax-
payer under this section shall be taken into ac-
count for purposes of determining the percent-
age limitations under section 170(b). 
‘‘(2) DESIGNATION REQUIRED.—A contribution 
shall only be treated as a qualified cash contribution 
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to the extent that it is designated as such by a cer-
tified educational institution under subsection (d). 
‘‘(c) DEFINITIONS.—For purposes of this section— 
‘‘(1) QUALIFYING PROJECT.—The term ‘quali-
fying project’ means a project to purchase, con-
struct, or improve research infrastructure property. 
‘‘(2) 
RESEARCH
INFRASTRUCTURE
PROP-
ERTY.—The term ‘research infrastructure property’ 
means any portion of a property, building, or struc-
ture of an eligible educational institution, or any 
land associated with such property, building, or 
structure, that is used for research. 
‘‘(3) ELIGIBLE EDUCATIONAL INSTITUTION.— 
The term ‘eligible educational institution’ means— 
‘‘(A) an institution of higher education (as 
such term is defined in section 101 or 102(c) 
of the Higher Education Act of 1965) that is 
a college or university described in section 
511(a)(2)(B), or 
‘‘(B) an organization described in section 
170(b)(1)(A)(iv) or section 509(a)(3) to which 
authority has been delegated by an institution 
described in subparagraph (A) for purposes of 
applying for or administering credit amounts on 
behalf of such institution. 
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‘‘(4) CERTIFIED EDUCATIONAL INSTITUTION.— 
The term ‘certified educational institution’ means an 
eligible educational institution which has been allo-
cated a credit amount for a qualifying project and— 
‘‘(A) has received a certification for such 
project under subsection (d)(2), and 
‘‘(B) designates credit amounts to tax-
payers for qualifying cash contributions toward 
such project under subsection (d)(4). 
‘‘(d) QUALIFYING UNIVERSITY RESEARCH INFRA-
STRUCTURE PROGRAM.— 
‘‘(1) ESTABLISHMENT.— 
‘‘(A) IN
GENERAL.—Not later than 180 
days after the date of the enactment of this sec-
tion, the Secretary, after consultation with the 
Secretary of Education, shall establish a pro-
gram to— 
‘‘(i) 
certify 
and 
allocate 
credit 
amounts for qualifying projects to eligible 
educational institutions, and 
‘‘(ii) allow certified educational insti-
tutions to designate cash contributions for 
qualifying projects of such certified edu-
cational institutions as qualified cash con-
tributions. 
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‘‘(B) LIMITATIONS.— 
‘‘(i) ALLOCATION LIMITATION PER IN-
STITUTION.—The credit amounts allocated 
to a certified educational institution under 
subparagraph (A)(i) for all projects shall 
not exceed $50,000,000 per calendar year. 
‘‘(ii) OVERALL
ALLOCATION
LIMITA-
TION.— 
‘‘(I) IN
GENERAL.—The total 
amount of qualifying project credit 
amounts that may be allocated under 
subparagraph (A)(i) shall not ex-
ceed— 
‘‘(aa) $500,000,000 for each 
of calendar years 2022, 2023, 
2024, 2025, and 2026, and 
‘‘(bb) $0 for each subse-
quent year. 
‘‘(II) 
ROLLOVER
OF 
UNALLOCATED
CREDIT
AMOUNTS.— 
Any credit amounts described in sub-
clause (I) that are unallocated during 
a calendar year shall be carried to the 
succeeding calendar year and added to 
the limitation allowable under such 
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subclause for such succeeding cal-
endar year. 
‘‘(iii) DESIGNATION
LIMITATION.— 
The aggregate amount of cash contribu-
tions which are designated by a certified 
educational institution as qualifying cash 
contributions with respect to any quali-
fying project shall not exceed 250 percent 
of the credit amount allocated to such cer-
tified educational institution for a quali-
fying project under subparagraph (A)(i). 
‘‘(2) CERTIFICATION APPLICATION.—Each eligi-
ble educational institution which applies for certifi-
cation of a project under this paragraph shall sub-
mit an application in such time, form, and manner 
as the Secretary may require. 
‘‘(3) SELECTION CRITERIA FOR ALLOCATIONS 
TO
ELIGIBLE
EDUCATIONAL
INSTITUTIONS.—The 
Secretary, after consultation with the Secretary of 
Education, shall select applications from eligible 
educational institutions— 
‘‘(A) based on the extent of the expected 
expansion of an eligible educational institution’s 
targeted research within disciplines in science, 
mathematics, engineering, and technology, and 
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‘‘(B) in a manner that ensures consider-
ation is given to eligible educational institutions 
with full-time student populations of less than 
12,000. 
‘‘(4) DESIGNATION OF QUALIFIED CASH CON-
TRIBUTIONS TO TAXPAYERS.—The Secretary, after 
consultation with the Secretary of Education, shall 
establish a process by which certified educational in-
stitutions shall designate cash contributions to such 
institutions as qualified cash contributions. 
‘‘(5) DISCLOSURE OF ALLOCATIONS AND DES-
IGNATIONS.— 
‘‘(A) ALLOCATIONS.—The Secretary shall, 
upon allocating credit amounts to an applicant 
under this subsection, publicly disclose the iden-
tity of the applicant and the credit amount allo-
cated to such applicant. 
‘‘(B) DESIGNATIONS.—Each certified edu-
cational institution shall, upon designating con-
tributions of a taxpayer as qualified cash con-
tributions under this subsection, publicly dis-
close the identity of the taxpayer and the 
amount of contributions designated in such 
time, form, and manner as the Secretary may 
require. 
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‘‘(e) REGULATIONS AND GUIDANCE.—The Secretary, 
after consultation with the Secretary of Education when 
applicable, shall prescribe such regulations and guidance 
as may be necessary or appropriate to carry out the pur-
poses of this section, including regulations for— 
‘‘(1) prevention of abuse, 
‘‘(2) establishment of reporting requirements, 
‘‘(3) establishment of selection criteria for ap-
plications, and 
‘‘(4) disclosure of allocations. 
‘‘(f) PENALTY FOR NONCOMPLIANCE.— 
‘‘(1) IN GENERAL.—If at any time during the 
5-year period beginning on the date of the allocation 
of credit amounts to a certified educational institu-
tion under subsection (d)(1)(A)(i) there is a non-
compliance event with respect to such credit 
amounts, then the following rules shall apply: 
‘‘(A) GENERAL RULE.—Any cash contribu-
tion designated as a qualifying cash contribu-
tion with respect to a qualifying project for 
which such credit amounts were allocated under 
subsection (d)(1)(A)(ii) shall be treated as un-
related business taxable income (as defined in 
section 512) of such certified educational insti-
tution. 
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‘‘(B) 
RULE
FOR
UNUSED
CREDIT 
AMOUNTS.—In the case of unused credit 
amounts described under paragraph (2)(A) and 
identified pursuant to subsection (g), the Sec-
retary shall reallocate any portion of such un-
used credit amounts to certified educational in-
stitutions in lieu of imposing the general rule 
under subparagraph (A). 
‘‘(2) NONCOMPLIANCE
EVENT.—For purposes 
of this subsection, the term ‘noncompliance event’ 
means, with respect to a credit amount allocated to 
a certified educational institution— 
‘‘(A) cash contributions equaling the 
amount of such credit amount are not des-
ignated as qualifying cash contributions within 
2 years after December 31 of the year such 
credit amount is allocated, 
‘‘(B) a qualifying project with respect to 
which such credit amount was allocated is not 
placed in service within either— 
‘‘(i) 4 years after December 31 of the 
year such credit amount is allocated, or 
‘‘(ii) a period of time that the Sec-
retary determines is appropriate, or 
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‘‘(C) the research infrastructure property 
placed in service as part of a qualifying project 
with respect to which such credit amount was 
allocated ceases to be used for research within 
five years after such property is placed in serv-
ice. 
‘‘(g) REVIEW
AND
REALLOCATION
OF
CREDIT 
AMOUNTS.— 
‘‘(1) REVIEW.—Not later than 5 years after the 
date of enactment of this section, the Secretary shall 
review the credit amounts allocated under this sec-
tion as of such date. 
‘‘(2) REALLOCATION.— 
‘‘(A) IN GENERAL.—The Secretary may re-
allocate credit amounts allocated under this sec-
tion if the Secretary determines, as of the date 
of the review in paragraph (1), that such credit 
amounts are subject to a noncompliance event. 
‘‘(B) ADDITIONAL PROGRAM.—If the Sec-
retary determines that credits under this sec-
tion are available for reallocation pursuant to 
the requirements set forth in subparagraph (A), 
the Secretary is authorized to conduct an addi-
tional program for applications for certification. 
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‘‘(C) DEADLINE
FOR
REALLOCATION.— 
The Secretary shall not certify any project, or 
reallocate any credit amount, pursuant to this 
paragraph after December 31, 2031. 
‘‘(h) DENIAL OF DOUBLE BENEFIT.—No credit or 
deduction shall be allowed under any other provision of 
this chapter for any qualified cash contribution for which 
a credit is allowed under this section. 
‘‘(i) RULE FOR TRUSTS AND ESTATES.—For pur-
poses of this section, rules similar to the rules of sub-
section (d) of section 52 shall apply. 
‘‘(j) TERMINATION.—This section shall not apply to 
qualified cash contributions made after December 31, 
2033.’’. 
(b) CREDIT MADE PART OF GENERAL BUSINESS 
CREDIT.—Subsection (b) of section 38, as amended by the 
preceding provisions of this Act, is amended by striking 
‘‘plus’’ at the end of paragraph (38), by striking the period 
at the end of paragraph (39) and inserting ‘‘, plus’’, and 
by adding at the end the following new paragraph: 
‘‘(43) the public university research infrastruc-
ture credit determined under section 45AA.’’. 
(c) CLERICAL AMENDMENT.—The table of sections 
for subpart D of part IV of subchapter A of chapter 1, 
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as amended by the preceding provisions of this Act, is 
amended by adding at the end the following new item: 
‘‘Sec. 45AA. Public university research infrastructure credit.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to qualified cash contributions 
made after December 31, 2021. 
SEC. 137702. MODIFICATION OF EXCISE TAX ON INVEST-
MENT INCOME OF PRIVATE COLLEGES AND 
UNIVERSITIES. 
(a) PHASEOUT OF INVESTMENT INCOME EXCISE TAX 
FOR PRIVATE COLLEGES AND UNIVERSITIES PROVIDING 
SUFFICIENT GRANTS AND SCHOLARSHIPS.—Section 4968 
is amended by adding at the end the following new sub-
section: 
‘‘(e) PHASEOUT
FOR
INSTITUTIONS
PROVIDING 
QUALIFIED AID.— 
‘‘(1) IN GENERAL.—The amount of tax imposed 
by subsection (a) (determined without regard to this 
subsection) shall be reduced (but not below zero) by 
the amount which bears the same ratio to such 
amount of tax (as so determined) as— 
‘‘(A) the excess (if any) of— 
‘‘(i) the aggregate amount of qualified 
aid awards provided by the institution to 
its first-time, full-time undergraduate stu-
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dents for academic periods beginning dur-
ing the taxable year, over 
‘‘(ii) an amount equal to 20 percent of 
the aggregate undergraduate tuition and 
fees received by the institution from first- 
time, full-time undergraduate students for 
such academic periods, bears to 
‘‘(B) an amount equal to 13 percent of 
such aggregate undergraduate tuition and fees 
so received. 
‘‘(2) INSTITUTION MUST MEET REPORTING RE-
QUIREMENT.— 
‘‘(A) IN
GENERAL.—Paragraph (1) shall 
not apply to an applicable educational institu-
tion for a taxable year unless such institution 
furnishes to the Secretary, and makes widely 
available, a statement detailing the average ag-
gregate amount of Federal student loans re-
ceived by a student for attendance at the insti-
tution, averaged among each of the following 
groups of first-time, full-time undergraduate 
students who during the taxable year completed 
a course of study for which the institution 
awarded a baccalaureate degree: 
‘‘(i) All such students. 
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‘‘(ii) The students who have been 
awarded a Federal Pell Grant under sub-
part 1 of part A of title IV of the Higher 
Education Act of 1965 for attendance at 
the institution. 
‘‘(iii) The students who received work- 
study assistance under part C of title IV of 
such Act for attendance at such institu-
tion. 
‘‘(iv) The students who were provided 
such Federal student loans. 
‘‘(B) FORM AND MANNER FOR REPORT.— 
Such statement shall be furnished at such time 
and in such form and manner, and made widely 
available, under such regulations or guidance as 
the Secretary may prescribe. 
‘‘(C) FEDERAL
STUDENT
LOANS.—For 
purposes of this paragraph, the term ‘Federal 
student loans’ means a loan made under part D 
of title IV of the Higher Education Act of 
1965, except such term does not include a Fed-
eral Direct PLUS Loan made on behalf of a de-
pendent student. 
‘‘(3) OTHER
DEFINITIONS.—For purposes of 
this subsection— 
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‘‘(A) 
FIRST-TIME, 
FULL-TIME
UNDER-
GRADUATE
STUDENT.—The term ‘first-time, 
full-time undergraduate student’ shall have the 
same meaning as when used in section 132 of 
the Higher Education Act of 1965. 
‘‘(B) QUALIFIED AID AWARDS.—The term 
‘qualified aid awards’ means, with respect to 
any applicable educational institution, grants 
and scholarships to the extent used for under-
graduate tuition and fees. 
‘‘(C) 
UNDERGRADUATE
TUITION
AND 
FEES.—The term ‘undergraduate tuition and 
fees’ means, with respect to any institution, the 
tuition and fees required for the enrollment or 
attendance of a student as an undergraduate 
student at the institution.’’. 
(b) INFLATION ADJUSTMENT
TO PER STUDENT 
ASSET THRESHOLD.—Section 4968(b) is amended by 
adding at the end the following new paragraph: 
‘‘(3) INFLATION ADJUSTMENT.—In the case of 
any taxable year beginning after 2022, the dollar 
amount in paragraph (1)(D) shall be increased by 
an amount equal to— 
‘‘(A) such dollar amount, multiplied by 
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‘‘(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 2021’ for 
‘calendar year 2016’ in subparagraph (A)(ii) 
thereof. 
If any increase determined under this paragraph is 
not a multiple of $1,000, such increase shall be 
rounded to the nearest multiple of $1,000.’’. 
(c) CLARIFICATION
OF 500 STUDENT THRESH-
OLD.—Section 4968(b)(1)(A) is amended by inserting 
‘‘below the graduate level’’ after ‘‘500 tuition-paying stu-
dents’’. 
(d) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2021. 
SEC. 137703. TREATMENT OF FEDERAL PELL GRANTS FOR 
INCOME TAX PURPOSES. 
(a) EXCLUSION
FROM
GROSS
INCOME.—Section 
117(b)(1) is amended by striking ‘‘received by an indi-
vidual’’ and all that follows and inserting ‘‘received by an 
individual— 
‘‘(A) as a scholarship or fellowship grant 
to the extent the individual establishes that, in 
accordance with the conditions of the grant, 
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such amount was used for qualified tuition and 
related expenses, or 
‘‘(B) as a Federal Pell Grant under section 
401 of the Higher Education Act of 1965.’’. 
(b) TREATMENT FOR PURPOSES OF AMERICAN OP-
PORTUNITY
TAX
CREDIT
AND
LIFETIME
LEARNING 
CREDIT.—Section 25A(g)(2) is amended— 
(1) in subparagraph (A), by inserting ‘‘de-
scribed in section 117(b)(1)(A)’’ after ‘‘a qualified 
scholarship’’, and 
(2) in subparagraph (C), by inserting ‘‘or Fed-
eral Pell Grant under section 401 of the Higher 
Education Act of 1965’’ after ‘‘within the meaning 
of section 102(a)’’. 
(c) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2021. 
SEC. 137704. REPEAL OF DENIAL OF AMERICAN OPPOR-
TUNITY TAX CREDIT ON BASIS OF FELONY 
DRUG CONVICTION. 
(a) IN GENERAL.—Section 25A(b)(2) is amended by 
striking subparagraph (D). 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2021. 
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Subtitle I—Responsibly Funding 
Our Priorities 
SEC. 138001. AMENDMENT OF 1986 CODE. 
Except as otherwise expressly provided, whenever in 
this subtitle an amendment or repeal is expressed in terms 
of an amendment to, or repeal of, a section or other provi-
sion, the reference shall be considered to be made to a 
section or other provision of the Internal Revenue Code 
of 1986. 
PART 1—CORPORATE AND INTERNATIONAL TAX 
REFORMS 
Subpart A—Corporate Tax Rate 
SEC. 138101. INCREASE IN CORPORATE TAX RATE. 
(a) IN GENERAL.—Section 11(b) is amended to read 
as follows: 
‘‘(b) AMOUNT OF TAX.— 
‘‘(1) IN GENERAL.—The amount of the tax im-
posed by subsection (a) shall be the sum of— 
‘‘(A) 18 percent of so much of the taxable 
income as does not exceed $400,000, 
‘‘(B) 21 percent of so much of the taxable 
income as exceeds $400,000 but does not ex-
ceed $5,000,000, and 
‘‘(C) 26.5 percent of so much of the tax-
able income as exceeds $5,000,000. 
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In the case of a corporation which has taxable in-
come in excess of $10,000,000 for any taxable year, 
the amount of tax determined under the preceding 
sentence for such taxable year shall be increased by 
the lesser of (i) 3 percent of such excess, or (ii) 
$287,000. 
‘‘(2) CERTAIN
PERSONAL
SERVICE
CORPORA-
TION NOT ELIGIBLE FOR GRADUATED RATES.—Not-
withstanding paragraph (1), the amount of the tax 
imposed by subsection (a) on the taxable income of 
a qualified personal service corporation (as defined 
in section 448(d)(2)) shall be equal to 26.5 percent 
of the taxable income.’’. 
(b) PROPORTIONAL ADJUSTMENT
OF DEDUCTION 
FOR DIVIDENDS RECEIVED.— 
(1) IN GENERAL.—Section 243(a)(1) is amend-
ed by striking ‘‘50 percent’’ and inserting ‘‘60 per-
cent’’. 
(2) DIVIDENDS FROM 20-PERCENT OWNED COR-
PORATIONS.—Section 243(c)(1) is amended— 
(A) prior to amendment by subparagraph 
(B), by striking ‘‘65 percent’’ and inserting 
‘‘72.5 percent’’, and 
(B) by striking ‘‘50 percent’’ and inserting 
‘‘60 percent’’. 
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(c) CONFORMING AMENDMENT.—Section 1561 is 
amended— 
(1) by amending subsection (a) to read as fol-
lows: 
‘‘(a) IN GENERAL.—The component members of a 
controlled group of corporations on a December 31 shall, 
for their taxable years which include such December 31, 
be limited for purposes of this subtitle to— 
‘‘(1) amounts in each taxable income bracket in 
the subparagraphs of section 11(b)(1) which do not 
aggregate more than the maximum amount in each 
such bracket to which a corporation which is not a 
component member of a controlled group is entitled, 
and 
‘‘(2) one $250,000 ($150,000 if any component 
member is a corporation described in section 
535(c)(2)(B)) amount for purposes of computing the 
accumulated earnings credit under section 535(c)(2) 
and (3). 
The amounts specified in paragraph (1) shall be divided 
equally among the component members of such group on 
such December 31 unless all of such component members 
consent (at such time and in such manner as the Secretary 
shall by regulations prescribe) to an apportionment plan 
providing for an unequal allocation of such amounts. The 
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amounts specified in paragraph (2) shall be divided equal-
ly among the component members of such group on such 
December 31 unless the Secretary prescribes regulations 
permitting an unequal allocation of such amounts. Not-
withstanding paragraph (1), in applying the last sentence 
of section 11(b)(1) to such component members, the tax-
able income of all such component members shall be taken 
into account and any increase in tax under such last sen-
tence shall be divided among such component members in 
the same manner as amounts under paragraph (1).’’, and 
(2) by striking ‘‘ACCUMULATED EARNINGS 
CREDIT’’ in the heading and inserting ‘‘CERTAIN 
MULTIPLE TAX BENEFITS’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2021. 
(e) NORMALIZATION REQUIREMENTS.— 
(1) IN GENERAL.—A normalization method of 
accounting shall not be treated as being used with 
respect to any public utility property for purposes of 
section 167 or 168 of the Internal Revenue Code of 
1986 if the taxpayer, in computing its cost of service 
for ratemaking purposes and reflecting operating re-
sults in its regulated books of account, reduces the 
tax reserve deficit less rapidly or to a lesser extent 
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than such reserve would be reduced under the aver-
age rate assumption method. 
(2) ALTERNATIVE METHOD FOR CERTAIN TAX-
PAYERS.—If, as of the first day of the taxable year 
that includes the date of enactment of this Act— 
(A) the taxpayer was required by a regu-
latory agency to compute depreciation for public 
utility property on the basis of an average life 
or composite rate method, and 
(B) the taxpayer’s books and underlying 
records did not contain the vintage account 
data necessary to apply the average rate as-
sumption method, 
the taxpayer will be treated as using a normalization 
method of accounting if, with respect to such juris-
diction, the taxpayer uses the alternative method for 
public utility property that is subject to the regu-
latory authority of that jurisdiction. 
(3) DEFINITIONS.—For purposes of this sub-
section— 
(A) TAX
RESERVE
DEFICIT.—The term 
‘‘tax reserve deficit’’ means the excess of— 
(i) the amount which would be the 
balance in the reserve for deferred taxes 
(as described in section 168(i)(9)(A)(ii) of 
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the Internal Revenue Code of 1986, or sec-
tion 167(l)(3)(G)(ii) of such Code as in ef-
fect on the day before the date of the en-
actment of the Tax Reform Act of 1986) 
if the amount of such reserve were deter-
mined by assuming that the corporate rate 
increases provided in the amendments 
made by this section were in effect for all 
prior periods, over 
(ii) the balance in such reserve as of 
the day before such corporate rate in-
creases take effect. 
(B) AVERAGE
RATE
ASSUMPTION
METH-
OD.—The average rate assumption method is 
the method under which the excess in the re-
serve for deferred taxes is reduced over the re-
maining lives of the property as used in its reg-
ulated books of account which gave rise to the 
reserve for deferred taxes. Under such method, 
if timing differences for the property reverse, 
the amount of the adjustment to the reserve for 
the deferred taxes is calculated by multi-
plying— 
(i) the ratio of the aggregate deferred 
taxes for the property to the aggregate 
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timing differences for the property as of 
the beginning of the period in question, by 
(ii) the amount of the timing dif-
ferences which reverse during such period. 
(C) ALTERNATIVE METHOD.—The ‘‘alter-
native method’’ is the method in which the tax-
payer— 
(i) computes the tax reserve deficit on 
all public utility property included in the 
plant account on the basis of the weighted 
average life or composite rate used to com-
pute depreciation for regulatory purposes, 
and 
(ii) reduces the tax reserve deficit rat-
ably over the remaining regulatory life of 
the property. 
(4) TREATMENT
OF
NORMALIZATION
VIOLA-
TION.—If, for any taxable year ending after the date 
of the enactment of this Act, the taxpayer does not 
use a normalization method of accounting, such tax-
payer shall not be treated as using a normalization 
method of accounting for purposes of subsections 
(f)(2) and (i)(9)(C) of section 168 of the Internal 
Revenue Code of 1986. 
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(5) REGULATIONS.—The Secretary of the 
Treasury, or the Secretary’s designee, shall issue 
such regulations or other guidance as may be nec-
essary or appropriate to carry out this subsection, 
including regulations or other guidance to provide 
appropriate coordination between this subsection, 
section 13001(d) of Public Law 115-97, and section 
203(e) of the Tax Reform Act of 1986. 
Subpart B—Limitations on Deduction for Interest 
Expense 
SEC. 138111. LIMITATIONS ON DEDUCTION FOR INTEREST 
EXPENSE. 
(a) INTEREST EXPENSE OF CERTAIN MEMBERS OF 
INTERNATIONAL FINANCIAL REPORTING GROUPS.—Sec-
tion 163 is amended by redesignating subsection (n) as 
subsection (p) and by inserting after subsection (m) the 
following new subsection: 
‘‘(n) LIMITATION ON DEDUCTION OF INTEREST BY 
CERTAIN MEMBERS OF INTERNATIONAL FINANCIAL RE-
PORTING GROUPS.— 
‘‘(1) IN GENERAL.—In the case of any specified 
domestic corporation which is a member of any 
international financial reporting group, the deduc-
tion under this chapter for interest paid or accrued 
during the taxable year in excess of the amount of 
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interest includible in the gross income of such cor-
poration shall not exceed the allowable percentage of 
110 percent of such excess. 
‘‘(2) SPECIFIED DOMESTIC CORPORATION.—For 
purposes of this subsection— 
‘‘(A) IN
GENERAL.—The term ‘specified 
domestic corporation’ means any domestic cor-
poration other than— 
‘‘(i) any corporation if the excess of— 
‘‘(I) the average amount of inter-
est paid or accrued by such corpora-
tion during the 3-taxable-year period 
ending with the taxable year to which 
paragraph (1) applies, over 
‘‘(II) the average amount of in-
terest includible in the gross income 
of such corporation for such 3-tax-
able-year period, 
does not exceed $12,000,000, 
‘‘(ii) any corporation to which para-
graph (1) of section 163(j) does not apply 
by reason of paragraph (3) thereof (relat-
ing to exemption for certain small busi-
nesses), and 
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‘‘(iii) any S corporation, real estate 
investment trust, or regulated investment 
company. 
‘‘(B) AGGREGATION RULE.—For purposes 
of subparagraph (A)(i), all domestic corpora-
tions which are members of the same inter-
national financial reporting group shall be 
treated as a single corporation. 
‘‘(3) INTERNATIONAL
FINANCIAL
REPORTING 
GROUP.—For purposes of this subsection— 
‘‘(A) IN
GENERAL.—The term ‘inter-
national financial reporting group’ means, with 
respect to any reporting year, two or more enti-
ties if— 
‘‘(i) either— 
‘‘(I) at least one entity is a for-
eign corporation engaged in a trade or 
business within the United States, or 
‘‘(II) at least one entity is a do-
mestic corporation and another entity 
is a foreign corporation, and 
‘‘(ii) such entities are included in the 
same applicable financial statement with 
respect to such year. 
‘‘(B) ADDITIONAL MEMBERS.— 
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‘‘(i) IN GENERAL.—To the extent pro-
vided by the Secretary in regulations or 
other guidance, the specified domestic cor-
poration referred to in paragraph (1) may 
elect (at such time and in such manner as 
the Secretary may provide) for purposes of 
this subsection to treat any eligible cor-
poration as a member of the international 
financial reporting group of which such 
specified domestic corporation is a member 
if such eligible corporation maintains (and 
such specified domestic corporation has ac-
cess to) such books and records as the Sec-
retary determines are satisfactory to allow 
for the application of this subsection with 
respect to such eligible corporation. Any 
election under this clause shall apply only 
with respect to the specified domestic cor-
poration which makes such election. 
‘‘(ii) ELIGIBLE
CORPORATION.—The 
term ‘eligible corporation’ means, with re-
spect to any international financial report-
ing group, any corporation if at least 20 
percent of the stock of such corporation 
(determined by vote and value) is held (di-
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rectly or indirectly) by members of such 
international financial reporting group (de-
termined without regard to this clause). 
‘‘(4) ALLOWABLE PERCENTAGE.—For purposes 
of this subsection— 
‘‘(A) IN
GENERAL.—The term ‘allowable 
percentage’ means, with respect to any specified 
domestic corporation for any taxable year, the 
ratio (expressed as a percentage and not great-
er than 100 percent) of— 
‘‘(i) such corporation’s allocable share 
of the international financial reporting 
group’s reported net interest expense for 
the reporting year of such group which 
ends in or with such taxable year of such 
corporation, over 
‘‘(ii) such corporation’s reported net 
interest expense for such reporting year of 
such group. 
‘‘(B) 
REPORTED
NET
INTEREST
EX-
PENSE.—The term ‘reported net interest ex-
pense’ means— 
‘‘(i) with respect to any international 
financial reporting group for any reporting 
year, the excess of— 
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‘‘(I) the aggregate amount of in-
terest 
expense 
reported 
in 
such 
group’s applicable financial state-
ments for such taxable year, over 
‘‘(II) the aggregate amount of in-
terest income reported in such group’s 
applicable financial statements for 
such taxable year, and 
‘‘(ii) with respect to any specified do-
mestic corporation for any reporting year, 
the excess of— 
‘‘(I) the amount of interest ex-
pense of such corporation reported in 
the books and records of the inter-
national financial reporting group 
which are used in preparing such 
group’s applicable financial state-
ments for such taxable year, over 
‘‘(II) the amount of interest in-
come of such corporation reported in 
such books and records. 
‘‘(C) ALLOCABLE
SHARE
OF
REPORTED 
NET INTEREST EXPENSE.—With respect to any 
specified domestic corporation which is a mem-
ber of any international financial reporting 
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group, such corporation’s allocable share of 
such group’s reported net interest expense for 
any reporting year is the portion of such ex-
pense which bears the same ratio to such ex-
pense as— 
‘‘(i) the EBITDA of such corporation 
for such reporting year, bears to 
‘‘(ii) the EBITDA of such group for 
such reporting year. 
‘‘(D) EBITDA.— 
‘‘(i) 
IN
GENERAL.—The 
term 
‘EBITDA’ means, with respect to any re-
porting year, earnings before interest in-
come and interest expense, taxes, deprecia-
tion, depletion, and amortization— 
‘‘(I) as determined in the inter-
national financial reporting group’s 
applicable financial statements for 
such year, or 
‘‘(II) for purposes of subpara-
graph (A)(i), as determined in the 
books and records of the international 
financial reporting group which are 
used in preparing such statements if 
not determined in such statements. 
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‘‘(ii) TREATMENT
OF
INTRA-GROUP 
DISTRIBUTIONS.—The EBITDA of any 
specified domestic corporation shall be de-
termined without regard to any distribu-
tion received by such corporation from any 
other member of the international financial 
reporting group. 
‘‘(E) SPECIAL RULES FOR NON-POSITIVE 
EBITDA.— 
‘‘(i) NON-POSITIVE GROUP EBITDA.— 
In the case of any international financial 
reporting group the EBITDA of which is 
zero or less, paragraph (1) shall not apply 
to any specified domestic corporation 
which is a member of such group. 
‘‘(ii) 
NON-POSITIVE
ENTITY 
EBITDA.—In the case of any specified do-
mestic corporation the EBITDA of which 
is zero or less, the allowable percentage 
shall be 0 percent. 
‘‘(5) APPLICABLE
FINANCIAL
STATEMENT.— 
For purposes of this subsection, the term ‘applicable 
financial statement’ has the meaning given such 
term in section 451(b)(3). 
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‘‘(6) REPORTING YEAR.—For purposes of this 
subsection, the term ‘reporting year’ means any year 
for which an applicable financial statement is pre-
pared or required to be prepared. 
‘‘(7) FOREIGN
CORPORATIONS
ENGAGED
IN 
TRADE
OR
BUSINESS
WITHIN
THE
UNITED 
STATES.—For purposes of this subsection, any for-
eign corporation engaged in a trade or business 
within the United States shall be treated as a do-
mestic corporation with respect to any earnings, in-
terest income and interest expense, or other amount, 
which is effectively connected with the conduct of a 
trade or business in the United States. 
‘‘(8) REGULATIONS.—The Secretary may issue 
such regulations or other guidance as are necessary 
or appropriate to carry out the purposes of this sub-
section, including regulations or other guidance 
which— 
‘‘(A) allows or requires the adjustment of 
amounts reported on applicable financial state-
ments, 
‘‘(B) allows or requires any corporation to 
be included or excluded as a member of any 
international financial reporting group for pur-
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poses of any determination or calculation under 
this subsection, 
‘‘(C) provides rules for the application of 
this subsection with respect to— 
‘‘(i) a domestic corporation that is a 
partner (directly or indirectly) in a part-
nership, and 
‘‘(ii) foreign corporation to which this 
subsection applies by reason of paragraph 
(7).’’. 
(b) MODIFICATION OF APPLICATION OF LIMITATION 
ON BUSINESS INTEREST TO PARTNERSHIPS AND S COR-
PORATIONS.—Section 163(j)(4) is amended to read as fol-
lows: 
‘‘(4) APPLICATION
TO
PARTNERSHIPS
AND
S 
CORPORATIONS.—In the case of any partnership or 
S corporation, this subsection shall be applied at the 
partner or shareholder level, respectively.’’. 
(c) CARRYFORWARD OF DISALLOWED INTEREST.— 
(1) IN GENERAL.—Section 163 is amended by 
inserting after subsection (n), as added by sub-
section (a), the following new subsection: 
‘‘(o) CARRYFORWARD OF CERTAIN DISALLOWED IN-
TEREST.— 
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‘‘(1) IN GENERAL.—The amount of any interest 
not allowed as a deduction for any taxable year by 
reason of subsection (j)(1) or (n)(1) (whichever im-
poses the lower limitation with respect to such tax-
able year) shall be treated as interest (and as busi-
ness interest for purposes of subsection (j)(1)) paid 
or accrued in the succeeding taxable year. 
‘‘(2) LIMITATION ON CARRYFORWARD.—Inter-
est paid or accrued in a taxable year beginning after 
December 31, 2021 (determined without regard to 
paragraph (1)), shall not be carried forward under 
paragraph (1) past the fifth taxable year following 
the taxable year in which such interest was so paid 
or accrued. For purposes of the preceding sentence, 
interest shall be treated as allowed as a deduction on 
a first-in, first-out basis.’’. 
(2) CONFORMING AMENDMENTS.— 
(A) Section 163(j)(2) is amended to read 
as follows: 
‘‘(2) CARRYFORWARD CROSS-REFERENCE.—For 
carryforward treatment, see subsection (o).’’. 
(B) Section 381(c)(20) is amended to read 
as follows: 
‘‘(20) CARRYFORWARD OF DISALLOWED INTER-
EST.—The carryover of disallowed interest described 
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in section 163(o) to taxable years ending after the 
date of distribution or transfer.’’. 
(C) Section 382(d)(3) is amended to read 
as follows: 
‘‘(3) APPLICATION TO CARRYFORWARD OF DIS-
ALLOWED
INTEREST.—The term ‘pre-change loss’ 
shall include any carryover of disallowed interest de-
scribed in section 163(o) under rules similar to the 
rules of paragraph (1).’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2021. 
(e) TRANSITION RULE.—In the case of a partner’s 
first succeeding taxable year described in subclause (II) 
of section 163(j)(4)(B)(ii) of the Internal Revenue Code 
of 1986 (as in effect before the amendment made by sub-
section (b)) which begins after December 31, 2021, the 
amount of excess business interest which would (but for 
such amendment) be carried to such taxable year under 
such subclause shall be treated as interest (and as busi-
ness interest for purposes of section 163(j) of such Code, 
as amended by this section) paid or accrued in such tax-
able year. For carryover of any such interest disallowed 
for such taxable year, see section 163(o) of such Code, 
as amended by this section. 
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Subpart C—Outbound International Provisions 
SEC. 138121. MODIFICATIONS TO DEDUCTION FOR FOR-
EIGN-DERIVED 
INTANGIBLE 
INCOME 
AND 
GLOBAL INTANGIBLE LOW-TAXED INCOME. 
(a) IN GENERAL.—Section 250(a) is amended to 
read as follows: 
‘‘(a) IN GENERAL.—In the case of a domestic cor-
poration for any taxable year, there shall be allowed as 
a deduction an amount equal to the sum of— 
‘‘(1) 21.875 percent of the foreign-derived in-
tangible income of such domestic corporation for 
such taxable year, plus 
‘‘(2) 37.5 percent of— 
‘‘(A) the global intangible low-taxed income 
(if any) which is included in the gross income 
of such domestic corporation under section 
951A for such taxable year, and 
‘‘(B) the amount treated as a dividend re-
ceived by such corporation under section 78 
which is attributable to the amount described in 
subparagraph (A).’’. 
(b) DEDUCTION TAKEN INTO ACCOUNT IN DETER-
MINING NET OPERATING LOSS DEDUCTION.—Section 
172(d) is amended by striking paragraph (9). 
(c) CERTAIN OTHER MODIFICATIONS.— 
(1) Section 250(b)(3) is amended— 
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(A) in subparagraph (A)(i)— 
(i) by striking ‘‘and’’ at the end of 
subclause (V), 
(ii) by striking ‘‘over’’ at the end of 
subclause (VI), and 
(iii) by adding at the end the fol-
lowing new subclauses: 
‘‘(VII) any income received or ac-
crued which is of a kind which would 
be foreign personal holding company 
income (as defined in section 954(c)), 
‘‘(VIII) any amount included in 
the gross income of such corporation 
under section 1293, and 
‘‘(IX) 
any 
disqualified 
extraterritorial income, over’’, and 
(B) by adding at the end the following new 
subparagraph: 
‘‘(C) DISQUALIFIED
EXTRATERRITORIAL 
INCOME.— 
‘‘(i) IN
GENERAL.—For purposes of 
subparagraph (A)(i)(IX), the term ‘dis-
qualified extraterritorial income’ means 
any amount included in the gross income 
of the corporation with respect to any 
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transaction for any taxable year if any 
amount could (determined after application 
of clause (ii) but without regard to any 
election under section 942(a)(3) as in ef-
fect before its repeal) be excluded from the 
gross income of the corporation with re-
spect to such transaction for such taxable 
year by reason of section 114 pursuant to 
the application of subsection (d) or (f) of 
section 101 of the American Jobs Creation 
Act of 2004. 
‘‘(ii) 
ELECTION
OUT
OF 
EXTRATERRITORIAL INCOME BENEFITS.— 
‘‘(I) IN
GENERAL.—Except as 
provided in subclause (II), the cor-
poration referred to in clause (i) may 
make an irrevocable election (at such 
time and in such form and manner as 
the Secretary may provide) to have 
subsections (d) and (f) of section 101 
of the American Jobs Creation Act of 
2004 not apply with respect to such 
corporation for the taxable year for 
which such election is made and all 
succeeding taxable years (applicable 
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with respect to all transactions, in-
cluding transactions occurring before 
such taxable year). 
‘‘(II) 
EXPANDED
AFFILIATED 
GROUPS.—In the case of any corpora-
tion which is a member of an ex-
panded affiliated group, the election 
described in subclause (I) may be 
made only by the common parent of 
such group and shall apply with re-
spect to all members of such group. 
For purposes of the preceding sen-
tence, the term ‘expanded affiliated 
group’ means an affiliated group as 
defined in section 1504(a), determined 
without regard to section 1504(b)(3) 
and by substituting ‘more than 50 
percent’ for ‘at least 80 percent’ each 
place it appears.’’. 
(2) Section 613A(d)(1) is amended by striking 
‘‘and’’ at the end of subparagraph (D), by striking 
the period at the end of subparagraph (E) and in-
serting ‘‘, and’’, and by inserting after subparagraph 
(E) the following new subparagraph: 
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‘‘(F) any deduction allowable under section 
250.’’. 
(d) 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, 2021. 
(2) CERTAIN
OTHER
MODIFICATIONS.—The 
amendments made by subsection (c) shall apply to 
taxable years beginning after December 31, 2017. 
(e) TRANSITIONAL RULE FOR ACCELERATED PER-
CENTAGE REDUCTION.— 
(1) IN GENERAL.—In the case of any taxable 
year which includes December 31, 2021 (other than 
a taxable year with respect to which such date is the 
last day of such taxable year)— 
(A) the percentage in effect under section 
250(a)(1)(A) of the Internal Revenue Code of 
1986 shall be treated as being equal to the sum 
of— 
(i) the pre-effective date percentage of 
37.5 percent, plus 
(ii) the post-effective date percentage 
of 21.875 percent, and 
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(B) the percentage in effect under section 
250(a)(1)(B) of such Code shall be treated as 
being equal to the sum of— 
(i) the pre-effective date percentage of 
50 percent, plus 
(ii) the post-effective date percentage 
of 37.5 percent. 
(2) PRE- AND
POST-EFFECTIVE
DATE
PER-
CENTAGES.—For purposes of this subsection, with 
respect to any taxable year— 
(A) the term ‘‘pre-effective date percent-
age’’ means the ratio that the portion of such 
taxable year which precedes January 1, 2022, 
bears to the entire taxable year, and 
(B) the term ‘‘post-effective date percent-
age’’ means the ratio that the remainder of 
such taxable year bears to the entire taxable 
year. 
SEC. 138122. REPEAL OF ELECTION FOR 1-MONTH DEFER-
RAL IN DETERMINATION OF TAXABLE YEAR 
OF SPECIFIED FOREIGN CORPORATIONS. 
(a) IN GENERAL.—Section 898(c) is amended by 
striking paragraph (2) and redesignating paragraph (3) 
as paragraph (2). 
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(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years of specified foreign 
corporations beginning after November 30, 2021. 
(c) TRANSITION RULE.—A taxpayer’s first taxable 
year beginning after November 30, 2021, shall end at the 
same time as the first required year (within the meaning 
of section 898(c)(1) of the Internal Revenue Code of 
1986) ending after such date. 
SEC. 138123. MODIFICATIONS OF FOREIGN TAX CREDIT 
RULES APPLICABLE TO CERTAIN TAXPAYERS 
RECEIVING SPECIFIC ECONOMIC BENEFITS. 
(a) IN GENERAL.—Section 901 is amended by redes-
ignating subsection (n) as subsection (o) and by inserting 
after subsection (m) the following new subsection: 
‘‘(n) SPECIAL RULES RELATING TO DUAL CAPACITY 
TAXPAYERS.— 
‘‘(1) GENERAL
RULE.—Notwithstanding any 
other provision of this chapter, any amount paid or 
accrued by a dual capacity taxpayer to a foreign 
country or possession of the United States for any 
period shall not be considered a tax— 
‘‘(A) if, for such period, the foreign coun-
try or possession does not impose a generally 
applicable income tax, or 
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‘‘(B) to the extent such amount exceeds 
the amount which would be paid or accrued by 
such dual capacity taxpayer under the generally 
applicable income tax imposed by such country 
or possession if such taxpayer were not a dual 
capacity taxpayer. 
Nothing in this paragraph shall be construed to 
imply the proper treatment of any such amount 
not in excess of the amount determined under 
subparagraph (B). 
‘‘(2) DUAL
CAPACITY
TAXPAYER.—For pur-
poses of this subsection, the term ‘dual capacity tax-
payer’ means, with respect to any foreign country or 
possession of the United States, a person who— 
‘‘(A) is subject to a levy of such country or 
possession, and 
‘‘(B) receives (or will receive) directly or 
indirectly a specific economic benefit from such 
country or possession. 
‘‘(3) GENERALLY APPLICABLE INCOME TAX.— 
For purposes of this subsection, the term ‘generally 
applicable income tax’ means an income tax (or a se-
ries of income taxes) which is generally imposed 
under the laws of a foreign country or possession of 
the United States on residents of such foreign coun-
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try or possession that are not dual capacity tax-
payers.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years of foreign corpora-
tions beginning after December 31, 2021, and to taxable 
years of United States shareholders in which or with which 
such taxable years of foreign corporations end. 
SEC. 138124. MODIFICATIONS TO FOREIGN TAX CREDIT 
LIMITATIONS. 
(a) COUNTRY-BY-COUNTRY APPLICATION OF LIMITA-
TION ON FOREIGN TAX CREDIT BASED ON TAXABLE 
UNITS.— 
(1) IN GENERAL.—Section 904 is amended by 
inserting after subsection (d) the following new sub-
section: 
‘‘(e) COUNTRY-BY-COUNTRY APPLICATION BASED ON 
TAXABLE UNITS.— 
‘‘(1) IN
GENERAL.—The provisions of sub-
sections (a), (b), (c), and (d) and sections 907 and 
960 shall be applied separately with respect to each 
country by taking into account the aggregate income 
properly attributable or otherwise allocable to a tax-
able unit of the taxpayer which is a tax resident of 
such country. 
‘‘(2) TAXABLE UNITS.— 
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2138 
‘‘(A) IN GENERAL.—Except as otherwise 
provided by the Secretary, each item shall be 
attributable or otherwise allocable to exactly 
one taxable unit of the taxpayer. 
‘‘(B) 
DETERMINATION
OF
TAXABLE 
UNITS.—Except as otherwise provided by the 
Secretary, the taxable units of a taxpayer are 
as follows: 
‘‘(i) GENERAL TAXABLE UNIT.—The 
person that is the taxpayer and that is not 
otherwise described in a separate clause of 
this subparagraph. 
‘‘(ii) CONTROLLED
FOREIGN
COR-
PORATIONS.—Each controlled foreign cor-
poration with respect to which the tax-
payer is a United States shareholder. 
‘‘(iii) INTERESTS
IN
PASS-THROUGH 
ENTITIES.—Each interest held (directly or 
indirectly) by the taxpayer or any con-
trolled foreign corporation referred to in 
clause (ii) in a pass-through entity if such 
pass-through entity is a tax resident of a 
country other than the country with re-
spect to which such taxpayer or controlled 
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foreign corporation (as the case may be) is 
a tax resident. 
‘‘(iv) BRANCHES.—Each branch (or 
portion thereof) the activities of which are 
directly or indirectly carried on by the tax-
payer or any controlled foreign corporation 
referred to in clause (ii) and which give 
rise to a taxable presence in a country 
other than the country in which the tax-
payer or any such controlled foreign cor-
poration (as the case may be) is a tax resi-
dent. 
‘‘(3) DEFINITIONS AND SPECIAL RULES.—For 
purposes of this subsection— 
‘‘(A) TAX RESIDENT.—Except as otherwise 
provided by the Secretary, the term ‘tax resi-
dent’ means a person or arrangement subject to 
tax under the tax law of a country as a resi-
dent, or a person or arrangement that gives rise 
to a taxable presence by reason of its activities 
in such country. If an entity is organized under 
the law of a country, or resident in a country, 
that does not impose an income tax with re-
spect to such entity, such entity shall, except as 
provided by the Secretary, be treated as subject 
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to tax under the tax law of such country for the 
purposes of the preceding sentence. 
‘‘(B) PASS-THROUGH ENTITY.—Except as 
otherwise provided by the Secretary, the term 
‘pass-through entity’ includes any partnership 
or other entity or arrangement to the extent 
that income, gain, deduction, or loss of the enti-
ty is taken into account in determining the in-
come or loss of a person that owns (directly or 
indirectly) an interest in such entity. 
‘‘(C) BRANCH.—Except as otherwise pro-
vided by the Secretary, the term ‘branch’ means 
a taxable presence of a tax resident in a coun-
try other than its country of residence as deter-
mined under such other country’s tax law. The 
Secretary shall provide regulations or other 
guidance applying such term to activities in a 
country that does not subject income to tax on 
the basis of residence or taxable presence. 
‘‘(D) TREATMENT OF FISCALLY AUTONO-
MOUS
JURISDICTIONS.—Any fiscally autono-
mous jurisdiction shall be treated as a separate 
country. Any possession of the United States 
shall also be treated as separate country. For 
purposes of the preceding sentence, the term 
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‘possession of the United States’ means each of 
American Samoa, the Commonwealth of the 
Northern Mariana Islands, the Commonwealth 
of Puerto Rico, Guam, and the Virgin Islands. 
‘‘(4) REGULATIONS.—The Secretary shall issue 
such regulations or other guidance as may be nec-
essary or appropriate to carry out, or prevent avoid-
ance of, the purposes of this subsection, including 
regulations or other guidance— 
‘‘(A) providing for the application of this 
subsection 
to 
entities, 
arrangements, 
and 
branches that are otherwise considered a resi-
dent of more than one country or no country, 
‘‘(B) providing for the application of this 
subsection to hybrid entities or hybrid trans-
actions (as such terms are used for purposes of 
section 267A), pass-through entities, passive 
foreign investment companies, trusts, and other 
entities or arrangements not otherwise de-
scribed in this subsection, and 
‘‘(C) providing for the assignment of any 
item (including foreign taxes and deductions) to 
taxable units, including in the case of amounts 
not otherwise taken into account in determining 
taxable income under this chapter.’’. 
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(2) APPLICATION OF RECAPTURE OF OVERALL 
FOREIGN LOSS.—Section 904(f)(5)(E)(i) is amended 
by inserting ‘‘applied separately with respect to each 
country (within the meaning of subsection (e)) as 
provided in subsection (e)’’ before the period at the 
end. 
(3) APPLICATION
OF
SEPARATE
LIMITATION 
LOSSES
WITH
RESPECT
TO
GLOBAL
INTANGIBLE 
LOW-TAXED INCOME.—Section 904(f)(5) is amended 
by adding at the end the following new subpara-
graph: 
‘‘(G) SPECIAL
RULE
WITH
RESPECT
TO 
GLOBAL
INTANGIBLE
LOW-TAXED
INCOME.— 
The amount of the separate limitation losses for 
any taxable year shall reduce income described 
in subparagraph (d)(1)(A) for such taxable year 
only to the extent the aggregate amount of such 
losses exceeds the aggregate amount of the sep-
arate limitation incomes for such taxable year. 
For purposes of this subparagraph, separate 
limitation income shall exclude income described 
in subparagraph (d)(1)(A) for the taxable 
year.’’. 
(b) REPEAL OF SEPARATE APPLICATION TO FOR-
EIGN BRANCH INCOME.— 
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2143 
(1) IN GENERAL.—Section 904(d)(1) is amend-
ed by striking subparagraph (B) and redesignating 
subparagraphs (C) and (D) as subparagraph (B) 
and (C). 
(2) COORDINATION WITH DEDUCTION FOR FOR-
EIGN-DERIVED
INTANGIBLE
INCOME.—Section 
205(b)(3)(A) is amended— 
(A) by striking subclause (VI) of clause (i) 
and inserting the following new subclause: 
‘‘(VI) the income of a United 
States person which is attributable to 
1 or more branches (which would be 
referred to in clause (iv) of section 
904(e)(2)(B) if such clause were ap-
plied without regard to any reference 
to a controlled foreign corporation) or 
pass-through entities (which would be 
referred to in clause (iii) of section 
904(e)(2)(B) if such clause were ap-
plied without regard to any reference 
to a controlled foreign corporation) in 
1 or more foreign countries, over’’, 
and 
(B) by adding at the end the following 
flush sentence: 
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2144 
‘‘For purposes of clause (i)(VI), the amount of 
income attributable to a branch or pass-through 
entity shall be determined under rules estab-
lished by the Secretary.’’. 
(3) CONFORMING AMENDMENTS.— 
(A) Section 904(d)(2)(A)(ii) is amended by 
striking ‘‘, foreign branch income,’’. 
(B) Section 904(d)(2) is amended by strik-
ing subparagraph (J). 
(c) MODIFICATION
OF
FOREIGN
TAX
CREDIT 
CARRYBACK AND CARRYFORWARD.— 
(1) CARRYOVER
LIMITED
TO
TAXABLE 
YEARS.— 
(A) IN
GENERAL.—Section 904(c) is 
amended by striking ‘‘10 succeeding taxable 
years’’ and inserting ‘‘5 succeeding taxable 
years’’. 
(B) CONFORMING
AMENDMENT.—Section 
6511(d)(3)(A) is amended by striking ‘‘10 
years’’ and inserting ‘‘5 years’’. 
(2) REPEAL OF CARRYBACK.—Section 904(c) is 
amended— 
(A) by striking ‘‘in the first preceding tax-
able year, and’’, 
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(B) by striking ‘‘preceding or’’ each place 
it appears, and 
(C) by striking ‘‘CARRYBACK AND’’ in the 
heading thereof. 
(3) CARRYOVER APPLICABLE TO TAX ON GLOB-
AL
INTANGIBLE
LOW-TAXED
INCOME.—Section 
904(c) is amended by striking the last sentence. 
(4) APPLICATION TO LIMITATION ON FOREIGN 
OIL AND GAS TAXES.—Section 907(f)(1) is amend-
ed— 
(A) by striking ‘‘in the first preceding tax-
able year and’’, and 
(B) by striking ‘‘first 10’’ and inserting 
‘‘first 5’’. 
(d) TREATMENT
OF CERTAIN TAX-EXEMPT DIVI-
DENDS.— 
(1) CERTAIN TAX-EXEMPT DIVIDENDS TAKEN 
INTO ACCOUNT IN APPLYING LIMITATIONS ON FOR-
EIGN TAX CREDITS.—Section 904(b) is amended by 
striking paragraph (4). 
(2) CERTAIN
TAX-EXEMPT
DIVIDENDS
NOT 
TAKEN
INTO
ACCOUNT
IN
ALLOCATING
INTEREST 
EXPENSE.—Section 864(e)(3) is amended by strik-
ing ‘‘or 245(a)’’ and inserting ‘‘, 245(a), or 245A’’. 
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