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HR 1 PCS
‘‘(ii) the aggregate amount of trans-
actions with respect to the participating 
payee during such calendar year exceeds 
the dollar amount specified in section 
6050W(e)(1) at the time of such payment. 
‘‘(B) EXCEPTION
IF
THIRD
PARTY
NET-
WORK
TRANSACTIONS
MADE
IN
PRIOR
YEAR 
WERE REPORTABLE.—Subparagraph (A) shall 
not apply with respect to payments to any par-
ticipating payee during any calendar year if one 
or more payments in settlement of third party 
network transactions made by the payor to the 
participating payee during the preceding cal-
endar year were reportable payments.’’. 
(2) EFFECTIVE DATE.—The amendment made 
by this subsection shall apply to calendar years be-
ginning after December 31, 2024. 
SEC. 111105. INCREASE IN THRESHOLD FOR REQUIRING IN-
FORMATION REPORTING WITH RESPECT TO 
CERTAIN PAYEES. 
(a) IN GENERAL.—Section 6041(a) is amended by 
striking ‘‘$600’’ and inserting ‘‘$2,000’’. 
(b) INFLATION
ADJUSTMENT.—Section 6041 is 
amended by adding at the end the following new sub-
section: 
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‘‘(h) INFLATION ADJUSTMENT.—In the case of any 
calendar year after 2026, the dollar amount in subsection 
(a) shall be increased by an amount equal to— 
‘‘(1) such dollar amount, multiplied by 
‘‘(2) the cost-of-living adjustment determined 
under section 1(f)(3) for such calendar year, deter-
mined by substituting ‘calendar year 2025’ for ‘cal-
endar year 2016’ in subparagraph (A)(ii) thereof. 
If any increase under the preceding sentence is not a mul-
tiple of $100, such increase shall be rounded to the nearest 
multiple of $100.’’. 
(c) APPLICATION TO REPORTING ON REMUNERATION 
FOR SERVICES.—Section 6041A(a)(2) is amended by 
striking ‘‘is $600 or more’’ and inserting ‘‘equals or ex-
ceeds the dollar amount in effect for such calendar year 
under section 6041(a)’’. 
(d) APPLICATION TO BACKUP WITHHOLDING.—Sec-
tion 3406(b)(6) is amended— 
(1) by striking ‘‘$600’’ in subparagraph (A) 
and inserting ‘‘the dollar amount in effect for such 
calendar year under section 6041(a)’’, and 
(2) by striking ‘‘ONLY WHERE AGGREGATE FOR 
CALENDAR YEAR IS $600 OR MORE’’ in the heading 
and inserting ‘‘ONLY IF IN EXCESS OF THRESHOLD’’. 
(e) CONFORMING AMENDMENTS.— 
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HR 1 PCS
(1) The heading of section 6041(a) is amended 
by striking ‘‘OF $600 OR MORE’’ and inserting ‘‘EX-
CEEDING THRESHOLD’’. 
(2) Section 6041(a) is amended by striking 
‘‘taxable year’’ and inserting ‘‘calendar year’’. 
(f) EFFECTIVE DATE.—The amendments made by 
this section shall apply with respect to payments made 
after December 31, 2025. 
SEC. 111106. EXCLUSION OF INTEREST ON LOANS SECURED 
BY RURAL OR AGRICULTURAL REAL PROP-
ERTY. 
(a) IN GENERAL.—Part III of subchapter B of chap-
ter 1, as amended by the preceding provisions of this Act, 
is amended by inserting after section 139J the following 
new section: 
‘‘SEC. 139K. INTEREST ON LOANS SECURED BY RURAL OR 
AGRICULTURAL REAL PROPERTY. 
‘‘(a) IN GENERAL.—Gross income shall not include 
25 percent of the interest received by a qualified lender 
on any qualified real estate loan. 
‘‘(b) QUALIFIED LENDER.—For purposes of this sec-
tion, the term ‘qualified lender’ means— 
‘‘(1) any bank or savings association the depos-
its of which are insured under the Federal Deposit 
Insurance Act (12 U.S.C. 1811 et seq.), 
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HR 1 PCS
‘‘(2) any State- or federally-regulated insurance 
company, 
‘‘(3) any entity wholly owned, directly or indi-
rectly, by a company that is treated as a bank hold-
ing company for purposes of section 8 of the Inter-
national Banking Act of 1978 (12 U.S.C. 3106) if— 
‘‘(A) such entity is organized, incor-
porated, or established under the laws of the 
United States or any State of the United 
States, and 
‘‘(B) the principal place of business of 
such entity is in the United States (including 
any territory of the United States), 
‘‘(4) any entity wholly owned, directly or indi-
rectly, by a company that is considered an insurance 
holding company under the laws of any State if such 
entity satisfies the requirements described in sub-
paragraphs (A) and (B) of paragraph (3), and 
‘‘(5) with respect to interest received on a quali-
fied real estate loan secured by real estate described 
in subsection (c)(3)(A), any federally chartered in-
strumentality of the United States established under 
section 8.1(a) of the Farm Credit Act of 1971 (12 
U.S.C. 2279aa-1(a)). 
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HR 1 PCS
‘‘(c) QUALIFIED REAL ESTATE LOAN.—For purposes 
of this section— 
‘‘(1) IN GENERAL.—The term ‘qualified real es-
tate loan’ means any loan— 
‘‘(A) secured by— 
‘‘(i) rural or agricultural real estate, 
or 
‘‘(ii) a leasehold mortgage (with a sta-
tus as a lien) on rural or agricultural real 
estate, 
‘‘(B) made to a person other than a speci-
fied foreign entity (as defined in section 
7701(a)(51)), and 
‘‘(C) made after the date of the enactment 
of this section and before January 1, 2029. 
For purposes of the preceding sentence, the deter-
mination of whether property securing such loan is 
rural or agricultural real estate shall be made as of 
the time the interest income on such loan is accrued. 
‘‘(2) REFINANCINGS.—For purposes of sub-
paragraphs (A) and (C) of paragraph (1), a loan 
shall not be treated as made after the date of the 
enactment of this section to the extent that the pro-
ceeds of such loan are used to refinance a loan 
which was made on or before the date of the enact-
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HR 1 PCS
ment of this section (or, in the case of any series of 
refinancings, the original loan was made on or be-
fore such date). 
‘‘(3) RURAL
OR
AGRICULTURAL
REAL
ES-
TATE.—The term ‘rural or agricultural real estate’ 
means— 
‘‘(A) any real property which is substan-
tially used for the production of one or more 
agricultural products, 
‘‘(B) any real property which is substan-
tially used in the trade or business of fishing or 
seafood processing, and 
‘‘(C) any aquaculture facility. 
Such term shall not include any property which is 
not located in a State or a possession of the United 
States. 
‘‘(4) 
AQUACULTURE
FACILITY.—The 
term 
‘aquaculture facility’ means any land, structure, or 
other appurtenance that is used for aquaculture (in-
cluding any hatchery, rearing pond, raceway, pen, or 
incubator). 
‘‘(d) COORDINATION WITH SECTION 265.—Qualified 
real estate loans shall be treated as obligations described 
in section 265(a)(2) the interest on which is wholly exempt 
from the taxes imposed by this subtitle.’’. 
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(b) CLERICAL AMENDMENT.—The table of sections 
for part III of subchapter B of chapter 1, as amended 
by the preceding provisions of this Act, is amended by in-
serting after the item relating to section 139J the fol-
lowing new item: 
‘‘Sec. 139K. Interest on loans secured by rural or agricultural real property.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years ending after the 
date of the enactment of this Act. 
SEC. 111107. TREATMENT OF CERTAIN QUALIFIED SOUND 
RECORDING PRODUCTIONS. 
(a) ELECTION TO TREAT COSTS AS EXPENSES.— 
Section 181(a)(1) is amended by striking ‘‘qualified film 
or television production, and any qualified live theatrical 
production,’’ and inserting ‘‘qualified film or television 
production, any qualified live theatrical production, and 
any qualified sound recording production’’. 
(b) DOLLAR
LIMITATION.—Section 181(a)(2) is 
amended by adding at the end the following new subpara-
graph: 
‘‘(C) QUALIFIED SOUND RECORDING PRO-
DUCTION.—Paragraph (1) shall not apply to so 
much of the aggregate cost of any qualified 
sound recording production, or to so much of 
the aggregate, cumulative cost of all such quali-
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fied sound recording productions in the taxable 
year, as exceeds $150,000.’’. 
(c) NO OTHER DEDUCTION OR AMORTIZATION DE-
DUCTION ALLOWABLE.—Section 181(b) is amended by 
striking ‘‘qualified film or television production or any 
qualified live theatrical production’’ and inserting ‘‘quali-
fied film or television production, any qualified live theat-
rical production, or any qualified sound recording produc-
tion’’. 
(d) ELECTION.—Section 181(c)(1) is amended by 
striking ‘‘qualified film or television production or any 
qualified live theatrical production’’ and inserting ‘‘quali-
fied film or television production, any qualified live theat-
rical production, or any qualified sound recording produc-
tion’’. 
(e) QUALIFIED SOUND RECORDING PRODUCTION 
DEFINED.—Section 181 is amended by redesignating sub-
sections (f) and (g) as subsections (g) and (h), respec-
tively, and by inserting after subsection (e) the following 
new subsection: 
‘‘(f) QUALIFIED SOUND RECORDING PRODUCTION.— 
For purposes of this section, the term ‘qualified sound re-
cording production’ means a sound recording (as defined 
in section 101 of title 17, United States Code) produced 
and recorded in the United States.’’. 
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HR 1 PCS
(f) APPLICATION OF TERMINATION.—Section 181(g) 
is amended by striking ‘‘qualified film and television pro-
ductions or qualified live theatrical productions’’ and in-
serting ‘‘qualified film and television productions, qualified 
live theatrical productions, and qualified sound recording 
productions’’. 
(g) BONUS DEPRECIATION.— 
(1) QUALIFIED
SOUND
RECORDING
PRODUC-
TION
AS
QUALIFIED
PROPERTY.—Section 
168(k)(2)(A)(i) is amended— 
(A) by striking ‘‘or’’ at the end of sub-
clause (IV), by inserting ‘‘or’’ at the end of sub-
clause (V), and by inserting after subclause (V) 
the following: 
‘‘(VI) which is a qualified sound 
recording production (as defined in 
subsection (f) of section 181) which is 
placed in service before January 1, 
2029, for which a deduction would 
have been allowable under section 181 
without regard to subsections (a)(2) 
and (h) of such section or this sub-
section, and’’, and 
(B) in subclauses (IV) and (V) (as so 
amended) by striking ‘‘without regard to sub-
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HR 1 PCS
sections (a)(2) and (g)’’ both places it appears 
and inserting ‘‘without regard to subsections 
(a)(2) and (h)’’. 
(2) PRODUCTION PLACED IN SERVICE.—Section 
168(k)(2)(H) is amended by striking ‘‘and’’ at the 
end of clause (i), by striking the period at the end 
of clause (ii) and inserting ‘‘, and’’, and by adding 
after clause (ii) the following: 
‘‘(iii) a qualified sound recording pro-
duction shall be considered to be placed in 
service at the time of initial release or 
broadcast.’’. 
(h) CONFORMING AMENDMENTS.— 
(1) The heading for section 181 is amended to 
read as follows: ‘‘TREATMENT
OF
CERTAIN 
QUALIFIED PRODUCTIONS.’’. 
(2) The table of sections for part VI of sub-
chapter B of chapter 1 is amended by striking the 
item relating to section 181 and inserting the fol-
lowing new item: 
‘‘Sec. 181. Treatment of certain qualified productions.’’. 
(i) EFFECTIVE DATE.—The amendments made by 
this section shall apply to productions commencing in tax-
able years ending after the date of the enactment of this 
Act. 
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SEC. 111108. MODIFICATIONS TO LOW-INCOME HOUSING 
CREDIT. 
(a) STATE HOUSING CREDIT CEILING INCREASE FOR 
LOW-INCOME HOUSING CREDIT.— 
(1) 
IN
GENERAL.—Section 
42(h)(3)(I) 
is 
amended— 
(A) by striking ‘‘and 2021,’’ and inserting 
‘‘2021, 2026, 2027, 2028, and 2029,’’, and 
(B) by striking ‘‘2018, 2019, 2020, AND 
2021’’ in the heading and inserting ‘‘CERTAIN 
CALENDAR YEARS’’. 
(2) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to calendar years after 
2025. 
(b) TAX-EXEMPT
BOND
FINANCING
REQUIRE-
MENT.— 
(1) IN GENERAL.—Section 42(h)(4) is amended 
by striking subparagraph (B) and inserting the fol-
lowing: 
‘‘(B) SPECIAL
RULE
WHERE
MINIMUM 
PERCENT
OF
BUILDINGS
IS
FINANCED
WITH 
TAX-EXEMPT
BONDS
SUBJECT
TO
VOLUME 
CAP.—For purposes of subparagraph (A), para-
graph (1) shall not apply to any portion of the 
credit allowable under subsection (a) with re-
spect to a building if— 
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‘‘(i) 50 percent or more of the aggre-
gate basis of such building and the land on 
which the building is located is financed by 
1 or more obligations described in subpara-
graph (A), or 
‘‘(ii)(I) 25 percent or more of the ag-
gregate basis of such building and the land 
on which the building is located is financed 
by 1 or more qualified obligations, and 
‘‘(II) 1 or more of such qualified obli-
gations— 
‘‘(aa) are part of an issue the 
issue date of which is after December 
31, 2025, and 
‘‘(bb) provide the financing for 
not less than 5 percent of the aggre-
gate basis of such building and the 
land on which the building is located. 
‘‘(C) QUALIFIED
OBLIGATION.—For pur-
poses of subparagraph (B)(ii), the term ‘quali-
fied obligation’ means an obligation which is de-
scribed in subparagraph (A) and which is part 
of an issue the issue date of which is before 
January 1, 2030.’’. 
(2) EFFECTIVE DATE.— 
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(A) IN GENERAL.—The amendment made 
by this subsection shall apply to buildings 
placed in service in taxable years beginning 
after December 31, 2025. 
(B) 
REHABILITATION
EXPENDITURES 
TREATED
AS
SEPARATE
NEW
BUILDING.—In 
the case of any building with respect to which 
any expenditures are treated as a separate new 
building under section 42(e) of the Internal 
Revenue Code of 1986, for purposes of sub-
paragraph (A), both the existing building and 
the separate new building shall be treated as 
having been placed in service on the date such 
expenditures are treated as placed in service 
under section 42(e)(4) of such Code. 
(c) TEMPORARY INCLUSION OF INDIAN AREAS AND 
RURAL AREAS AS DIFFICULT DEVELOPMENT AREAS FOR 
PURPOSES OF CERTAIN BUILDINGS.— 
(1) IN GENERAL.—Section 42(d)(5)(B)(iii)(I) is 
amended by inserting before the period the fol-
lowing: ‘‘, and, in the case of buildings placed in 
service after December 31, 2025 and before January 
1, 2030, any Indian area or rural area’’. 
(2) INDIAN
AREA; 
RURAL
AREA.—Section 
42(d)(5)(B)(iii) is amended by redesignating sub-
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clause (II) as subclause (IV) and by inserting after 
subclause (I) the following new subclauses: 
‘‘(II) INDIAN
AREA.—For pur-
poses of subclause (I), the term ‘In-
dian area’ means any Indian area (as 
defined in section 4(11) of the Native 
American Housing Assistance and 
Self Determination Act of 1996 (25 
U.S.C. 4103(11))) and any housing 
area (as defined in section 801(5) of 
such Act (25 U.S.C. 4221(5))). 
‘‘(III) RURAL
AREA.—For pur-
poses of subclause (I), the term ‘rural 
area’ means any non-metropolitan 
area, or any rural area as defined by 
section 520 of the Housing Act of 
1949, which is identified by the quali-
fied allocation plan under subsection 
(m)(1)(B).’’. 
(3) 
ELIGIBLE
BUILDINGS.—Section 
42(d)(5)(B)(iii), as amended by paragraph (2), is 
further amended by adding at the end the following 
new subclause: 
‘‘(V) SPECIAL RULE FOR BUILD-
INGS IN INDIAN AREAS.—In the case 
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HR 1 PCS
of an area which is a difficult develop-
ment area solely because it is an In-
dian area under this section, a build-
ing shall not be treated as located in 
such area unless such building is as-
sisted or financed under the Native 
American Housing Assistance and 
Self Determination Act of 1996 (25 
U.S.C. 4101 et seq.) or the project 
sponsor is an Indian tribe (as defined 
in section 45A(c)(6)), a tribally des-
ignated housing entity (as defined in 
section 4(22) of such Act (25 U.S.C. 
4103(22))), or wholly owned or con-
trolled by such an Indian tribe or trib-
ally designated housing entity.’’. 
(4) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to buildings placed in 
service after December 31, 2025. 
SEC. 111109. INCREASED GROSS RECEIPTS THRESHOLD 
FOR SMALL MANUFACTURING BUSINESSES. 
(a) IN GENERAL.—Section 448(c) is amended by re-
designating paragraph (4) as paragraph (5) and by insert-
ing after paragraph (3) the following new paragraph: 
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‘‘(4) GROSS
RECEIPTS
TEST
FOR
MANUFAC-
TURING
TAXPAYERS.—In the case of a manufac-
turing taxpayer, paragraph (1) shall be applied by 
substituting ‘$80,000,000’ for ‘$25,000,000’.’’. 
(b) INFLATION ADJUSTMENT.—Section 448(c)(5) (as 
so redesignated) is amended by striking ‘‘the dollar 
amount in paragraph (1) shall be increased’’ and inserting 
‘‘the dollar amounts in paragraphs (1) and (4) shall each 
be increased’’. 
(c) MANUFACTURING TAXPAYER DEFINED.—Section 
448(d) is amended by redesignating paragraph (8) as 
paragraph (9) and by inserting after paragraph (7) the 
following new paragraph: 
‘‘(8) MANUFACTURING TAXPAYER.— 
‘‘(A) IN GENERAL.—The term ‘manufac-
turing taxpayer’ means a corporation or part-
nership substantially all the gross receipts of 
which during the 3-taxable-year period de-
scribed in subsection (c)(1) are derived from 
the lease, rental, license, sale, exchange, or 
other disposition of qualified products. 
‘‘(B) QUALIFIED PRODUCT.—For purposes 
of subparagraph (A), the term ‘qualified prod-
uct’ means a product that is both— 
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‘‘(i) tangible personal property which 
is not a food or beverage prepared in the 
same building as a retail establishment in 
which substantially similar property is sold 
to the public, and 
‘‘(ii) produced or manufactured by the 
taxpayer in a manner which results in a 
substantial transformation (within the 
meaning of section 168(n)(2)(D)) of the 
property comprising the product. 
‘‘(C) AGGREGATION RULE.—Solely for pur-
poses of determining whether a taxpayer is a 
manufacturing taxpayer under subparagraph 
(A)— 
‘‘(i) gross receipts shall be determined 
under the rules of paragraphs (2) and (3) 
of subsection (c), and 
‘‘(ii) for purposes of subsection (c)(2), 
in applying section 52(b), the term ‘trade 
or business’ shall include any activity 
treated as a trade or business under para-
graph (5) or (6) of section 469(c) (deter-
mined without regard to the phrase ‘To 
the extent provided in regulations’ in such 
paragraph (6)).’’. 
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(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2025. 
SEC. 111110. GLOBAL INTANGIBLE LOW-TAXED INCOME DE-
TERMINED WITHOUT REGARD TO CERTAIN 
INCOME 
DERIVED 
FROM 
SERVICES 
PER-
FORMED IN THE VIRGIN ISLANDS. 
(a) IN
GENERAL.—Section 951A(c)(2)(A)(i) is 
amended by striking ‘‘and’’ at the end of subclause (IV), 
by striking ‘‘, over’’ at the end of subclause (V) and insert-
ing ‘‘, and’’, and by adding at the end the following new 
subclause: 
‘‘(VI) in the case of any specified 
United States shareholder, any quali-
fied Virgin Islands services income, 
over’’. 
(b) DEFINITIONS
AND SPECIAL RULES.—Section 
951A(c)(2) is amended by adding at the end the following 
new subparagraph: 
‘‘(C) PROVISIONS RELATED TO QUALIFIED 
VIRGIN ISLANDS SERVICES INCOME.—For pur-
poses of subparagraph (A)(i)(VI)— 
‘‘(i) 
QUALIFIED
VIRGIN
ISLANDS 
SERVICES
INCOME.—The term ‘qualified 
Virgin Islands services income’ means any 
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gross income which satisfies all of the fol-
lowing requirements: 
‘‘(I) Such gross income is com-
pensation for labor or personal serv-
ices performed in the Virgin Islands 
by a corporation formed under the 
laws of the Virgin Islands. 
‘‘(II) Such gross income is attrib-
utable to services performed from 
within the Virgin Islands by individ-
uals for the benefit of such corpora-
tion. 
‘‘(III) Such gross income is effec-
tively connected with the conduct of a 
trade or business within the Virgin Is-
lands. 
‘‘(ii) 
SPECIFIED
UNITED
STATES 
SHAREHOLDER.—The 
term 
‘specified 
United States shareholder’ means any 
United States shareholder which is— 
‘‘(I) an individual, trust, or es-
tate, or 
‘‘(II) a closely held C corporation 
(as defined in section 469(j)(1)) if 
such corporation acquired its direct or 
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indirect equity interest in the foreign 
corporation which derived the quali-
fied Virgin Islands services income be-
fore December 31, 2023. 
‘‘(iii) REGULATIONS.—The Secretary 
shall prescribe such regulations or other 
guidance as may be necessary or appro-
priate to carry out this subparagraph and 
subparagraph (A)(i)(VI), including regula-
tions or other guidance to prevent the 
abuse of such subparagraphs.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years of foreign corpora-
tions beginning after the date of the enactment of this 
Act, and to taxable years of United States shareholders 
with or within which such taxable years of foreign corpora-
tions end. 
SEC. 111111. EXTENSION AND MODIFICATION OF CLEAN 
FUEL PRODUCTION CREDIT. 
(a) PROHIBITION ON FOREIGN FEEDSTOCKS.— 
(1) IN
GENERAL.—Section 45Z(f)(1)(A) is 
amended— 
(A) in clause (i)(II)(bb), by striking ‘‘and’’ 
at the end, 
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(B) in clause (ii), by striking the period at 
the end and inserting ‘‘, and’’, and 
(C) by adding at the end the following new 
clause: 
‘‘(iii) such fuel is exclusively derived 
from a feedstock which was produced or 
grown in the United States, Mexico, or 
Canada.’’. 
(2) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to transportation fuel 
sold after December 31, 2025. 
(b) DETERMINATION OF EMISSIONS RATE.— 
(1) IN
GENERAL.—Section 45Z(b)(1)(B) is 
amended by adding at the end the following new 
clauses: 
‘‘(iv) EXCLUSION OF INDIRECT LAND 
USE
CHANGES.—Notwithstanding clauses 
(ii) and (iii), the lifecycle greenhouse gas 
emissions shall be adjusted as necessary to 
exclude any emissions attributed to indi-
rect land use change. Any such adjustment 
shall be based on regulations or methodolo-
gies determined by the Secretary in con-
sultation with the Administrator of the En-
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HR 1 PCS
vironmental Protection Agency and the 
Secretary of Agriculture. 
‘‘(v) ANIMAL
MANURES.—For pur-
poses of the table described in clause (i), 
with respect to any transportation fuels 
which are derived from animal manure, a 
distinct emissions rate shall be provided 
with respect to each of the specific feed-
stocks used to such produce such fuel, 
which shall include dairy manure, swine 
manure, poultry manure, and such other 
sources as are determined appropriate by 
the Secretary.’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
45Z(b)(1)(B)(i) is amended by striking ‘‘clauses (ii) 
and (iii)’’ and inserting ‘‘clauses (ii), (iii), (iv), and 
(v)’’. 
(3) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to emissions rates pub-
lished for taxable years beginning after December 
31, 2025. 
(c) EXTENSION
OF
CLEAN
FUEL
PRODUCTION 
CREDIT.—Section 45Z(g) is amended by striking ‘‘Decem-
ber 31, 2027’’ and inserting ‘‘December 31, 2031’’. 
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(d) RESTRICTIONS RELATING TO PROHIBITED FOR-
EIGN ENTITIES.— 
(1) IN GENERAL.—Section 45Z(f) is amended 
by adding at the end the following new paragraph: 
‘‘(8) RESTRICTIONS RELATING TO PROHIBITED 
FOREIGN ENTITIES.— 
‘‘(A) IN GENERAL.—No credit determined 
under subsection (a) shall be allowed under sec-
tion 38 for any taxable year beginning after the 
date of enactment of this paragraph if the tax-
payer is a specified foreign entity (as defined in 
section 7701(a)(51)(B)). 
‘‘(B) OTHER PROHIBITED FOREIGN ENTI-
TIES.—No credit determined under subsection 
(a) shall be allowed under section 38 for any 
taxable year beginning after the date which is 
2 years after the date of enactment of this 
paragraph if the taxpayer is a foreign-influ-
enced 
entity 
(as 
defined 
in 
section 
7701(a)(51)(D)).’’. 
(2) EFFECTIVE DATE.—The amendment made 
by this subsection shall apply to taxable years begin-
ning after the date of enactment of this Act. 
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SEC. 111112. RESTORATION OF TAXABLE REIT SUBSIDIARY 
ASSET TEST. 
(a) 
IN
GENERAL.—Section 
856(c)(4)(B)(ii) 
is 
amended by striking ‘‘20 percent’’ and inserting ‘‘25 per-
cent’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2025. 
PART 3—INVESTING IN THE HEALTH OF RURAL 
AMERICA AND MAIN STREET 
SEC. 111201. EXPANDING THE DEFINITION OF RURAL 
EMERGENCY HOSPITAL UNDER THE MEDI-
CARE PROGRAM. 
(a) IN GENERAL.—Section 1861(kkk) of the Social 
Security Act (42 U.S.C. 1395x(kkk)) is amended— 
(1) in paragraph (2)— 
(A) in subparagraph (A), by striking ‘‘the 
detailed transition plan’’ and all that follows 
through ‘‘such paragraph’’ and inserting ‘‘the 
detailed transition plan described in clause 
(i)(I) of such paragraph or the assessment of 
health care needs described in clause (i)(II) of 
such paragraph, as applicable,’’; 
(B) in subparagraph (D)(vi), by striking 
the period at the end and inserting ‘‘; and’’; 
and 
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(C) by adding at the end the following new 
subparagraph: 
‘‘(E) in the case of a facility described in para-
graph (3)(B)— 
‘‘(i) submits an application under section 
1866(j) to enroll under this title as a rural 
emergency hospital— 
‘‘(I) in the case that such facility is 
located in a State that, as of January 1, 
2027, provides for the licensing of rural 
emergency hospitals under State or appli-
cable local law (as described in paragraph 
(5)(A)), not later than December 31, 2027; 
and 
‘‘(II) in the case that such facility is 
located in a State that, as of January 1, 
2027, does not provide for the licensing of 
such rural emergency hospitals under State 
or applicable local law (as so described), 
not later than the date that is 1 year after 
the date on which such State begins to 
provide for such licensing; and 
‘‘(ii) in the case that such facility is lo-
cated less than 35 miles away from the nearest 
hospital, critical access hospital, or rural emer-
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gency hospital as of the date on which such fa-
cility submits an application under section 
1866(j) to enroll under this title as a rural 
emergency hospital, beginning not later than 1 
year after the end of the first full cost reporting 
period for which the facility is so enrolled, dem-
onstrates annually, in a form and manner de-
termined appropriate by the Secretary, that 
more than 50 percent of the services furnished 
for the most recent cost reporting period (as de-
termined by the Secretary) were services de-
scribed in paragraph (1)(A)(i), as determined 
based on discharges of individuals entitled to 
benefits under part A or enrolled under part B 
during such cost reporting period.’’; 
(2) in paragraph (3)— 
(A) by redesignating subparagraphs (A) 
and (B) as clauses (i) and (ii), respectively, and 
adjusting the margins accordingly; 
(B) by striking ‘‘A facility’’ and inserting: 
‘‘(A) IN GENERAL.—A facility’’; and 
(C) by adding at the end the following new 
subparagraph: 
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‘‘(B) 
ADDITIONAL
FACILITIES.—Beginning 
January 1, 2027, a facility described in this para-
graph shall also include a facility that— 
‘‘(i) at any time during the period begin-
ning January 1, 2014, and ending December 
26, 2020— 
‘‘(I) was a critical access hospital; or 
‘‘(II) was a subsection (d) hospital (as 
defined in section 1886(d)(1)(B)) with not 
more than 50 beds located in a county (or 
equivalent unit of local government) in a 
rural 
area 
(as 
defined 
in 
section 
1886(d)(2)(D)); and 
‘‘(ii) as of December 27, 2020, was not en-
rolled in the program under this title under sec-
tion 1866(j).’’; and 
(3) in paragraph (4)— 
(A) in subparagraph (A)(i)— 
(i) in subclause (IV), by striking the 
period at the end and inserting ‘‘; and’’; 
(ii) by redesignating subclauses (I) 
through (IV) as items (aa) through (dd), 
respectively, and adjusting the margins ac-
cordingly; 
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(iii) by striking ‘‘including a detailed’’ 
and inserting ‘‘including— 
‘‘(I) except in the case of a facility de-
scribed in paragraph (3)(B), a detailed’’; 
and 
(iv) by adding at the end the following 
new subclause: 
‘‘(II) in the case of a facility described 
in paragraph (3)(B), an assessment of the 
health care needs of the county (or equiva-
lent unit of local government) in which 
such facility is located, which shall in-
clude— 
‘‘(aa) a description of the services 
furnished by the facility during the 
period that such facility was enrolled 
in the program under this title under 
section 1866(j); 
‘‘(bb) a description of the reasons 
that the facility, as of December 27, 
2020, was no longer so enrolled; 
‘‘(cc) the population of such 
county (or equivalent unit); 
‘‘(dd) the percentage of such pop-
ulation who are individuals entitled to 
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benefits under part A or enrolled 
under part B; and 
‘‘(ee) a description of any lack of 
access to health care services experi-
enced by such individuals, and an ex-
planation of how reopening the facility 
as a rural emergency hospital would 
mitigate such lack of access.’’. 
(b) AMENDMENTS
TO PAYMENT RULES.—Section 
1834(x) of the Social Security Act (42 U.S.C. 1395m(x)) 
is amended— 
(1) in paragraph (1), by inserting ‘‘, except 
that, in the case of a facility described in section 
1861(kkk)(3)(B) that, as of the date on which such 
facility submits an application under section 1866(j) 
to enroll under this title as a rural emergency hos-
pital, is located less than 35 miles away from the 
nearest hospital, critical access hospital, or rural 
emergency hospital, such increase shall not apply’’ 
before the period at the end; and 
(2) in paragraph (2)(A), by inserting ‘‘(other 
than a facility described in section 1861(kkk)(3)(B) 
that, as of the date on which such facility submits 
an application under section 1866(j) to enroll under 
this title as a rural emergency hospital, is located 
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less than 10 miles away from the nearest hospital, 
critical access hospital, or rural emergency hos-
pital)’’ after ‘‘rural emergency hospital’’. 
Subtitle C—Make America Win 
Again 
PART 1—WORKING FAMILIES OVER ELITES 
SEC. 112001. TERMINATION OF PREVIOUSLY-OWNED CLEAN 
VEHICLE CREDIT. 
(a) IN GENERAL.—Section 25E(g) is amended by 
striking ‘‘December 31, 2032’’ and inserting ‘‘December 
31, 2025’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to vehicles acquired after Decem-
ber 31, 2025. 
SEC. 112002. TERMINATION OF CLEAN VEHICLE CREDIT. 
(a) IN GENERAL.—Section 30D is amended— 
(1) by redesignating subsection (h) as sub-
section (i), and 
(2) in subsection (i), as so redesignated, by 
striking ‘‘December 31, 2032’’ and inserting ‘‘De-
cember 31, 2026’’. 
(b) SPECIAL RULE FOR TAXABLE YEAR 2026.—Sec-
tion 30D is amended by inserting after subsection (g) the 
following new subsection: 
‘‘(h) SPECIAL RULE FOR TAXABLE YEAR 2026.— 
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‘‘(1) IN GENERAL.—With respect to any vehicle 
placed in service after December 31, 2025, such ve-
hicle shall not be treated as a new clean vehicle for 
purposes of this section if, during the period begin-
ning on December 31, 2009, and ending on Decem-
ber 31, 2025, the number of covered vehicles manu-
factured by the manufacturer of such vehicle which 
are sold for use in the United States is greater than 
200,000. 
‘‘(2) COVERED
VEHICLES.—For purposes of 
this subsection, the term ‘covered vehicles’ means— 
‘‘(A) with respect to vehicles placed in 
service before January 1, 2023, new qualified 
plug-in electric drive motor vehicles (as defined 
in subsection (d)(1), as in effect on December 
31, 2022), and 
‘‘(B) new clean vehicles. 
‘‘(3) CONTROLLED GROUPS.—Rules similar to 
the rules of section 30B(f)(4) shall apply for pur-
poses of this subsection.’’. 
(c) CONFORMING AMENDMENTS.—Section 30D(e) is 
amended— 
(1) in paragraph (1)(B)— 
(A) in clause (iii), by inserting ‘‘and’’ after 
the comma at the end, 
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(B) in clause (iv), by striking ‘‘, and’’ and 
inserting a period, and 
(C) by striking clause (v), and 
(2) in paragraph (2)(B)— 
(A) in clause (ii), by inserting ‘‘and’’ after 
the comma at the end, 
(B) in clause (iii), by striking the comma 
at the end and inserting a period, and 
(C) by striking clauses (iv) through (vi). 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to vehicles placed in service after 
December 31, 2025. 
SEC. 112003. TERMINATION OF QUALIFIED COMMERCIAL 
CLEAN VEHICLES CREDIT. 
(a) IN GENERAL.—Section 45W(g) is amended to 
read as follows: 
‘‘(g) TERMINATION.— 
‘‘(1) IN GENERAL.—No credit shall be deter-
mined under this section with respect to any vehicle 
acquired after December 31, 2025. 
‘‘(2) EXCEPTION FOR BINDING CONTRACTS.— 
Paragraph (1) shall not apply with respect to vehi-
cles placed in service before January 1, 2033, and 
acquired pursuant to a written binding contract en-
tered into before May 12, 2025.’’. 
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(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to vehicles acquired after Decem-
ber 31, 2025. 
SEC. 112004. TERMINATION OF ALTERNATIVE FUEL VEHI-
CLE REFUELING PROPERTY CREDIT. 
(a) IN GENERAL.—Section 30C(i) is amended by 
striking ‘‘December 31, 2032’’ and inserting ‘‘December 
31, 2025’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to property placed in service after 
December 31, 2025. 
SEC. 112005. TERMINATION OF ENERGY EFFICIENT HOME 
IMPROVEMENT CREDIT. 
(a) IN GENERAL.—Section 25C(i) is amended to read 
as follows: 
‘‘(i) TERMINATION.—This section shall not apply 
with respect to any property placed in service after Decem-
ber 31, 2025.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 25C(d)(2)(C) is amended to read as 
follows: 
‘‘(C) Any oil furnace or hot water boiler 
which is placed in service before January 1, 
2026, and— 
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‘‘(i) meets or exceeds 2021 Energy 
Star efficiency criteria, and 
‘‘(ii) is rated by the manufacturer for 
use with fuel blends at least 20 percent of 
the volume of which consists of an eligible 
fuel.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to property placed in service after 
December 31, 2025. 
SEC. 112006. TERMINATION OF RESIDENTIAL CLEAN EN-
ERGY CREDIT. 
(a) IN GENERAL.—Section 25D(h) is amended by 
striking ‘‘December 31, 2034’’ and inserting ‘‘December 
31, 2025’’. 
(b) CONFORMING AMENDMENTS.—Section 25D(g) is 
amended— 
(1) in paragraph (2), by inserting ‘‘and’’ after 
the comma at the end, 
(2) in paragraph (3), by striking ‘‘January 1, 
2033, 30 percent,’’ and inserting ‘‘January 1, 2026, 
30 percent.’’, and 
(3) by striking paragraphs (4) and (5). 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to property placed in service after 
December 31, 2025. 
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SEC. 112007. TERMINATION OF NEW ENERGY EFFICIENT 
HOME CREDIT. 
(a) IN GENERAL.—Section 45L(h) is amended to 
read as follows: 
‘‘(h) TERMINATION.—This section shall not apply to 
any qualified new energy efficient home acquired after De-
cember 31, 2025 (December 31, 2026, in the case of any 
home for which construction began before May 12, 
2025).’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to homes acquired after December 
31, 2025. 
SEC. 112008. RESTRICTIONS ON CLEAN ELECTRICITY PRO-
DUCTION CREDIT. 
(a) TERMINATION
OF
CREDIT.—Section 45Y is 
amended by striking subsection (d) and by adding at the 
end the following new subsection: 
‘‘(h) TERMINATION OF CREDIT.— 
‘‘(1) IN GENERAL.—Except as provided in para-
graphs (2) and (3), no credit shall be allowed under 
this section for any qualified facility— 
‘‘(A) the construction of which begins after 
the date which is 60 days after the date of the 
enactment of this subsection, or 
‘‘(B) which is placed in service after De-
cember 31, 2028. 
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‘‘(2) ADVANCED NUCLEAR FACILITIES.—In the 
case of any qualified facility that is an advanced nu-
clear facility (as defined in section 45J(d)(2))— 
‘‘(A) paragraph (1) shall not apply, and 
‘‘(B) no credit shall be allowed under this 
section for any such facility the construction of 
which begins after December 31, 2028. 
‘‘(3) EXPANSION OF NUCLEAR FACILITIES.—In 
the case of any nuclear facility the reactor design for 
which is approved by the Nuclear Regulatory Com-
mission— 
‘‘(A) paragraph (1) shall not apply, and 
‘‘(B) no credit shall be allowed under this 
section for any such facility the expansion of 
which begins after December 31, 2028.’’. 
(b) RESTRICTIONS RELATING TO PROHIBITED FOR-
EIGN ENTITIES.—Section 45Y is amended— 
(1) in subsection (b)(1), by adding at the end 
the following new subparagraph: 
‘‘(E) MATERIAL
ASSISTANCE
FROM
PRO-
HIBITED FOREIGN ENTITIES.—The term ‘quali-
fied facility’ shall not include any facility for 
which construction begins after December 31, 
2025 if the construction of such facility in-
cludes any material assistance from a prohib-
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HR 1 PCS
ited foreign entity (as defined in section 
7701(a)(52)).’’, and 
(2) in subsection (g), by adding at the end the 
following new paragraph: 
‘‘(13) RESTRICTIONS
RELATING
TO
PROHIB-
ITED FOREIGN ENTITIES.— 
‘‘(A) IN GENERAL.—No credit determined 
under subsection (a) shall be allowed under sec-
tion 38 for any taxable year beginning after the 
date of enactment of this paragraph if the tax-
payer is a specified foreign entity (as defined in 
section 7701(a)(51)(B)). 
‘‘(B) OTHER PROHIBITED FOREIGN ENTI-
TIES.—No credit determined under subsection 
(a) shall be allowed under section 38 for any 
taxable year beginning after the date which is 
2 years after the date of enactment of this 
paragraph if— 
‘‘(i) the taxpayer is a foreign-influ-
enced 
entity 
(as 
defined 
in 
section 
7701(a)(51)(D)), or 
‘‘(ii) during such taxable year, the 
taxpayer— 
‘‘(I) makes a payment of divi-
dends, interest, compensation for serv-
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ices, rentals or royalties, guarantees 
or any other fixed, determinable, an-
nual, or periodic amount to a prohib-
ited foreign entity (as defined in sec-
tion 7701(a)(51)) in an amount which 
is equal to or greater than 5 percent 
of the total of such payments made by 
such taxpayer during such taxable 
year which are related to the produc-
tion of electricity, or 
‘‘(II) makes payments described 
in subclause (I) to more than 1 pro-
hibited foreign entity (as so defined) 
in an amount which, in the aggregate, 
is equal to or greater than 15 percent 
of the total of such payments made by 
such taxpayer during such taxable 
year which are related to the produc-
tion of electricity.’’. 
(c) DEFINITIONS RELATING TO PROHIBITED FOR-
EIGN ENTITIES.—Section 7701(a) is amended by adding 
at the end the following new paragraphs: 
‘‘(51) PROHIBITED FOREIGN ENTITY.— 
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‘‘(A) IN GENERAL.—The term ‘prohibited 
foreign entity’ means a specified foreign entity 
or a foreign-influenced entity. 
‘‘(B) SPECIFIED
FOREIGN
ENTITY.—For 
purposes of subparagraph (A), the term ‘speci-
fied foreign entity’ means— 
‘‘(i) a foreign entity of concern de-
scribed in subparagraph (A), (B), (D), or 
(E) of section 9901(8) of the William M. 
(Mac) Thornberry National Defense Au-
thorization Act for Fiscal Year 2021 (Pub-
lic Law 116–283; 15 U.S.C. 4651), 
‘‘(ii) an entity identified as a Chinese 
military company operating in the United 
States in accordance with section 1260H 
of the William M. (Mac) Thornberry Na-
tional Defense Authorization Act for Fiscal 
Year 2021 (Public Law 116–283; 10 
U.S.C. 113 note), 
‘‘(iii) an entity included on a list re-
quired by clause (i), (ii), (iv), or (v) of sec-
tion 2(d)(2)(B) of Public Law 117–78 
(135 Stat. 1527), 
‘‘(iv) an entity specified under section 
154(b) of the National Defense Authoriza-
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HR 1 PCS
tion Act for Fiscal Year 2024 (Public Law 
118–31; 10 U.S.C. note prec. 4651), or 
‘‘(v) a foreign-controlled entity. 
‘‘(C) FOREIGN-CONTROLLED ENTITY.—For 
purposes of subparagraph (B), the term ‘for-
eign-controlled entity’ means— 
‘‘(i) the government of a covered na-
tion (as defined in section 4872(f)(2) of 
title 10, United States Code), 
‘‘(ii) a person who is a citizen, na-
tional, or resident of a covered nation, pro-
vided that such person is not an individual 
who is a citizen or lawful permanent resi-
dent of the United States, 
‘‘(iii) an entity or a qualified business 
unit (as defined in section 989(a)) incor-
porated or organized under the laws of, or 
having its principal place of business in, a 
covered nation, or 
‘‘(iv) an entity (including subsidiary 
entities) controlled (as determined under 
subparagraph (F)) by an entity described 
in clause (i), (ii), or (iii). 
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HR 1 PCS
‘‘(D) FOREIGN-INFLUENCED ENTITY.—For 
purposes of subparagraph (A), the term ‘for-
eign-influenced entity’ means an entity— 
‘‘(i) with respect to which, during the 
taxable year— 
‘‘(I) a specified foreign entity has 
the direct or indirect authority to ap-
point a covered officer of such entity, 
‘‘(II) a single specified foreign 
entity owns at least 10 percent of 
such entity, 
‘‘(III) one or more specified for-
eign entities own in the aggregate at 
least 25 percent of such entity, or 
‘‘(IV) at least 25 percent of the 
debt of such entity is held in the ag-
gregate by one or more specified for-
eign entities, or 
‘‘(ii) which, during the previous tax-
able year— 
‘‘(I) makes a payment of divi-
dends, interest, compensation for serv-
ices, rentals or royalties, guarantees 
or any other fixed, determinable, an-
nual, or periodic amount to a specified 
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HR 1 PCS
foreign entity in an amount which is 
equal to or greater than 10 percent of 
the total of such payments made by 
such entity during such taxable year, 
or 
‘‘(II) makes payments described 
in subclause (I) to more than 1 speci-
fied foreign entity in an amount 
which, in the aggregate, is equal to or 
greater than 25 percent of the total of 
such payments made by such entity 
during such taxable year. 
Clause (ii) shall not apply unless such enti-
ty makes such payments knowingly (or has 
reason to know). 
‘‘(E) COVERED OFFICER.—For purposes of 
this paragraph, the term ‘covered officer’ 
means, with respect to an entity— 
‘‘(i) a member of the board of direc-
tors, board of supervisors, or equivalent 
governing body, 
‘‘(ii) an executive-level officer, includ-
ing the president, chief executive officer, 
chief operating officer, chief financial offi-
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HR 1 PCS
cer, general counsel, or senior vice presi-
dent, or 
‘‘(iii) an individual having powers or 
responsibilities similar to those of officers 
or members described in clause (i) or (ii). 
‘‘(F) DETERMINATION OF CONTROL.—For 
purposes of subparagraph (C)(iv), the term 
‘control’ means— 
‘‘(i) in the case of a corporation, own-
ership (by vote or value) of more than 50 
percent of the stock in such corporation, 
‘‘(ii) in the case of a partnership, 
ownership of more than 50 percent of the 
profits interests or capital interests in such 
partnership, or 
‘‘(iii) in any other case, ownership of 
more than 50 percent of the beneficial in-
terests in the entity. 
‘‘(G) DETERMINATION OF OWNERSHIP.— 
For purposes of this section, section 318 (other 
than subsection (a)(3) thereof) shall apply for 
purposes of determining ownership of stock in 
a corporation. Similar principles shall apply for 
purposes of determining ownership of interests 
in any other entity. 
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HR 1 PCS
‘‘(H) REGULATIONS AND GUIDANCE.—The 
Secretary may prescribe such regulations and 
guidance as may be necessary or appropriate to 
carry out the provisions of this paragraph. 
‘‘(52) MATERIAL ASSISTANCE FROM A PROHIB-
ITED FOREIGN ENTITY.— 
‘‘(A) IN
GENERAL.—The term ‘material 
assistance from a prohibited foreign entity’ 
means, with respect to any property— 
‘‘(i) any component, subcomponent, or 
applicable critical mineral (as defined in 
section 45X(c)(6)) included in such prop-
erty that is extracted, processed, recycled, 
manufactured, or assembled by a prohib-
ited foreign entity, or 
‘‘(ii) any design of such property 
which is based on any copyright or patent 
held by a prohibited foreign entity or any 
know-how or trade secret provided by a 
prohibited foreign entity. 
‘‘(B) EXCLUSION.— 
‘‘(i) IN GENERAL.—The term ‘mate-
rial assistance from a prohibited foreign 
entity’ shall not include any assembly part 
or constituent material, provided that such 
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HR 1 PCS
part or material is not acquired directly 
from a prohibited foreign entity. 
‘‘(ii) ASSEMBLY PART.—For purposes 
of this subparagraph, the term ‘assembly 
part’ means a subcomponent or collection 
of subcomponents which is— 
‘‘(I) not uniquely designed for 
use in the construction of a qualified 
facility described in section 45Y or 
48E or an eligible component de-
scribed in section 45X, and 
‘‘(II) not exclusively or predomi-
nantly produced by prohibited foreign 
entities. 
‘‘(iii) CONSTITUENT MATERIAL.—For 
purposes of this subparagraph, the term 
‘constituent material’ means any material 
which is— 
‘‘(I) not uniquely formulated for 
use in a qualified facility described in 
section 45Y or 48E or an eligible 
component described in section 45X, 
and 
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‘‘(II) not exclusively or predomi-
nantly produced, processed, or ex-
tracted by prohibited foreign entities. 
‘‘(iv) 
REGULATIONS
AND
GUID-
ANCE.—The Secretary may prescribe such 
regulations and guidance as may be nec-
essary or appropriate to carry out the pro-
visions of this paragraph.’’. 
(d) DENIAL OF CREDIT FOR EXPENDITURES FOR 
CERTAIN WIND AND SOLAR LEASING ARRANGEMENTS.— 
Section 45Y, as amended by subsection (a), is amended 
by inserting after subsection (c) the following new sub-
section: 
‘‘(d) DENIAL OF CREDIT FOR EXPENDITURES FOR 
WIND AND SOLAR LEASING ARRANGEMENTS.—No credit 
shall be allowed under this section for any investment dur-
ing the taxable year with respect to property described in 
paragraph (1), (2), or (4) of section 25D(d) if— 
‘‘(1) the taxpayer rents or leases such property 
to a third party during such taxable year, and 
‘‘(2) the lessee would qualify for a credit under 
section 25D with respect to such property if the les-
see owned such property.’’. 
(e) EFFECTIVE DATES.— 
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HR 1 PCS
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section 
shall apply to taxable years beginning after the date 
of enactment of this Act. 
(2) TERMINATION
OF
CREDIT.—The amend-
ment made by subsection (a) shall apply to facilities 
for which construction begins after the date that is 
60 days after the date of enactment of this Act. 
SEC. 112009. RESTRICTIONS ON CLEAN ELECTRICITY IN-
VESTMENT CREDIT. 
(a) TERMINATION
OF
CREDIT.—Section 48E is 
amended by striking subsection (e) and by adding at the 
end the following new subsection: 
‘‘(j) TERMINATION OF CREDIT.— 
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), no credit shall be allowed under this sec-
tion for any qualified facility or energy storage tech-
nology— 
‘‘(A) the construction of which begins after 
the date which is 60 days after the date of the 
enactment of this subsection, or 
‘‘(B) which is placed in service after De-
cember 31, 2028. 
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HR 1 PCS
‘‘(2) ADVANCED
NUCLEAR
FACILITY.—In the 
case of any qualified facility that is an advanced nu-
clear facility (as defined in section 45J(d)(2))— 
‘‘(A) paragraph (1) shall not apply, and 
‘‘(B) no credit shall be allowed under this 
section for any such facility the construction of 
which begins after December 31, 2028.’’. 
(b) RESTRICTIONS RELATING TO PROHIBITED FOR-
EIGN ENTITIES.— 
(1) IN GENERAL.—Section 48E is amended— 
(A) in subsection (b)(3), by adding at the 
end the following new subparagraph: 
‘‘(D) MATERIAL ASSISTANCE FROM PRO-
HIBITED FOREIGN ENTITIES.—The term ‘quali-
fied facility’ shall not include any facility the 
construction of which begins after December 
31, 2025 if the construction of such facility in-
cludes any material assistance from a prohib-
ited foreign entity (as defined in section 
7701(a)(52)).’’, and 
(B) in subsection (c), by adding at the end 
the following new paragraph: 
‘‘(3) MATERIAL ASSISTANCE FROM PROHIBITED 
FOREIGN ENTITIES.—The term ‘energy storage tech-
nology’ shall not include any property the construc-
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HR 1 PCS
tion of which begins after December 31, 2025 if the 
construction of such property includes any material 
assistance from a prohibited foreign entity (as de-
fined in section 7701(a)(52)).’’. 
(2) RESTRICTIONS RELATING TO PROHIBITED 
FOREIGN ENTITIES.—Section 48E(d) is amended by 
adding at the end the following new paragraph: 
‘‘(6) RESTRICTIONS RELATING TO PROHIBITED 
FOREIGN ENTITIES.— 
‘‘(A) IN GENERAL.—No credit determined 
under subsection (a) shall be allowed under sec-
tion 38 for any taxable year beginning after the 
date of enactment of this paragraph if the tax-
payer is a specified foreign entity (as defined in 
section 7701(a)(51)(B)). 
‘‘(B) OTHER PROHIBITED FOREIGN ENTI-
TIES.—No credit determined under subsection 
(a) shall be allowed under section 38 for any 
taxable year beginning after the date which is 
2 years after the date of enactment of this 
paragraph if— 
‘‘(i) the taxpayer is a foreign-influ-
enced 
entity 
(as 
defined 
in 
section 
7701(a)(51)(D)), or 
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HR 1 PCS
‘‘(ii) during such taxable year, the 
taxpayer— 
‘‘(I) makes a payment of divi-
dends, interest, compensation for serv-
ices, rentals or royalties, guarantees 
or any other fixed, determinable, an-
nual, or periodic amount to a prohib-
ited foreign entity (as defined in sec-
tion 7701(a)(51)) in an amount which 
is equal to or greater than 5 percent 
of the total of such payments made by 
such taxpayer during such taxable 
year which are related to the produc-
tion of electricity or storage of energy, 
or 
‘‘(II) makes payments described 
in subclause (I) to more than 1 pro-
hibited foreign entity (as so defined) 
in an amount which, in the aggregate, 
is equal to or greater than 15 percent 
of the total of such payments made by 
such taxpayer during such taxable 
year which are related to the produc-
tion of electricity or storage of en-
ergy.’’. 
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HR 1 PCS
(3) RECAPTURE.—Section 50(a) is amended— 
(A) 
by 
redesignating 
paragraphs 
(4) 
through (6) as paragraphs (5) through (7), re-
spectively, 
(B) by inserting after paragraph (3) the 
following new paragraph: 
‘‘(4) PAYMENTS TO PROHIBITED FOREIGN EN-
TITIES.— 
‘‘(A) IN GENERAL.—If there is an applica-
ble payment made by a specified taxpayer be-
fore the close of the 10-year period beginning 
on the date such taxpayer placed in service in-
vestment credit property which is eligible for 
the clean electricity investment credit under 
section 48E(a), then the tax under this chapter 
for the taxable year in which such applicable 
payment occurs shall be increased by 100 per-
cent of the aggregate decrease in the credits al-
lowed under section 38 for all prior taxable 
years which would have resulted solely from re-
ducing to zero any credit determined under sec-
tion 46 which is attributable to the clean elec-
tricity investment credit under section 48E(a) 
with respect to such property. 
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HR 1 PCS
‘‘(B) APPLICABLE
PAYMENT.—For pur-
poses of this paragraph, the term ‘applicable 
payment’ means, with respect to any taxable 
year, a payment or payments described in sub-
clause (I) or (II) of section 48E(d)(6)(B)(ii). 
‘‘(C) SPECIFIED
TAXPAYER.—For pur-
poses of this paragraph, the term ‘specified tax-
payer’ means any taxpayer who has been al-
lowed a credit under section 48E(a) for any 
taxable year beginning after the date which is 
2 years after the date of enactment of this 
paragraph.’’, 
(C) in paragraph (5), as redesignated by 
subparagraph (A), by striking ‘‘or any applica-
ble transaction to which paragraph (3)(A) ap-
plies,’’ and inserting ‘‘any applicable trans-
action to which paragraph (3)(A) applies, or 
any applicable payment to which paragraph 
(4)(A) applies,’’, and 
(D) in paragraph (7), as redesignated by 
subparagraph (A), by striking ‘‘or (3)’’ and in-
serting ‘‘(3), or (4)’’. 
(c) DENIAL OF CREDIT FOR EXPENDITURES FOR 
CERTAIN WIND AND SOLAR LEASING ARRANGEMENTS.— 
Section 48E, as amended by subsection (a), is amended 
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HR 1 PCS
by inserting after subsection (d) the following new sub-
section: 
‘‘(e) DENIAL OF CREDIT FOR EXPENDITURES FOR 
WIND AND SOLAR LEASING ARRANGEMENTS.—No credit 
shall be allowed under this section for any investment dur-
ing the taxable year with respect to property described in 
paragraph (1), (2), or (4) of section 25D(d) if— 
‘‘(1) the taxpayer rents or leases such property 
to a third party during such taxable year, and 
‘‘(2) the lessee would qualify for a credit under 
section 25D with respect to such property if the les-
see owned such property.’’. 
(d) CONFORMING AMENDMENTS.—Section 48E(h)(4) 
is amended— 
(1) in subparagraph (C), by striking ‘‘December 
31 of the applicable year (as defined in section 
45Y(d)(3))’’ and inserting ‘‘December 31, 2028’’, 
(2) in subparagraph (D), by striking ‘‘the third 
calendar year following the applicable year (as de-
fined in section 45Y(d)(3))’’ and inserting ‘‘2028’’, 
and 
(3) in subparagraph (E)(i), by striking ‘‘after 
the date that is 4 years after the date of the alloca-
tion with respect to the facility of which such prop-
erty is a part’’ and inserting ‘‘the earlier of— 
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HR 1 PCS
‘‘(I) the date that is 4 years after 
the date of the allocation with respect 
to the facility of which such property 
is a part, or 
‘‘(II) December 31, 2028.’’. 
(e) EFFECTIVE DATES.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section 
shall apply to taxable years beginning after the date 
of enactment of this Act. 
(2) TERMINATION
OF
CREDIT.—The amend-
ment made by subsection (a) shall apply to facilities 
and energy storage technology for which construc-
tion begins after the date that is 60 days after the 
date of enactment of this Act. 
SEC. 112010. REPEAL OF TRANSFERABILITY OF CLEAN 
FUEL PRODUCTION CREDIT. 
(a) IN GENERAL.—Section 6418(f)(1)(A) is amended 
by striking clause (viii). 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to fuel produced after December 
31, 2027. 
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HR 1 PCS
SEC. 112011. RESTRICTIONS ON CARBON OXIDE SEQUES-
TRATION CREDIT. 
(a) RESTRICTIONS RELATING TO PROHIBITED FOR-
EIGN ENTITIES.—Section 45Q(f) is amended by adding 
at the end the following new paragraph: 
‘‘(10) RESTRICTIONS
RELATING
TO
PROHIB-
ITED FOREIGN ENTITIES.— 
‘‘(A) IN GENERAL.—No credit determined 
under subsection (a) shall be allowed under sec-
tion 38 for any taxable year beginning after the 
date of enactment of this paragraph if the tax-
payer is a specified foreign entity (as defined in 
section 7701(a)(51)(B)). 
‘‘(B) OTHER PROHIBITED FOREIGN ENTI-
TIES.—No credit determined under subsection 
(a) shall be allowed under section 38 for any 
taxable year beginning after the date which is 
2 years after the date of enactment of this 
paragraph if the taxpayer is a foreign-influ-
enced 
entity 
(as 
defined 
in 
section 
7701(a)(51)(D)).’’. 
(b) 
REPEAL
OF
TRANSFERABILITY.—Section 
6418(f)(1), as amended by section 112010, is amended— 
(1) in subparagraph (A), by striking clause (iii), 
and 
(2) in subparagraph (B)— 
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(A) in the matter preceding clause (i), by 
striking ‘‘clause (ii), (iii), or (v)’’ and inserting 
‘‘clause (ii) or (v)’’, and 
(B) in clause (ii), by striking ‘‘(or, in the 
case’’ and all that follows through ‘‘at such fa-
cility)’’. 
(c) EFFECTIVE DATES.— 
(1) RESTRICTIONS RELATING TO PROHIBITED 
FOREIGN
ENTITIES.—The amendments made by 
subsection (a) shall apply to taxable years beginning 
after the date of enactment of this Act. 
(2) 
REPEAL
OF
TRANSFERABILITY.—The 
amendments made by subsection (b) shall apply to 
carbon capture equipment the construction of which 
begins after the date that is 2 years after the date 
of enactment of this Act. 
SEC. 112012. RESTRICTIONS ON ZERO-EMISSION NUCLEAR 
POWER PRODUCTION CREDIT. 
(a) RESTRICTIONS RELATING TO PROHIBITED FOR-
EIGN ENTITIES.—Section 45U(c) is amended by adding 
at the end the following new paragraph: 
‘‘(3) RESTRICTIONS RELATING TO PROHIBITED 
FOREIGN ENTITIES.— 
‘‘(A) IN GENERAL.—No credit determined 
under subsection (a) shall be allowed under sec-
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HR 1 PCS
tion 38 for any taxable year beginning after the 
date of enactment of this paragraph if the tax-
payer is a specified foreign entity (as defined in 
section 7701(a)(51)(B)). 
‘‘(B) OTHER PROHIBITED FOREIGN ENTI-
TIES.—No credit determined under subsection 
(a) shall be allowed under section 38 for any 
taxable year beginning after the date which is 
2 years after the date of enactment of this 
paragraph if the taxpayer is a foreign-influ-
enced 
entity 
(as 
defined 
in 
section 
7701(a)(51)(D)).’’. 
(b) TERMINATION OF CREDIT.—Section 45U(e) is 
amended by striking ‘‘December 31, 2032’’ and inserting 
‘‘December 31, 2031’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of enactment of this Act. 
SEC. 112013. TERMINATION OF CLEAN HYDROGEN PRODUC-
TION CREDIT. 
(a) TERMINATION.—Section 45V(c)(3)(C) is amend-
ed by striking ‘‘January 1, 2033’’ and inserting ‘‘January 
1, 2026’’. 
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HR 1 PCS
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to facilities the construction of 
which begins after December 31, 2025. 
SEC. 112014. PHASE-OUT AND RESTRICTIONS ON AD-
VANCED 
MANUFACTURING 
PRODUCTION 
CREDIT. 
(a) PHASE-OUT.—Section 45X(b)(3) is amended— 
(1) in subparagraph (B)— 
(A) in clause (ii), by adding ‘‘and’’ at the 
end, 
(B) in clause (iii), by striking ‘‘during cal-
endar year 2032, 25 percent,’’ and inserting 
‘‘after December 31, 2031, 0 percent.’’, and 
(C) by striking clause (iv), and 
(2) by striking subparagraph (C) and inserting 
the following: 
‘‘(C) TERMINATION
FOR
WIND
ENERGY 
COMPONENTS.—This section shall not apply to 
wind energy components sold after December 
31, 2027.’’. 
(b) RESTRICTIONS RELATING TO PROHIBITED FOR-
EIGN ENTITIES.—Section 45X is amended— 
(1) in subsection (c)(1), by adding at the end 
the following new subparagraph: 
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HR 1 PCS
‘‘(C) MATERIAL
ASSISTANCE
FROM
PRO-
HIBITED FOREIGN ENTITIES.—In the case of 
taxable years beginning after the date which is 
2 years after the date of enactment of this sub-
paragraph, the term ‘eligible component’ shall 
not include any property which— 
‘‘(i) includes any material assistance 
from a prohibited foreign entity (as defined 
in section 7701(a)(52)), or 
‘‘(ii) is produced subject to a licensing 
agreement with a prohibited foreign entity 
(as defined in section 7701(a)(51)) for 
which the value of such agreement is in ex-
cess of $1,000,000.’’, and 
(2) in subsection (d), by adding at the end the 
following new paragraph: 
‘‘(5) RESTRICTIONS RELATING TO PROHIBITED 
FOREIGN ENTITIES.— 
‘‘(A) IN GENERAL.—No credit determined 
under subsection (a) shall be allowed under sec-
tion 38 for any taxable year beginning after the 
date of enactment of this paragraph if the tax-
payer is a specified foreign entity (as defined in 
section 7701(a)(51)(B)). 
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HR 1 PCS
‘‘(B) OTHER PROHIBITED FOREIGN ENTI-
TIES.—No credit determined under subsection 
(a) shall be allowed under section 38 for any 
taxable year beginning after the date which is 
2 years after the date of enactment of this 
paragraph if the taxpayer is a foreign-influ-
enced 
entity 
(as 
defined 
in 
section 
7701(a)(51)(D)). 
‘‘(C) PAYMENTS TO PROHIBITED FOREIGN 
ENTITIES.— 
‘‘(i) IN GENERAL.—If, for any taxable 
year beginning after the date that is 2 
years after the date of the enactment of 
this paragraph, a taxpayer is described in 
clause (ii) for such taxable year with re-
spect to any eligible component category, 
no credit shall be determined under sub-
section (a) for eligible components in such 
eligible component category for such tax-
able year. 
‘‘(ii) TAXPAYER DESCRIBED.—A tax-
payer is described in this clause for a tax-
able year with respect to any eligible com-
ponent category if such taxpayer— 
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‘‘(I) makes a payment of divi-
dends, interest, compensation for serv-
ices, rentals or royalties, guarantees 
or any other fixed, determinable, an-
nual, or periodic amount to a prohib-
ited foreign entity (as defined in sec-
tion 7701(a)(51)) in an amount which 
is equal to or greater than 5 percent 
of the total of such payments made by 
such taxpayer during such taxable 
year which are related to the produc-
tion of eligible components included 
within such eligible component cat-
egory, or 
‘‘(II) makes payments described 
in subclause (I) to more than 1 pro-
hibited foreign entity (as so defined) 
in an amount which, in the aggregate, 
is equal to or greater than 15 percent 
of such payments made by such tax-
payer during such taxable year which 
are related to the production of eligi-
ble components included within such 
eligible component category. 
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‘‘(iii) ELIGIBLE
COMPONENT
CAT-
EGORY.—For purposes of this subpara-
graph, the term ‘eligible component cat-
egory’ means eligible components which 
are included within each respective clause 
under subsection (c)(1)(A).’’. 
(c) REPEAL OF TRANSFERABILITY.—Section 6418, 
as amended by sections 112010, 112011, and 112012 is 
amended— 
(1) in subsection (f)(1)— 
(A) in subparagraph (A)— 
(i) by striking clause (vi), and 
(ii) by redesignating clauses (iv), (v), 
(vii), (ix), (x), and (xi) as clauses (iii), (iv), 
(v), (vi), (vii), and (viii), respectively, and 
(B) in subparagraph (B), by striking 
‘‘clause (ii) or (v)’’ and inserting ‘‘clause (ii) or 
(iv)’’, and 
(2) in subsection (g)(3), by striking ‘‘clause (ix) 
or (x)’’ and inserting ‘‘clause (vi) or (vii)’’. 
(d) EFFECTIVE DATES.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section 
shall apply to taxable years beginning after the date 
of enactment of this Act. 
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HR 1 PCS
(2) 
REPEAL
OF
TRANSFERABILITY.—The 
amendments made by subsection (c) shall apply to 
components sold after December 31, 2027. 
SEC. 112015. PHASE-OUT OF CREDIT FOR CERTAIN ENERGY 
PROPERTY. 
(a) PHASE-OUT.—Section 48(a) is amended— 
(1) in paragraph (3)(vii), by striking ‘‘the con-
struction of which begins before January 1, 2035’’ 
and inserting ‘‘the construction of which begins be-
fore January 1, 2032’’, and 
(2) by striking paragraph (7) and inserting the 
following new paragraph: 
‘‘(7) PHASE-OUT FOR CERTAIN ENERGY PROP-
ERTY.—In the case of any energy property described 
in clause (vii) of paragraph (3)(A), the energy per-
centage determined under paragraph (2) shall be 
equal to— 
‘‘(A) in the case of any property the con-
struction of which begins before January 1, 
2030, and which is placed in service after De-
cember 31, 2021, 6 percent, 
‘‘(B) in the case of any property the con-
struction of which begins after December 31, 
2029, and before January 1, 2031, 5.2 percent, 
and 
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HR 1 PCS
‘‘(C) in the case of any property the con-
struction of which begins after December 31, 
2030, and before January 1, 2032, 4.4 per-
cent.’’. 
(b) RESTRICTIONS RELATING TO PROHIBITED FOR-
EIGN ENTITIES.—Section 48(a) is amended by redesig-
nating paragraph (16) as paragraph (17) and by inserting 
after paragraph (15) the following new paragraph: 
‘‘(16) RESTRICTIONS
RELATING
TO
PROHIB-
ITED FOREIGN ENTITIES.— 
‘‘(A) IN GENERAL.—No credit determined 
under this subsection for energy property de-
scribed in paragraph (3)(A)(vii) shall be allowed 
under section 38 for any taxable year beginning 
after the date of enactment of this paragraph 
if the taxpayer is a specified foreign entity (as 
defined in section 7701(a)(51)(B)). 
‘‘(B) OTHER PROHIBITED FOREIGN ENTI-
TIES.—No credit determined under this sub-
section for energy property described in para-
graph (3)(A)(vii) shall be allowed under section 
38 for any taxable year beginning after the date 
which is 2 years after the date of enactment of 
this paragraph if the taxpayer is a foreign-influ-
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enced 
entity 
(as 
defined 
in 
section 
7701(a)(51)(D)).’’. 
(c) 
REPEAL
OF
TRANSFERABILITY.—Section 
6418(f)(1)(A)(iii), as redesignated by section 112014, is 
amended by inserting ‘‘(except so much of the credit as 
is determined under paragraph (3)(A)(vii) of such sec-
tion)’’ after ‘‘section 48’’. 
(d) EFFECTIVE DATES.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section 
shall apply to taxable years beginning after the date 
of the enactment of this Act. 
(2) 
REPEAL
OF
TRANSFERABILITY.—The 
amendments made by subsection (c) shall apply to 
property the construction of which begins after the 
date that is 2 years after the date of enactment of 
this Act. 
SEC. 112016. INCOME FROM HYDROGEN STORAGE, CARBON 
CAPTURE ADDED TO QUALIFYING INCOME OF 
CERTAIN PUBLICLY TRADED PARTNERSHIPS 
TREATED AS CORPORATIONS. 
(a) IN GENERAL.—Section 7704(d)(1)(E) is amend-
ed— 
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(1) by striking ‘‘income and gains derived from 
the exploration’’ and inserting ‘‘income and gains 
derived from— 
‘‘(i) the exploration’’, 
(2) 
by 
inserting 
‘‘or’’ 
before 
‘‘industrial 
source’’, and 
(3) by striking ‘‘the transportation or storage’’ 
and all that follows and inserting the following: 
‘‘(ii) the transportation or storage 
of— 
‘‘(I) any fuel described in sub-
section (b), (c), (d), (e), or (k) of sec-
tion 6426, or any alcohol fuel defined 
in section 6426(b)(4)(A) or any bio-
diesel fuel as defined in section 
40A(d)(1) or sustainable aviation fuel 
as defined in section 40B(d)(1), or 
‘‘(II) liquified hydrogen or com-
pressed hydrogen, or 
‘‘(iii) in the case of a qualified facility 
(as defined in section 45Q(d), without re-
gard to any date by which construction of 
the facility is required to begin) not less 
than 50 percent of the total carbon oxide 
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production of which is qualified carbon 
oxide (as defined in section 45Q(c))— 
‘‘(I) the generation, availability 
for such generation, or storage of elec-
tric power at such facility, or 
‘‘(II) the capture of carbon diox-
ide by such facility,’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2025. 
SEC. 112017. LIMITATION ON AMORTIZATION OF CERTAIN 
SPORTS FRANCHISES. 
(a) IN GENERAL.—Section 197 is amended by redes-
ignating subsection (g) as subsection (h) and by inserting 
after subsection (f) the following new subsection: 
‘‘(g) LIMITATION ON AMORTIZATION OF CERTAIN 
SPORTS FRANCHISES.— 
‘‘(1) IN GENERAL.—In the case of a specified 
sports franchise intangible, subsection (a) shall be 
applied by substituting ‘50 percent of the adjusted 
basis’ for ‘the adjusted basis’. 
‘‘(2) SPECIFIED
SPORTS
FRANCHISE
INTAN-
GIBLE.—For purposes of this subsection, the term 
‘specified sports franchise intangible’ means any am-
ortizable section 197 intangible which is— 
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‘‘(A) a franchise to engage in professional 
football, basketball, baseball, hockey, soccer, or 
other professional sport, or 
‘‘(B) acquired in connection with such a 
franchise.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to property acquired after the date 
of the enactment of this Act. 
SEC. 112018. LIMITATION ON INDIVIDUAL DEDUCTIONS FOR 
CERTAIN STATE AND LOCAL TAXES, ETC. 
(a) IN GENERAL.—Section 275 is amended by redes-
ignating subsection (b) as subsection (c) and by inserting 
after subsection (a) the following new subsection: 
‘‘(b) LIMITATION ON INDIVIDUAL DEDUCTIONS FOR 
CERTAIN STATE AND LOCAL TAXES, ETC.— 
‘‘(1) LIMITATION.— 
‘‘(A) IN GENERAL.—In the case of an indi-
vidual, no deduction shall be allowed for— 
‘‘(i) any disallowed foreign real prop-
erty taxes, and 
‘‘(ii) any specified taxes to the extent 
that such taxes for such taxable year in 
the aggregate exceed— 
‘‘(I) half the dollar amount in ef-
fect under subclause (II), in the case 
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of a married individual filing a sepa-
rate return, and 
‘‘(II) $40,400, in the case of any 
other taxpayer. 
‘‘(B) PHASEDOWN
BASED
ON
MODIFIED 
ADJUSTED GROSS INCOME.— 
‘‘(i) IN
GENERAL.—Except as pro-
vided in clause (ii), the limitation otherwise 
in effect under subparagraph (A)(ii) shall 
be reduced by 30 percent of the excess (if 
any) of the taxpayer’s modified adjusted 
gross income over— 
‘‘(I) half the dollar amount in ef-
fect under subclause (II), in the case 
of a married individual filing a sepa-
rate return, and 
‘‘(II) $505,000, in the case of 
any other taxpayer. 
‘‘(ii) LIMITATION
ON
REDUCTION.— 
The reduction under clause (i) shall not re-
sult in— 
‘‘(I) the limitation in effect under 
subparagraph (A)(ii)(I) being less 
than $5,000, or 
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‘‘(II) the limitation in effect 
under subparagraph (A)(ii)(II) being 
less than $10,000. 
‘‘(C) MODIFIED
ADJUSTED
GROSS
IN-
COME.—For purposes of this paragraph, the 
term ‘modified adjusted gross income’ means 
adjusted gross income increased by any amount 
excluded from gross income under section 911, 
931, or 933. 
‘‘(D) ADJUSTMENT OF CERTAIN DOLLAR 
AMOUNTS.— 
‘‘(i) IN GENERAL.—In the case of any 
taxable year beginning after December 31, 
2026, and before January 1, 2034, the dol-
lar amount in effect under subparagraph 
(A)(ii)(II), and the dollar amount in effect 
under subparagraph (B)(i)(II), shall each 
be equal to 101 percent of such dollar 
amount as in effect for taxable years be-
ginning in the preceding taxable year. 
‘‘(ii) MAINTENANCE
OF
INCREASE 
THEREAFTER.—In the case of any taxable 
year beginning after December 31, 2033, 
the dollar amounts referred to in clause (i) 
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shall be equal to such dollar amounts as in 
effect for taxable years beginning in 2033. 
‘‘(2) DISALLOWED
FOREIGN
REAL
PROPERTY 
TAX.—For purposes of this subsection, the term 
‘disallowed foreign real property tax’ means any tax 
which— 
‘‘(A) is a foreign real property tax de-
scribed in section 164(a)(1) or 216(a)(1), and 
‘‘(B) is not an excepted tax. 
‘‘(3) SPECIFIED
TAX.—For purposes of this 
subsection, the term ‘specified tax’ means— 
‘‘(A) any tax which— 
‘‘(i) is described in paragraph (1), (2), 
or (3) of section 164(a) or section 
216(a)(1), or is taken into account under 
section 164(b)(5), and 
‘‘(ii) is not an excepted tax or a dis-
allowed foreign real property tax, and 
‘‘(B) any substitute payment. 
‘‘(4) EXCEPTED
TAX.—For purposes of this 
subsection— 
‘‘(A) IN
GENERAL.—The term ‘excepted 
tax’ means— 
‘‘(i) any foreign tax described in sec-
tion 164(a)(3), 
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‘‘(ii) any tax described in section 
164(a)(3) which is paid or accrued by a 
qualifying entity with respect to carrying 
on a qualified trade or business (as defined 
in section 199A(d), without regard to sec-
tion 199A(b)(3)), and 
‘‘(iii) any tax described in paragraph 
(1) or (2) of section 164(a), or section 
216(a)(1), which is paid or accrued in car-
rying on a trade or business or an activity 
described in section 212. 
‘‘(B) QUALIFYING ENTITY.—For purposes 
of subparagraph (A), the term ‘qualifying enti-
ty’ means any partnership or S corporation 
with gross receipts for the taxable year (within 
the meaning of section 448(c)) if at least 75 
percent of such gross receipts are derived in a 
qualified trade or business (as defined in sec-
tion 
199A(d), 
without 
regard 
to 
section 
199A(b)(3)). For purposes of the preceding 
sentence, the gross receipts of all trades or 
businesses which are under common control 
(within the meaning of section 52(b)) with any 
trade or business of the partnership or S cor-
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poration shall be taken into account as gross 
receipts of the entity. 
‘‘(5) SUBSTITUTE PAYMENT.—For purposes of 
this subsection— 
‘‘(A) IN GENERAL.—The term ‘substitute 
payment’ means any amount (other than a tax 
described in paragraph (3)(A) or (4)(A)(ii)) 
paid, incurred, or accrued to any entity referred 
to in section 164(b)(2) if, under the laws of one 
or 
more 
entities 
referred 
to 
in 
section 
164(b)(2), one or more persons would (if the 
assumptions described in subparagraphs (B) 
and (C) applied) be entitled to specified tax 
benefits the aggregate dollar value of which 
equals or exceeds 25 percent of such amount. 
‘‘(B) ASSUMPTION
REGARDING
DOLLAR 
VALUE OF TAX BENEFITS.—The assumption de-
scribed in this subparagraph is that the dollar 
value of a specified tax benefit is— 
‘‘(i) in the case of a credit or refund, 
the amount of such credit or refund, 
‘‘(ii) in the case of a deduction or ex-
clusion, 15 percent of the amount of such 
deduction or exclusion, and 
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‘‘(iii) in any other case, an amount 
determined in such manner as the Sec-
retary may provide consistent with the 
principles of clauses (i) and (ii). 
‘‘(C) ASSUMPTION REGARDING STATUS OF 
PARTNERS OR SHAREHOLDERS.—The assump-
tion described in this subparagraph is, in the 
case of any amount referred to in subparagraph 
(A) which is paid, incurred, or accrued by a 
partnership or S corporation, that all of the 
partners or shareholders of such partnership or 
S corporation, respectively, are individuals who 
are residents of the jurisdiction of the entity or 
entities providing the specified tax benefits (and 
possess such other characteristics as the laws of 
such entities may require for entitlement to 
such benefits). 
‘‘(D) SPECIFIED TAX BENEFIT.—For pur-
poses of subparagraph (A), the term ‘specified 
tax benefit’ means any benefit which— 
‘‘(i) is determined with respect to the 
amount referred to in subparagraph (A), 
and 
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‘‘(ii) is allowed against, or determined 
by reference to, a tax described in para-
graph (3)(A) or section 164(b)(5). 
‘‘(E) EXCEPTION
FOR
NON-DEDUCTIBLE 
PAYMENTS.—To the extent that a deduction for 
an amount described in subparagraph (A) is 
not allowed under this chapter (determined 
without regard to this subsection, section 
170(b)(1), section 703(a), section 704(d), and 
section 1363(b)), the term ‘substitute payment’ 
shall not include such amount. 
‘‘(F) EXCEPTION
FOR
CERTAIN
WITH-
HOLDING
TAXES.—To the extent provided in 
regulations issued by the Secretary, the term 
‘substitute payment’ shall not include an 
amount withheld on behalf of another person if 
all of such amount is included in the gross in-
come of such person (determined under this 
chapter). 
‘‘(6) REGULATIONS.—The Secretary shall issue 
such regulations or other guidance as may be nec-
essary or appropriate to carry out the purposes of 
this subsection, including regulations or other guid-
ance— 
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‘‘(A) to treat as a tax described in para-
graph (3) of section 164(a) any tax that is, in 
substance, based on general tax principles, de-
scribed in such paragraph, 
‘‘(B) to treat as a substitute payment any 
amount that, in substance, substitutes for a 
specified tax, 
‘‘(C) to provide for the proper allocation, 
for purposes of paragraph (4)(A)(ii), of taxes 
described in section 164(a)(3) between trades 
or business described in section 199A(d)(1) and 
trades or business not so described, and 
‘‘(D) to otherwise prevent the avoidance of 
the purposes of this subsection.’’. 
(b) STATE
AND LOCAL INCOME TAXES PAID
BY 
PARTNERSHIPS AND S CORPORATIONS TAKEN INTO AC-
COUNT
SEPARATELY
BY
PARTNERS
AND
SHARE-
HOLDERS.— 
(1) IN GENERAL.—Section 702(a)(6) is amend-
ed to read as follows: 
‘‘(6)(A) taxes, described in section 901, paid or 
accrued to foreign countries, 
‘‘(B) taxes, described in section 901, paid or ac-
crued to possessions of the United States, 
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‘‘(C) specified taxes (within the meaning of sec-
tion 275(b)), other than taxes described in subpara-
graph (B), and 
‘‘(D) taxes described in section 275(b)(2),’’. 
(2) TREATMENT OF SUBSTITUTE PAYMENTS.— 
Section 702 is amended by redesignating subsection 
(d) as subsection (e) and by inserting after sub-
section (c) the following new subsection: 
‘‘(d) TREATMENT OF SUBSTITUTE PAYMENTS.—Any 
substitute payment (as defined in section 275(b)(5)) shall 
be taken into account under subsection (a)(6)(C) and not 
under any other paragraph of subsection (a).’’. 
(3) DISALLOWANCE OF DEDUCTION TO PART-
NERSHIPS.—Section 703(a)(2)(B) is amended to 
read as follows: 
‘‘(B) any deduction under this chapter 
with respect to taxes or payments described in 
section 702(a)(6),’’. 
(4) S CORPORATIONS.—For corresponding pro-
visions related to S corporations which apply by rea-
son of the amendments made by paragraphs (1) 
through (3), see sections 1366(a)(1) and 1363(b)(2) 
of the Internal Revenue Code of 1986. 
(5) ALLOWABLE
SALT
DEDUCTIONS
TAKEN 
INTO ACCOUNT FOR PURPOSES OF LIMITATION ON 
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PARTNERSHIP
LOSSES.—Section 
704(d)(3) 
is 
amended by striking subparagraph (A), by redesig-
nating subparagraph (B) as subparagraph (C), and 
by inserting before subparagraph (C) (as so redesig-
nated) the following new subparagraphs: 
‘‘(A) IN
GENERAL.—In determining the 
amount of any loss under paragraph (1), there 
shall be taken into account— 
‘‘(i) the partner’s distributive share of 
amounts described in paragraphs (4) and 
(6)(A) of section 702(a), 
‘‘(ii) if the taxpayer chooses to take to 
any extent the benefits of section 901, the 
partner’s distributive share of amounts de-
scribed in section 702(a)(6)(B), and 
‘‘(iii) the amount by which the deduc-
tions allowed under this chapter (deter-
mined without regard to this subsection) to 
the partner would decrease if the partner’s 
distributive share of amounts described in 
section 702(a)(6)(C) were not taken into 
account. 
‘‘(B) TREATMENT OF POSSESSION TAXES 
IN
EVENT
PARTNER
DOES
NOT
ELECT
THE 
FOREIGN TAX CREDIT.—In the case of a tax-
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payer not described in subparagraph (A)(ii), 
subparagraph (A)(iii) shall be applied by sub-
stituting ‘subparagraphs (B) and (C) of section 
702(a)(6)’ for ‘section 702(a)(6)(C)’.’’. 
(6) 
CONFORMING
AMENDMENT.—Section 
56(b)(1)(A)(ii) is amended by inserting ‘‘or for any 
substitute 
payment 
(as 
defined 
in 
section 
275(b)(5))’’ before the period at the end. 
(c) ADDITION TO TAX FOR STATE AND LOCAL TAX 
ALLOCATION MISMATCH.— 
(1) IN GENERAL.—Part I of subchapter A of 
chapter 68 is amended by adding at the end the fol-
lowing new section: 
‘‘SEC. 6659. STATE AND LOCAL TAX ALLOCATION MIS-
MATCH. 
‘‘(a) IN GENERAL.—In the case of any covered indi-
vidual, there shall be added to the tax imposed under sec-
tion 1 for the taxable year an amount equal to the product 
of— 
‘‘(1) the highest rate of tax in effect under such 
section for such taxable year, multiplied by 
‘‘(2) the sum of the State and local tax alloca-
tion mismatches for such taxable year with respect 
to each partnership specified tax payment with re-
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spect to which such individual is a covered indi-
vidual. 
‘‘(b) COVERED INDIVIDUAL.—For purposes of this 
section, the term ‘covered individual’ means, with respect 
to any partnership specified tax payment, any individual 
(or estate or trust) who— 
‘‘(1) is entitled (directly or indirectly) to one or 
more specified tax benefits with respect to such pay-
ment, and 
‘‘(2) takes into account (directly or indirectly) 
any item of income, gain, deduction, loss, or credit 
of the partnership which made such payment. 
‘‘(c) STATE
AND LOCAL TAX ALLOCATION MIS-
MATCH.—For purposes of this section— 
‘‘(1) IN GENERAL.—The term ‘State and local 
tax allocation mismatch’ means, with respect to any 
partnership specified tax payment, the excess (if 
any) of— 
‘‘(A) the aggregate dollar value of the 
specified tax benefits of the covered individual 
with respect to such payment, over 
‘‘(B) the amount of such payment taken 
into account by such individual under section 
702(a) (without regard to sections 275(b) and 
704(d)). 
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‘‘(2) TAXABLE YEAR OF INDIVIDUAL IN WHICH 
MISMATCH TAKEN INTO ACCOUNT.—In the case of 
any partnership specified tax payment paid, in-
curred, or accrued in any taxable year of the part-
nership, the State and local tax allocation mismatch 
determined under paragraph (1) with respect to 
such payment shall be taken into account under sub-
section (a) by the covered individual for the taxable 
year of such individual in which such individual 
takes into account the items referred to in sub-
section (b)(2) which are determined with respect to 
such partnership taxable year. 
‘‘(d) DETERMINATION OF DOLLAR VALUE OF SPECI-
FIED TAX BENEFITS.— 
‘‘(1) IN GENERAL.—Except in the case of a cov-
ered individual who elects the application of para-
graph (3) for any taxable year, the dollar value of 
any specified tax benefit shall be the sum of— 
‘‘(A) the aggregate increase in tax liability 
(and reduction in credit or refund) for taxes de-
scribed in section 275(b)(3)(A) for the taxable 
year and all prior taxable years that would re-
sult if such specified tax benefit were not taken 
into account with respect to such taxes, plus 
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‘‘(B) the deemed value of any carryforward 
of such specified tax benefit (including any tax 
attribute derived from such benefit) to any sub-
sequent taxable year. 
‘‘(2) DEEMED VALUE OF CARRYFORWARDS.— 
For purposes of paragraph (1), the deemed value of 
any carryforward is— 
‘‘(A) in the case of a credit or refund, the 
amount of such credit or refund, 
‘‘(B) in the case of a deduction or exclu-
sion, the product of— 
‘‘(i) the highest rate of tax which may 
be imposed on individuals under the tax re-
ferred to in subsection (e)(3)(B) with re-
spect to the specified tax benefit, multi-
plied by 
‘‘(ii) the amount of such deduction or 
exclusion, and 
‘‘(C) in any other case, an amount deter-
mined in such manner as the Secretary may 
provide consistent with the principles of sub-
paragraphs (A) and (B). 
‘‘(3) ELECTION OF SIMPLIFIED METHOD.—In 
the case of a covered individual who elects the appli-
cation of this paragraph for any taxable year, the 
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dollar value of any specified tax benefit shall be de-
termined under the assumptions described in section 
275(b)(5)(B). 
‘‘(e) OTHER DEFINITIONS AND SPECIAL RULES.— 
For purposes of this section— 
‘‘(1) 
PARTNERSHIP
SPECIFIED
TAX
PAY-
MENT.—The term ‘partnership specified tax pay-
ment’ means any specified tax paid, incurred, or ac-
crued by a partnership. 
‘‘(2) SPECIFIED TAX.—The term ‘specified tax’ 
has the meaning given such term by section 
275(b)(3). 
‘‘(3) SPECIFIED
TAX
BENEFIT.—The term 
‘specified tax benefit’ means any benefit which— 
‘‘(A) is determined with respect to a part-
nership specified tax payment, and 
‘‘(B) is allowed against, or determined by 
reference to, a tax described in section 
275(b)(3)(A). 
‘‘(f) REGULATIONS.—The Secretary shall issue such 
regulations or other guidance as may be necessary or ap-
propriate to carry out the purposes of this section, includ-
ing regulations or other guidance preventing avoidance of 
the addition to tax prescribed by this section through part-
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nership allocations that achieve similar tax reductions as 
a State and local tax allocation mismatch.’’. 
(2) CLERICAL AMENDMENT.—The table of sec-
tions for part I of subchapter A of chapter 68 is 
amended by adding at the end the following new 
item: 
‘‘Sec. 6659. State and local tax allocation mismatch.’’. 
(d) LIMITATION ON CAPITALIZATION OF SPECIFIED 
TAXES.—Section 275, as amended by the preceding provi-
sions of this section, is amended by redesignating sub-
section (c) as subsection (d) and by inserting after sub-
section (b) the following new subsection: 
‘‘(c) LIMITATIONS ON CAPITALIZATION OF SPECI-
FIED TAXES.—Notwithstanding any other provision of 
this chapter, in the case of an individual, specified taxes 
(as defined in subsection (b)) shall not be treated as 
chargeable to capital account.’’. 
(e) REPORTING BY PARTNERSHIPS AND S CORPORA-
TIONS WITH RESPECT TO SPECIFIED SERVICE TRADE OR 
BUSINESS INCOME.— 
(1) PARTNERSHIPS.—Section 6031 is amended 
by adding at the end the following new subsection: 
‘‘(g) SPECIFIED SERVICE TRADE OR BUSINESS IN-
COME.—Returns required under subsection (a), and copies 
required to be furnished under subsection (b), shall in-
clude a statement of whether or not the partnership had 
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any gross receipts (within the meaning of section 448(c)) 
from a trade or business described in subsection 
199A(d)(2).’’. 
(2) S CORPORATIONS.—Section 6037 is amend-
ed by adding at the end the following new sub-
section: 
‘‘(d) SPECIFIED SERVICE TRADE OR BUSINESS IN-
COME.—Returns required under subsection (a), and copies 
required to be furnished under subsection (b), shall in-
clude a statement of whether or not the S corporation had 
any gross receipts (within the meaning of section 448(c)) 
from a trade or business described in subsection 
199A(d)(2).’’. 
(f) TEMPORARY INCREASE FOR 2025.— 
(1) IN GENERAL.—Section 164(b)(6) is amend-
ed by striking ‘‘$10,000 ($5,000 in the case of a 
married individual filing a separate return)’’ and in-
serting ‘‘applicable limitation amount’’. 
(2) APPLICABLE
LIMITATION
AMOUNT.—Sec-
tion 164(b) is amended by adding at the end the fol-
lowing new paragraph: 
‘‘(7) APPLICABLE LIMITATION AMOUNT.— 
‘‘(A) IN GENERAL.—For purposes of para-
graph (6), the term ‘applicable limitation 
amount’ means— 
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‘‘(i) $20,000, in the case of a married 
individual filing a separate return, and 
‘‘(ii) $40,000, in the case of any other 
taxpayer. 
‘‘(B) PHASEDOWN
BASED
ON
MODIFIED 
ADJUSTED GROSS INCOME.— 
‘‘(i) IN
GENERAL.—Except as pro-
vided in clause (ii), the $20,000 amount in 
subparagraph (A)(i) and the $40,000 
amount in subparagraph (A)(ii) shall each 
be reduced by 30 percent of the excess (if 
any) of the taxpayer’s modified adjusted 
gross income over— 
‘‘(I) $250,000, in the case of a 
married individual filing a separate 
return, and 
‘‘(II) $500,000, in the case of 
any other taxpayer. 
‘‘(ii) LIMITATION
ON
REDUCTION.— 
The reduction under clause (i) shall not re-
sult in— 
‘‘(I) the dollar amount in effect 
under subparagraph (A)(i) being less 
than $5,000, or 
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‘‘(II) the dollar amount in effect 
under subparagraph (A)(ii) being less 
than $10,000. 
‘‘(C) MODIFIED
ADJUSTED
GROSS
IN-
COME.—For purposes of this paragraph, the 
term ‘modified adjusted gross income’ means 
adjusted gross income increased by any amount 
excluded from gross income under section 911, 
931, or 933.’’. 
(3) REPEAL AFTER 2025.—Section 164(b), as 
amended by paragraphs (1) and (2), is amended by 
striking paragraphs (6) and (7). 
(g) EFFECTIVE DATE.— 
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
this section shall apply to taxable years beginning 
after December 31, 2025. 
(2) TEMPORARY
INCREASE
FOR
2025.—The 
amendments made by paragraphs (1) and (2) of 
subsection (f) shall apply to taxable years beginning 
after December 31, 2024. 
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SEC. 112019. EXCESSIVE EMPLOYEE REMUNERATION FROM 
CONTROLLED GROUP MEMBERS AND ALLO-
CATION OF DEDUCTION. 
(a) APPLICATION OF AGGREGATION RULES.—Section 
162(m) is amended by adding at the end the following new 
paragraph: 
‘‘(7) 
REMUNERATION
FROM
CONTROLLED 
GROUP MEMBERS.— 
‘‘(A) IN
GENERAL.—In the case of any 
publicly held corporation which is a member of 
a controlled group— 
‘‘(i) paragraph (1) shall be applied by 
substituting ‘specified covered employee’ 
for ‘covered employee’, and 
‘‘(ii) if any person which is a member 
of such controlled group (other than such 
publicly held corporation) provides applica-
ble employee remuneration to an individual 
who is a specified covered employee of such 
controlled group and the aggregate amount 
described in subparagraph (B)(ii) with re-
spect to such specified covered employee 
exceeds $1,000,000— 
‘‘(I) paragraph (1) shall apply to 
such person with respect to such re-
muneration, and 
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‘‘(II) paragraph (1) shall apply 
to such publicly held corporation and 
to each such related person by sub-
stituting 
‘the 
allocable 
limitation 
amount’ for ‘$1,000,000’. 
‘‘(B) ALLOCABLE LIMITATION AMOUNT.— 
For purposes of this paragraph, the term ‘allo-
cable limitation amount’ means, with respect to 
any member of the controlled group referred to 
in subparagraph (A) with respect to any speci-
fied covered employee of such controlled group, 
the amount which bears the same ratio to 
$1,000,000 as— 
‘‘(i) the amount of applicable em-
ployee remuneration provided by such 
member with respect to such specified cov-
ered employee, bears to 
‘‘(ii) the aggregate amount of applica-
ble employee remuneration provided by all 
such members with respect to such speci-
fied covered employee. 
‘‘(C) SPECIFIED
COVERED
EMPLOYEE.— 
For purposes of this paragraph, the term ‘spec-
ified covered employee’ means, with respect to 
any controlled group— 
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‘‘(i) any employee described in sub-
paragraph (A), (B), or (D) of paragraph 
(3), with respect to the publicly held cor-
poration which is a member of such con-
trolled group, and 
‘‘(ii) any employee who would be de-
scribed in subparagraph (C) of paragraph 
(3) if such subparagraph were applied by 
taking into account the employees of all 
members of the controlled group. 
‘‘(D) CONTROLLED GROUP.—For purposes 
of this paragraph, the term ‘controlled group’ 
means any group treated as a single employer 
under subsection (b), (c), (m), or (o) of section 
414.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2025. 
SEC. 112020. EXPANDING APPLICATION OF TAX ON EXCESS 
COMPENSATION WITHIN TAX-EXEMPT ORGA-
NIZATIONS. 
(a) IN GENERAL.—Section 4960(c)(2) is amended to 
read as follows: 
‘‘(2) COVERED
EMPLOYEE.—For purposes of 
this section, the term ‘covered employee’ means any 
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employee (including any former employee) of an ap-
plicable tax-exempt organization.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to taxable years beginning after 
December 31, 2025. 
SEC. 112021. MODIFICATION OF EXCISE TAX ON INVEST-
MENT INCOME OF CERTAIN PRIVATE COL-
LEGES AND UNIVERSITIES. 
(a) IN GENERAL.—Section 4968 is amended to read 
as follows: 
‘‘SEC. 4968. EXCISE TAX BASED ON INVESTMENT INCOME 
OF PRIVATE COLLEGES AND UNIVERSITIES. 
‘‘(a) TAX IMPOSED.—There is hereby imposed on 
each applicable educational institution for the taxable year 
a tax equal to the applicable percentage of the net invest-
ment income of such institution for the taxable year. 
‘‘(b) APPLICABLE PERCENTAGE.—For purposes of 
this section, the term ‘applicable percentage’ means— 
‘‘(1) 1.4 percent in the case of an institution 
with a student adjusted endowment in excess of 
$500,000, and not in excess of $750,000, 
‘‘(2) 7 percent in the case of an institution with 
a student adjusted endowment in excess of 
$750,000, and not in excess of $1,250,000, 
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‘‘(3) 14 percent in the case of an institution 
with a student adjusted endowment in excess of 
$1,250,000, and not in excess of $2,000,000, and 
‘‘(4) 21 percent in the case of an institution 
with a student adjusted endowment in excess of 
$2,000,000. 
‘‘(c) APPLICABLE EDUCATIONAL INSTITUTION.—For 
purposes of this subchapter— 
‘‘(1) IN GENERAL.—The term ‘applicable edu-
cational institution’ means an eligible educational in-
stitution (as defined in section 25A(f)(2))— 
‘‘(A) which had at least 500 tuition-paying 
students during the preceding taxable year, 
‘‘(B) more than 50 percent of the tuition- 
paying students of which are located in the 
United States, 
‘‘(C) which is not— 
‘‘(i) described in the first sentence of 
section 511(a)(2)(B) (relating to State col-
leges and universities), or 
‘‘(ii) a qualified religious institution, 
and 
‘‘(D) the student adjusted endowment of 
which is at least $500,000. 
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‘‘(2) QUALIFIED RELIGIOUS INSTITUTION.—For 
purposes of this subsection, the term ‘qualified reli-
gious institution’ means any institution— 
‘‘(A) established after July 4, 1776, 
‘‘(B) that was established by or in associa-
tion with and has continuously maintained an 
affiliation with an organization described in sec-
tion 170(b)(1)(A)(i), and 
‘‘(C) which maintains a published institu-
tional mission that is approved by the governing 
body of such institution and that includes, re-
fers to, or is predicated upon religious tenets, 
beliefs, or teachings. 
‘‘(d) STUDENT ADJUSTED ENDOWMENT.—For pur-
poses of this section— 
‘‘(1) IN GENERAL.—The term ‘student adjusted 
endowment’ means, with respect to any institution 
for any taxable year— 
‘‘(A) the aggregate fair market value of 
the assets of such institution (determined as of 
the end of the preceding taxable year), other 
than those assets which are used directly in car-
rying out the institution’s exempt purpose, di-
vided by 
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‘‘(B) the number of eligible students of 
such institution. 
‘‘(2) ELIGIBLE
STUDENT.—For purposes of 
this subsection, the term ‘eligible student’ means a 
student of the institution that meets the student eli-
gibility requirements under section 484(a)(5) of the 
Higher Education Act of 1965. 
‘‘(e) DETERMINATION OF NUMBER OF STUDENTS.— 
For purposes of subsections (c)(1) and (d), the number 
of students of an institution (including for purposes of de-
termining the number of students at a particular location) 
shall be based on the daily average number of full-time 
students attending such institution (with part-time stu-
dents taken into account on a full-time student equivalent 
basis). 
‘‘(f) NET INVESTMENT INCOME.—For purposes of 
this section— 
‘‘(1) IN
GENERAL.—Net investment income 
shall be determined under rules similar to the rules 
of section 4940(c). 
‘‘(2) OVERRIDE OF CERTAIN REGULATORY EX-
CEPTIONS.— 
‘‘(A) STUDENT LOAN INTEREST.—Net in-
vestment income shall be determined by taking 
into account any interest income from a student 
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loan made by the applicable educational institu-
tion (or any related organization) as gross in-
vestment income. 
‘‘(B) FEDERALLY-SUBSIDIZED
ROYALTY 
INCOME.— 
‘‘(i) IN GENERAL.—Net investment in-
come shall be determined by taking into 
account any Federally-subsidized royalty 
income as gross investment income. 
‘‘(ii) FEDERALLY-SUBSIDIZED
ROY-
ALTY INCOME.—For purposes of this sub-
paragraph— 
‘‘(I) IN
GENERAL.—The term 
‘Federally-subsidized royalty income’ 
means any otherwise-regulatory-ex-
empt royalty income if any Federal 
funds were used in the research, de-
velopment, or creation of the patent, 
copyright, or other intellectual or in-
tangible property from which such 
royalty income is derived. 
‘‘(II) OTHERWISE-REGULATORY- 
EXEMPT ROYALTY INCOME.—For pur-
poses of this subparagraph, the term 
‘otherwise-regulatory-exempt 
royalty 
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income’ means royalty income which 
(but for this subparagraph) would not 
be taken into account as gross invest-
ment income by reason of being de-
rived from patents, copyrights, or 
other intellectual or intangible prop-
erty which resulted from the work of 
students or faculty members in their 
capacities as such with the applicable 
educational institution. 
‘‘(III) FEDERAL
FUNDS.—The 
term ‘Federal funds’ includes any 
grant made by, and any payment 
made under any contract with, any 
Federal agency to the applicable edu-
cational institution, any related orga-
nization, or any student or faculty 
member referred to in subclause (II). 
‘‘(g) ASSETS AND NET INVESTMENT INCOME OF RE-
LATED ORGANIZATIONS.— 
‘‘(1) IN
GENERAL.—For purposes of sub-
sections (d) and (f), assets and net investment in-
come of any related organization with respect to an 
educational institution shall be treated as assets and 
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net investment income, respectively, of the edu-
cational institution, except that— 
‘‘(A) no such amount shall be taken into 
account with respect to more than 1 educational 
institution, and 
‘‘(B) unless such organization is controlled 
by such institution or is described in section 
509(a)(3) with respect to such institution for 
the taxable year, assets and net investment in-
come which are not intended or available for 
the use or benefit of the educational institution 
shall not be taken into account. 
‘‘(2) RELATED ORGANIZATION.—For purposes 
of this subsection, the term ‘related organization’ 
means, with respect to an educational institution, 
any organization which— 
‘‘(A) controls, or is controlled by, such in-
stitution, 
‘‘(B) is controlled by 1 or more persons 
which also control such institution, or 
‘‘(C) is a supported organization (as de-
fined in section 509(f)(3)), or an organization 
described in section 509(a)(3), during the tax-
able year with respect to such institution. 
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‘‘(h) REGULATIONS.—The Secretary shall prescribe 
such regulations or other guidance as may be necessary 
to prevent avoidance of the tax under this section, includ-
ing regulations or other guidance to prevent avoidance of 
such tax through the restructuring of endowment funds 
or other arrangements designed to reduce or eliminate the 
value of net investment income or assets subject to the 
tax imposed by this section.’’. 
(b) REQUIREMENT TO REPORT CERTAIN INFORMA-
TION WITH RESPECT TO APPLICATION OF EXCISE TAX 
BASED ON INVESTMENT INCOME OF PRIVATE COLLEGES 
AND UNIVERSITIES.—Section 6033 is amended by redes-
ignating subsection (o) as subsection (p) and by inserting 
after subsection (n) the following new subsection: 
‘‘(o) REQUIREMENT TO REPORT CERTAIN INFORMA-
TION WITH RESPECT TO EXCISE TAX BASED ON INVEST-
MENT INCOME
OF PRIVATE COLLEGES
AND UNIVER-
SITIES.—Each applicable educational institution described 
in section 4968(c) which is subject to the requirements 
of subsection (a) shall include on the return required 
under subsection (a)— 
‘‘(1) the number of eligible students taken into 
account under section 4968(c)(1)(D), and 
‘‘(2) the number of students of such institution 
(determined after application of section 4968(e)).’’. 
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(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2025. 
SEC. 112022. INCREASE IN RATE OF TAX ON NET INVEST-
MENT INCOME OF CERTAIN PRIVATE FOUN-
DATIONS. 
(a) IN GENERAL.—Section 4940(a) is amended by 
striking ‘‘1.39 percent’’ and inserting ‘‘the applicable per-
centage’’. 
(b) APPLICABLE PERCENTAGE.—Section 4940(a) is 
amended— 
(1) by striking ‘‘There is hereby’’ and inserting 
the following: 
‘‘(1) IMPOSITION OF TAX.—There is hereby’’, 
and 
(2) by adding at the end the following new 
paragraphs: 
‘‘(2) APPLICABLE PERCENTAGE.—For purposes 
of this subsection, the term ‘applicable percentage’ 
means, with respect to any taxable year— 
‘‘(A) in the case of a private foundation 
with assets of less than $50,000,000, 1.39 per-
cent, 
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‘‘(B) in the case of a private foundation 
with assets of at least $50,000,000, and less 
than $250,000,000, 2.78 percent, 
‘‘(C) in the case of a private foundation 
with assets of at least $250,000,000, and less 
than $5,000,000,000, 5 percent, and 
‘‘(D) in the case of a private foundation 
with assets of at least $5,000,000,000, 10 per-
cent. 
‘‘(3) ASSETS.—For purposes of this subsection, 
the assets of any private foundation shall be deter-
mined with respect to any taxable year as being the 
aggregate fair market value of all assets of such pri-
vate foundation, as determined as of the close of 
such taxable year. The preceding sentence shall be 
applied without reduction for any liabilities. 
‘‘(4) AGGREGATION.— 
‘‘(A) IN GENERAL.—For purposes of this 
subsection and subsection (c), assets and net 
investment income of any related organization 
with respect to a private foundation shall be 
treated as assets and net investment income, 
respectively, of the private foundation, except 
that— 
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‘‘(i) no such amount shall be taken 
into account with respect to more than 1 
private foundation, and 
‘‘(ii) unless such organization is con-
trolled by such private foundation, assets 
and net investment income which are not 
intended or available for the use or benefit 
of the private foundation shall not be 
taken into account. 
‘‘(B) RELATED ORGANIZATION.—For pur-
poses of this paragraph, the term ‘related orga-
nization’ means, with respect to a private foun-
dation, any organization which— 
‘‘(i) controls, or is controlled by, such 
private foundation, or 
‘‘(ii) is controlled by 1 or more per-
sons which also control such private foun-
dation.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
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SEC. 112023. CERTAIN PURCHASES OF EMPLOYEE-OWNED 
STOCK DISREGARDED FOR PURPOSES OF 
FOUNDATION 
TAX 
ON 
EXCESS 
BUSINESS 
HOLDINGS. 
(a) IN GENERAL.—Section 4943(c)(4)(A) is amended 
by adding at the end the following new clauses: 
‘‘(v) For purposes of clause (i), subpara-
graph (D), and paragraph (2), any voting stock 
which— 
‘‘(I) is not readily tradable on an es-
tablished securities market, 
‘‘(II) is purchased by the business en-
terprise on or after January 1, 2020, from 
an employee stock ownership plan (as de-
fined in section 4975(e)(7)) in which em-
ployees of such business enterprise partici-
pate, in connection with a distribution 
from such plan, and 
‘‘(III) is held by the business enter-
prise as treasury stock, cancelled, or re-
tired, 
shall be treated as outstanding voting stock, but 
only to the extent so treating such stock would 
not result in permitted holdings exceeding 49 
percent (determined without regard to this 
clause). The preceding sentence shall not apply 
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with respect to the purchase of stock from a 
plan during the 10-year period beginning on the 
date the plan is established. 
‘‘(vi) Section 4943(c)(4)(A)(ii) shall not 
apply with respect to any decrease in the per-
centage of holdings in a business enterprise by 
reason of the application of clause (v).’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years ending after the 
date of the enactment of this Act and to purchases by 
a business enterprise of voting stock in taxable years be-
ginning after December 31, 2019. 
SEC. 112024. UNRELATED BUSINESS TAXABLE INCOME IN-
CREASED BY AMOUNT OF CERTAIN FRINGE 
BENEFIT EXPENSES FOR WHICH DEDUCTION 
IS DISALLOWED. 
(a) IN GENERAL.—Section 512(a) is amended by 
adding at the end the following new paragraph: 
‘‘(7) INCREASE IN UNRELATED BUSINESS TAX-
ABLE INCOME BY DISALLOWED FRINGE.— 
‘‘(A) IN
GENERAL.—Unrelated business 
taxable income of an organization shall be in-
creased by any amount— 
‘‘(i) which is paid or incurred by such 
organization for any qualified transpor-
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tation fringe (as defined in section 132(f)) 
or any parking facility used in connection 
with qualified parking (as defined in sec-
tion 132(f)(5)(C)), 
‘‘(ii) which is not directly connected 
with an unrelated trade or business which 
is regularly carried on by the organization, 
and 
‘‘(iii) for which a deduction is not al-
lowable under this chapter by reason of 
section 274. 
‘‘(B) EXCEPTION FOR CHURCH ORGANIZA-
TIONS.—Subparagraph (A) shall not apply to— 
‘‘(i) any organization to which section 
6033(a)(1) does not apply by reason of 
clause (i) or (iii) of section 6033(a)(3)(A), 
and 
‘‘(ii) any church-affiliated organiza-
tion described in section 501(c) which is 
not required to file an annual return under 
section 6033(a)(1) by reason of section 
6033(a)(3)(B). 
‘‘(C) TREATMENT AS INCOME FROM SEPA-
RATE TRADE OR BUSINESS.—For purposes of 
paragraph (6), any increase under subpara-
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graph (A) shall be treated as unrelated business 
taxable income with respect to an unrelated 
trade or business separate from any other unre-
lated trade or business of the organization. 
‘‘(D) REGULATIONS.— The Secretary shall 
issue such regulations or other guidance as may 
be necessary or appropriate to carry out the 
purposes of this paragraph, including regula-
tions or other guidance providing for the appro-
priate allocation of costs with respect to facili-
ties used for parking.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to amounts paid or incurred after 
December 31, 2025. 
SEC. 112025. EXCLUSION OF RESEARCH INCOME LIMITED 
TO PUBLICLY AVAILABLE RESEARCH. 
(a) IN GENERAL.—Section 512(b)(9) is amended by 
striking ‘‘from research’’ and inserting ‘‘from such re-
search’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to amounts received or accrued 
after December 31, 2025. 
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SEC. 112026. LIMITATION ON EXCESS BUSINESS LOSSES OF 
NONCORPORATE TAXPAYERS. 
(a) RULE MADE PERMANENT.—Section 461(l)(1) is 
amended by striking ‘‘and before January 1, 2029,’’ each 
place it appears. 
(b) EXCESS BUSINESS LOSS DETERMINED ON A CU-
MULATIVE BASIS WITH RESPECT TO PERIODS AFTER 
2024.—Section 461(l)(2) is amended to read as follows: 
‘‘(2) DISALLOWED LOSS CARRYOVER.—Any loss 
disallowed under paragraph (1) for any taxable year 
shall be treated for purposes of this title as a loss 
attributable to a trade or business of the taxpayer 
(other than a trade or business described in the last 
sentence of paragraph (3)(A)) arising in the subse-
quent taxable year. To the extent provided by the 
Secretary, for purposes of applying section 1341 and 
subtitle F, a loss treated as arising under the pre-
ceding sentence shall be treated (to the extent not 
inconsistent with the purposes of this subsection) in 
a manner similar to the manner in which net oper-
ating losses are treated for purposes of such provi-
sions.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to losses arising (or treated as aris-
ing under section 461(l)(2) of the Internal Revenue Code 
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of 1986, as amended by this section) in taxable years be-
ginning after December 31, 2024. 
SEC. 112027. 1-PERCENT FLOOR ON DEDUCTION OF CHARI-
TABLE CONTRIBUTIONS MADE BY CORPORA-
TIONS. 
(a) IN GENERAL.—Section 170(b)(2)(A) is amended 
to read as follows: 
‘‘(A) IN
GENERAL.—Any charitable con-
tribution (other than any contribution to which 
subparagraph (B) or subparagraph (C) applies 
or any contribution for which a deduction is not 
allowable under this section without regard to 
this paragraph) shall be allowed as a deduction 
under this subsection (a) only to the extent that 
the aggregate of such contributions— 
‘‘(i) exceeds 1 percent of the tax-
payer’s taxable income, and 
‘‘(ii) does not exceed 10 percent of the 
taxpayer’s taxable income.’’. 
(b) APPLICATION
OF
CARRYFORWARD.—Section 
170(d)(2) is amended to read as follows: 
‘‘(2) CORPORATIONS.— 
‘‘(A) IN
GENERAL.—Any charitable con-
tribution taken into account under subsection 
(b)(2)(A) for any taxable year which is not al-
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HR 1 PCS
lowed as a deduction by reason of clause (ii) 
thereof shall be taken into account as a chari-
table contribution for the succeeding taxable 
year, except that, for purposes of determining 
under this subparagraph whether such contribu-
tion is allowed in such succeeding taxable year, 
contributions in such succeeding taxable year 
(determined without regard to this paragraph) 
shall be taken into account under subsection 
(b)(2)(A) before any contribution taken into ac-
count by reason of this paragraph. 
‘‘(B) 5-YEAR CARRYFORWARD.—No chari-
table contribution may be carried forward under 
subparagraph (A) to any taxable year following 
the fifth taxable year after the taxable year in 
which the charitable contribution was first 
taken into account. For purposes of the pre-
ceding sentence, contributions shall be treated 
as allowed on a first-in first-out basis. 
‘‘(C) CONTRIBUTIONS DISALLOWED BY 1- 
PERCENT
FLOOR
CARRIED
FORWARD
ONLY 
FROM YEARS IN WHICH 10 PERCENT LIMITA-
TION IS EXCEEDED.—In the case of any taxable 
year from which a charitable contribution is 
carried forward under subparagraph (A) (deter-
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mined without regard this subparagraph), sub-
paragraph (A) shall be applied by substituting 
‘clause (i) or (ii)’ for ‘clause (ii)’. 
‘‘(D) SPECIAL RULE FOR NET OPERATING 
LOSS CARRYOVERS.—The amount of charitable 
contributions carried forward under subpara-
graph (A) shall be reduced to the extent that 
such carryfoward would (but for this subpara-
graph) reduce taxable income (as computed for 
purposes of the second sentence of section 
172(b)(2)) and increase a net operating loss 
carryover under section 172 to a succeeding 
taxable year.’’. 
(c) 
CONFORMING
AMENDMENTS.—Subparagraph 
(B)(ii) and (C)(ii) of section 170(b)(2) are each amended 
by inserting ‘‘other than subparagraph (C) thereof’’ after 
‘‘subsection (d)(2)’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2025. 
SEC. 112028. ENFORCEMENT OF REMEDIES AGAINST UN-
FAIR FOREIGN TAXES. 
(a) IN GENERAL.—Subpart D of part II of sub-
chapter N of chapter 1 is amended by adding at the end 
the following new section: 
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‘‘SEC. 899. ENFORCEMENT OF REMEDIES AGAINST UNFAIR 
FOREIGN TAXES. 
‘‘(a) INCREASED RATES OF TAX ON FOREIGN PER-
SONS OF DISCRIMINATORY FOREIGN COUNTRIES.— 
‘‘(1) 
TAXES
OTHER
THAN
WITHHOLDING 
TAXES.— 
‘‘(A) IN GENERAL.—In the case of any ap-
plicable person, each specified rate of tax (or 
any rate of tax applicable in lieu of such statu-
tory rate) shall be increased by the applicable 
number of percentage points. 
‘‘(B) SPECIFIED RATE OF TAX.—For pur-
poses of this paragraph, the term ‘specified rate 
of tax’ means— 
‘‘(i) the rates of tax specified in para-
graphs (1) and (2) of section 871(a), 
‘‘(ii) in the case of any applicable per-
son to which section 871(b) applies, each 
rate of tax in effect under section 1, 
‘‘(iii) the rate of tax specified in sec-
tion 881(a), 
‘‘(iv) in the case of any applicable per-
son to which section 882(a) applies, the 
rate of tax specified in section 11(b), 
‘‘(v) the rate of tax specified in sec-
tion 884(a), and 
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HR 1 PCS
‘‘(vi) the rate of tax specified in sec-
tion 4948(a). 
‘‘(C) APPLICATION OF INCREASED RATES 
TO EFFECTIVELY CONNECTED INCOME OF NON-
RESIDENT
ALIEN
INDIVIDUALS
LIMITED
TO 
GAINS ON UNITED STATES REAL PROPERTY IN-
TERESTS.—In the case of any individual to 
whom subparagraph (A) applies, the tax im-
posed under section 1 on such individual (after 
application of subparagraph (A)) shall be re-
duced (but not below zero) by the excess of— 
‘‘(i) the tax which would be imposed 
under such section (after application of 
subparagraph (A)) if FIRPTA items were 
not taken into account, over 
‘‘(ii) the tax which would be imposed 
under such section if FIRPTA items were 
not taken into account, and subparagraph 
(A) did not apply. 
For purposes of this clause, the term ‘FIRPTA 
items’ means gains and losses taken into ac-
count under section 871(b)(1) by reason of sec-
tion 897(a)(1)(A). 
‘‘(D) APPLICATION OF INCREASED RATES 
TO CERTAIN FOREIGN GOVERNMENTS.—In the 
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case of any applicable person described in sub-
section (b)(1)(A), section 892(a) shall not 
apply. 
‘‘(2) MODIFICATION
OF
BASE
EROSION
AND 
ANTI-ABUSE TAX.—In the case of any corporation 
described in subsection (b)(1)(E) (applied by sub-
stituting ‘corporation’ for ‘foreign corporation’)— 
‘‘(A) such corporation shall be treated as 
described in subparagraphs (B) and (C) of sec-
tion 59A(e)(1) for purposes of determining 
whether such corporation is an applicable tax-
payer, 
‘‘(B) section 59A(b)(1) shall be applied 
by— 
‘‘(i) substituting ‘12.5 percent’ for 
‘10.1 percent’ in subparagraph (A), and 
‘‘(ii) by treating the amount described 
in section 59A(b)(1)(B)(ii) as being zero, 
‘‘(C) subsections (c)(2)(B), (c)(4)(B)(ii), 
and (d)(5) of section 59A shall not apply, and 
‘‘(D) if any amount (other than the pur-
chase price of depreciable or amortizable prop-
erty or inventory) would have been a base ero-
sion payment described in section 59A(d)(1) 
but for the fact that the taxpayer capitalizes 
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the amount, then solely for purposes of calcu-
lating the taxpayer’s base erosion payments 
(within the meaning of section 59A(d)) and 
base erosion tax benefits (within the meaning of 
section 59A(c)(2)), such amount shall be treat-
ed as if it had been deducted rather than cap-
italized. 
‘‘(3) WITHHOLDING TAXES.— 
‘‘(A) IN
GENERAL.—In the case of any 
payment to an applicable person, each rate of 
tax specified in section 1441(a) or 1442(a) (or 
any rate of tax applicable in lieu of such statu-
tory rate) shall be increased by the applicable 
number of percentage points. The preceding 
sentence shall not apply to the 14 percent rate 
of tax specified in section 1441(a). 
‘‘(B) DISPOSITION
OF
UNITED
STATES 
REAL PROPERTY INTERESTS.—In the case of 
any disposition of a United States real property 
interest (as defined in section 897(c)) by an ap-
plicable person, the rate of tax specified in sec-
tion 1445(a) (or any rate of tax applicable in 
lieu of such statutory rate) shall be increased 
by the applicable number of percentage points. 
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‘‘(C) OTHER DISPOSITIONS AND DISTRIBU-
TIONS
RELATED
TO
UNITED
STATES
REAL 
PROPERTY INTERESTS.—In the case of any dis-
position or distribution described in any para-
graph of section 1445(e), each rate of tax in 
such paragraph (or any rate of tax applicable in 
lieu of such statutory rate) shall be increased 
by the applicable number of percentage points 
if— 
‘‘(i) in the case of section 1445(e)(1), 
the foreign person referred to in subpara-
graph (A) or (B) of such section is an ap-
plicable person, 
‘‘(ii) in the case of section 1445(e)(2), 
the foreign corporation referred to in such 
section is an applicable person, 
‘‘(iii) 
in 
the 
case 
of 
section 
1445(e)(3), the foreign shareholder re-
ferred to in such section is an applicable 
person, 
‘‘(iv) in the case of section 1445(e)(4), 
the foreign person referred to in such sec-
tion is an applicable person, 
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‘‘(v) in the case of section 1445(e)(5), 
the Secretary issues regulations or other 
guidance providing for such increase, and 
‘‘(vi) in the case of section 1445(e)(6), 
the nonresident alien individual or foreign 
corporation referred to in such section is 
an applicable person. 
‘‘(4) APPLICABLE
NUMBER
OF
PERCENTAGE 
POINTS.—For purposes of this paragraph— 
‘‘(A) IN GENERAL.—The term ‘applicable 
number of percentage points’ means, with re-
spect to any discriminatory foreign country— 
‘‘(i) with respect to the 1-year period 
beginning on the applicable date with re-
spect to such foreign country, 5 percentage 
points, and 
‘‘(ii) with respect to any period after 
the 1-year period to which clause (i) ap-
plies, the sum of — 
‘‘(I) 5 percentage points, plus 
‘‘(II) an additional 5 percentage 
points for each annual anniversary of 
such applicable date which has oc-
curred before the beginning of such 
period. 
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‘‘(B) CAP ON INCREASE.—Notwithstanding 
subparagraph (A), the increase in any rate 
under paragraph (1) or (3) shall not result in 
such rate exceeding the amount of the statutory 
rate (determined without regard to any rate ap-
plicable in lieu of such statutory rate) increased 
by 20 percentage points. 
‘‘(C) APPLICABLE DATE.—For purposes of 
this section, the term ‘applicable date’ means, 
with respect to any discriminatory foreign coun-
try, the first day of the first calendar year be-
ginning on or after the latest of— 
‘‘(i) 90 days after the date of enact-
ment of this section, 
‘‘(ii) 180 days after the date of enact-
ment of the unfair foreign tax that causes 
such country to be treated as a discrimina-
tory foreign country, or 
‘‘(iii) the first date that an unfair for-
eign tax of such country begins to apply. 
‘‘(D) APPLICATION TO TAXABLE YEARS.— 
For purposes of paragraph (1), the applicable 
number of percentage points is the applicable 
number of percentage points in effect for the 
discriminatory foreign country during the tax-
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HR 1 PCS
payer’s taxable year. If more than one applica-
ble number of percentage points is in effect for 
the discriminatory foreign country during the 
taxpayer’s taxable year, the applicable number 
of percentage points shall be determined by 
using a weighted average rate based on each 
applicable number of percentage points in effect 
during such taxable year and the number of 
days during which it was in effect. For pur-
poses of the prior sentence, the applicable num-
ber of percentage points in effect for the dis-
criminatory foreign country for the period be-
fore the applicable date is treated as zero, and, 
if the taxpayer ceases to be an applicable per-
son during its taxable year, the applicable num-
ber of percentage points in effect for the dis-
criminatory foreign country for the period after 
the taxpayer ceased to be an applicable person 
is treated as zero. 
‘‘(E) 
APPLICATION
TO
WITHHOLDING 
TAXES.—For purposes of paragraph (3), the 
applicable number of percentage points shall be 
determined with respect to the date of the pay-
ment or disposition, as the case may be. 
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‘‘(F) MULTIPLE DISCRIMINATORY FOREIGN 
COUNTRIES.—For purposes of paragraphs (1) 
and (3), if, on any day, the taxpayer is an ap-
plicable person with respect to more than one 
discriminatory foreign country, the highest ap-
plicable number of percentage points in effect 
shall apply. 
‘‘(G) INCREASE NOT APPLICABLE TO NON-
DISCRIMINATORY FOREIGN COUNTRIES.—In the 
case of any foreign country which is not a dis-
criminatory foreign country, the applicable 
number of percentage points is zero. 
‘‘(5) YEARS TO WHICH APPLICABLE.— 
‘‘(A) TAXABLE YEAR.—In the case of any 
person, paragraphs (1) and (2) shall apply to 
each taxable year beginning— 
‘‘(i) after the later of— 
‘‘(I) 90 days after the date of en-
actment of this section, 
‘‘(II) 180 days after the date of 
enactment of the unfair foreign tax 
that causes such country to be treated 
as a discriminatory foreign country, 
or 
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‘‘(III) the first date that an un-
fair foreign tax of such country begins 
to apply, and 
‘‘(ii) before the last date on which the 
discriminatory foreign country imposes an 
unfair foreign tax. 
‘‘(B) WITHHOLDING.—In the case of any 
person, paragraph (3) shall apply to each cal-
endar year beginning during the period that 
such person is an applicable person. 
‘‘(C) SAFE HARBOR FOR WITHHOLDING.— 
Paragraph (3) shall not apply— 
‘‘(i) in the case of any applicable per-
son to which clause (ii) does not apply, if 
the discriminatory foreign country with re-
spect to which such person is an applicable 
person is not listed by the Secretary as a 
discriminatory foreign country, and 
‘‘(ii) in the case of any applicable per-
son described in subparagraph (E) or (F) 
of subsection (b)(1), if the discriminatory 
foreign country with respect to which such 
person is an applicable person (and such 
country’s applicable date) has been listed 
in such guidance for less than 90 days. 
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HR 1 PCS
‘‘(D) TEMPORARY
SAFE
HARBOR
FOR 
WITHHOLDING AGENTS.—No penalties or inter-
est shall be imposed with respect to failures, be-
fore January 1, 2027, to deduct or withhold 
any amounts by reason of paragraph (3) if the 
person required to deduct or withhold such 
amounts demonstrates to the satisfaction of the 
Secretary that such person made best efforts to 
comply with paragraph (3) in a timely manner. 
‘‘(b) APPLICABLE PERSON.—For purposes of this 
section— 
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided by the Secretary, the term ‘applicable person’ 
means— 
‘‘(A) any government (within the meaning 
of section 892) of any discriminatory foreign 
country, 
‘‘(B) any individual (other than a citizen 
or resident of the United States) who is tax 
resident of a discriminatory foreign country, 
‘‘(C) any foreign corporation (other than a 
United States-owned foreign corporation, as de-
fined in section 904(h)(6)) which is a tax resi-
dent of a discriminatory foreign country, 
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‘‘(D) any private foundation (within the 
meaning of section 4948) created or organized 
in a discriminatory foreign country, 
‘‘(E) any foreign corporation (other than a 
publicly held corporation) if more than 50 per-
cent of— 
‘‘(i) the total combined voting power 
of all classes of stock of such corporation 
entitled to vote, or 
‘‘(ii) the total value of the stock of 
such corporation, 
is owned (within the meaning of section 958(a)) 
by persons described in this paragraph, 
‘‘(F) any trust the majority of the bene-
ficial interests of which are held (directly or in-
directly) by persons described in this para-
graph, and 
‘‘(G) foreign partnerships, branches, and 
any other entity identified with respect to a dis-
criminatory foreign country by the Secretary 
for purposes of this subsection. 
‘‘(2) CONTINUATION
OF
TREATMENT
DURING 
CERTAIN PERIODS.—For purposes of this section, if 
a person would cease to be an applicable person for 
a period of less than one year, such person shall con-
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tinue to be treated as an applicable person during 
such period. 
‘‘(c) UNFAIR FOREIGN TAX.—For purposes of this 
section— 
‘‘(1) IN GENERAL.—The term ‘unfair foreign 
tax’ means an undertaxed profits rule (UTPR), dig-
ital services tax, diverted profits tax, and, to the ex-
tent provided by the Secretary, an extraterritorial 
tax, discriminatory tax, or any other tax enacted 
with a public or stated purpose indicating the tax 
will be economically borne, directly or indirectly, dis-
proportionately by United States persons. Such term 
shall not include any tax which neither applies to— 
‘‘(A) any United States person (including 
a trade or business of a United States person), 
nor 
‘‘(B) any foreign corporation (including a 
trade or business of such foreign corporation) if 
the foreign corporation is a controlled foreign 
corporation and more than 50 percent of the 
total combined voting power of all classes of 
stock of such corporation entitled to vote, or the 
total value of the stock of such corporation) is 
owned (within the meaning of section 958(a)) 
by United States persons. 
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‘‘(2) 
EXTRATERRITORIAL
TAX.—The 
term 
‘extraterritorial tax’ means any tax imposed by a 
foreign country on a corporation (including any 
trade or business of such corporation) which is de-
termined by reference to any income or profits re-
ceived by any person (including any trade or busi-
ness of any person) by reason of such person being 
connected to such corporation through any chain of 
ownership, determined without regard to the owner-
ship interests of any individual, and other than by 
reason of such corporation having a direct or indi-
rect ownership interest in such person. 
‘‘(3) DISCRIMINATORY
TAX.—The term ‘dis-
criminatory tax’ means any tax imposed by a foreign 
country if— 
‘‘(A) such tax applies more than inciden-
tally to items of income that would not be con-
sidered to be from sources, or effectively con-
nected to a trade or business, within the foreign 
country under the rules of part I of this sub-
chapter if such part were applied by treating 
such foreign country as though it were the 
United States, 
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‘‘(B) such tax is imposed on a base other 
than net income and is not computed by per-
mitting recovery of costs and expenses, 
‘‘(C) such tax is exclusively or predomi-
nantly applicable, in practice or by its terms, to 
nonresident individuals and foreign corporations 
or partnerships (as determined under rules 
similar to paragraphs (4) and (5) of section 
7701(a) by treating the foreign country as 
though it were the United States) because of 
the application of revenue thresholds, exemp-
tions or exclusions for taxpayers subject to such 
foreign country’s corporate income tax, or re-
strictions of scope that ensure that substantially 
all residents (other than foreign corporations 
and partnerships (as so determined)) supplying 
comparable goods or services are excluded from 
the application of such tax, or 
‘‘(D) such tax is not treated as an income 
tax under the laws of such foreign country or 
is otherwise treated by such foreign country as 
outside the scope of any agreements that are in 
force between such foreign country and one or 
more other jurisdictions for the avoidance of 
double taxation with respect to taxes on income. 
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‘‘(4) EXCEPTIONS.—Except as otherwise pro-
vided by the Secretary, the terms ‘extraterritorial 
tax’ and ‘discriminatory tax’ shall not include any 
generally applicable tax which constitutes— 
‘‘(A) an income tax generally imposed on 
the income of citizens or residents of the for-
eign country, even if the computation of income 
includes payments that would be foreign source 
income under part I of this subchapter, 
‘‘(B) an income tax which would be an un-
fair foreign tax (determined without regard to 
this subparagraph) solely because it is imposed 
on the income of nonresidents attributable to a 
trade or business in such foreign country, 
‘‘(C) an income tax which would be an un-
fair foreign tax (determined without regard to 
this subparagraph) solely because it is imposed 
on citizens or residents of such foreign country 
by reference to the income of a corporate sub-
sidiary of such person, 
‘‘(D) a withholding tax, or other gross 
basis tax, on any amount described in section 
871(a)(1) or 881(a), other than any with-
holding tax, or other gross basis tax, imposed 
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with respect to services performed by persons 
other than individuals, 
‘‘(E) a value added tax, goods and services 
tax, sales tax, or other similar tax on consump-
tion, 
‘‘(F) a tax imposed with respect to trans-
actions on a per-unit or per-transaction basis 
rather than on an ad valorem basis, 
‘‘(G) a tax on real or personal property, an 
estate tax, a gift tax, other similar tax, 
‘‘(H) a tax which would not be an 
extraterritorial tax or discriminatory tax (deter-
mined without regard to this subparagraph) ex-
cept by reason of consolidation or loss sharing 
rules that generally apply only with respect to 
income of tax residents of the foreign country, 
or 
‘‘(I) any other tax identified by the Sec-
retary for purposes of this paragraph. 
‘‘(d) OTHER DEFINITIONS.—For purposes of this 
section— 
‘‘(1) DISCRIMINATORY
FOREIGN
COUNTRY.— 
The term ‘discriminatory foreign country’ means any 
foreign country which has one or more unfair for-
eign taxes. 
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HR 1 PCS
‘‘(2) FOREIGN
COUNTRY.—The term ‘foreign 
country’ means a foreign country (or political sub-
division thereof) or a dependent territory or posses-
sion of a foreign country. Such term does not in-
clude any possession of the United States. 
‘‘(3) TAX.—The term ‘tax’ includes any in-
crease in tax whether effectuated by an increase in 
the rate or base of a tax, by a denial of deductions 
or credits, or otherwise. 
‘‘(e) REGULATIONS
AND OTHER GUIDANCE.—The 
Secretary shall issue such regulations or other guidance 
as may be necessary or appropriate to carry out the pur-
poses of this section, including regulations or other guid-
ance which— 
‘‘(1) provide for such adjustments to the appli-
cation of this section as are necessary to prevent the 
avoidance of the purposes of this section, including 
the application of this section (including subsections 
(b)(1)(E) 
and 
(c)(2)(A)(ii)) 
with 
respect 
to 
branches, partnerships, and other entities (whether 
or not otherwise disregarded for purposes of this 
chapter), 
‘‘(2) list the discriminatory foreign countries 
(and each such country’s applicable date) in guid-
ance, and update such guidance on a quarterly basis, 
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‘‘(3) provide notice to Congress with respect to 
changes to the list under paragraph (2), 
‘‘(4) exercise the authority to provide exceptions 
under subsections (b)(1), (c)(4), and 
‘‘(5) prevent the application of subsection 
(a)(2)(D) from resulting in double counting of 
amounts for purposes of section 59A(c)(4)(A)(ii).’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for subpart D of part II of subchapter N of chapter 1 
is amended by adding at the end the following new item: 
‘‘Sec. 899. Enforcement of remedies against unfair foreign taxes.’’. 
SEC. 112029. MODIFICATION OF TREATMENT OF SILENC-
ERS. 
(a) IN GENERAL.—Section 5845(a) is amended by 
striking ‘‘(7) any silencer’’ and all that follows through 
‘‘; and (8)’’ and inserting ‘‘and (7)’’. 
(b) TRANSFER TAX.—Section 5811(a) is amended to 
read as follows: 
‘‘(a) RATE.—There shall be levied, collected, and paid 
on firearms transferred a tax at the rate of— 
‘‘(1) $5 for each firearm transferred in the case 
of a weapon classified as any other weapon under 
section 5845(e), 
‘‘(2) $0 for each firearm transferred in the case 
of a silencer (as defined in section 921 of title 18, 
United States Code), and 
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HR 1 PCS
‘‘(3) $200 for any other firearm transferred.’’. 
(c) MAKING TAX.—Section 5821(a) is amended to 
read as follows: 
‘‘(a) RATE.—There shall be levied, collected, and paid 
upon the making of a firearm a tax at the rate of— 
‘‘(1) $0 for each silencer (as defined in section 
921 of title 18, United States Code) made, and 
‘‘(2) $200 for any other firearm made.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to calendar quarters beginning 
more than 90 days after the date of the enactment of this 
Act. 
SEC. 112030. MODIFICATIONS TO DE MINIMIS ENTRY PRIVI-
LEGE FOR COMMERCIAL SHIPMENTS. 
(a) CIVIL PENALTY.— 
(1) ADDITIONAL
PENALTY
IMPOSED.—Section 
321 of the Tariff Act of 1930 (19 U.S.C. 1321) is 
amended by adding at the end the following new 
subsection: 
‘‘(c) Any person who enters, introduces, facilitates, 
or attempts to introduce an article into the United States 
using the privilege of this section, the importation of which 
violates any other provision of United States customs law, 
shall be assessed, in addition to any other penalty per-
mitted by law, a civil penalty of up to $5,000 for the first 
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violation and up to $10,000 for each subsequent viola-
tion.’’. 
(2) EFFECTIVE DATE.—The amendment made 
by paragraph (1) shall take effect 30 days after the 
date of the enactment of this Act. 
(b) REPEAL
OF COMMERCIAL SHIPMENT EXCEP-
TION.— 
(1) REPEAL.—Section 321(a)(2)(B) of such Act 
(19 U.S.C. 1321(a)(2)(B)) is amended by striking 
‘‘of this Act, or’’ and all that follows through ‘‘sub-
division (2); and’’ and inserting ‘‘of this Act; and’’. 
(2) CONFORMING REPEAL.—Subsection (c) of 
such section 321, as added by subsection (a) of this 
section, is repealed. 
(3) EFFECTIVE DATE.—The amendments made 
by this subsection shall take effect on July 1, 2027. 
SEC. 112031. LIMITATION ON DRAWBACK OF TAXES PAID 
WITH RESPECT TO SUBSTITUTED MERCHAN-
DISE. 
Effective for claims filed on or after July 1, 2026, 
for purposes of drawback of internal revenue tax imposed 
under chapter 52 of the Internal Revenue Code of 1986, 
the amount of drawback granted under such Code, or the 
Tariff Act of 1930, on the export or destruction of sub-
stituted merchandise may not exceed the amount of taxes 
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paid (and not returned by refund, credit, or drawback) 
on the substituted merchandise. 
SEC. 112032. TREATMENT OF PAYMENTS FROM PARTNER-
SHIPS TO PARTNERS FOR PROPERTY OR 
SERVICES. 
(a) IN GENERAL.—Section 707(a)(2) is amended by 
striking ‘‘Under regulations prescribed’’ and inserting 
‘‘Except as provided’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to services performed, and property 
transferred, after the date of the enactment of this Act. 
(c) RULE OF CONSTRUCTION.—Nothing in this sec-
tion, or the amendments made by this section, shall be 
construed to create any inference with respect to the prop-
er treatment under section 707(a) of the Internal Revenue 
Code of 1986 with respect to payments from a partnership 
to a partner for services performed, or property trans-
ferred, on or before the date of the enactment of this Act. 
PART 2—REMOVING TAXPAYER BENEFITS FOR 
ILLEGAL IMMIGRANTS 
SEC. 112101. PERMITTING PREMIUM TAX CREDIT ONLY FOR 
CERTAIN INDIVIDUALS. 
(a) IN GENERAL.—Section 36B(e)(1) is amended by 
inserting ‘‘or, in the case of aliens who are lawfully 
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present, are not eligible aliens’’ after ‘‘individuals who are 
not lawfully present’’. 
(b) ELIGIBLE ALIENS.—Section 36B(e)(2) is amend-
ed— 
(1) by striking ‘‘For purposes of this section, 
an individual’’ and inserting the following: ‘‘For pur-
poses of this section— 
‘‘(A) IN GENERAL.—An individual’’, and 
(2) by adding at the end the following new sub-
paragraph: 
‘‘(B) ELIGIBLE
ALIENS.—An individual 
who is an alien and lawfully present shall be 
treated as an eligible alien if and only if such 
individual is, and is reasonably expected to be 
for the entire period of enrollment for which the 
credit under this section is being claimed— 
‘‘(i) an alien who is lawfully admitted 
for permanent residence under the Immi-
gration and Nationality Act (8 U.S.C. 
1101 et seq.), 
‘‘(ii) an alien who— 
‘‘(I) is a citizen or national of the 
Republic of Cuba, 
‘‘(II) is the beneficiary of an ap-
proved petition under section 203(a) 
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of the Immigration and Nationality 
Act (8 U.S.C. 1153(a)), 
‘‘(III) meets all eligibility re-
quirements for an immigrant visa but 
for whom such a visa is not imme-
diately available, 
‘‘(IV) is not otherwise inadmis-
sible under section 212(a) of such Act 
(8 U.S.C. 1182(a)), and 
‘‘(V) is physically present in the 
United States pursuant to a grant of 
parole in furtherance of the commit-
ment of the United States to the min-
imum level of annual legal migration 
of Cuban nationals to the United 
States specified in the U.S.-Cuba 
Joint 
Communique´
on 
Migration, 
done at New York September 9, 1994, 
and reaffirmed in the Cuba-United 
States: Joint Statement on Normal-
ization of Migration, Building on the 
Agreement of September 9, 1994, 
done at New York May 2, 1995, or 
‘‘(iii) an individual who lawfully re-
sides in the United States in accordance 
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with a Compact of Free Association re-
ferred to in section 402(b)(2)(G) of the 
Personal Responsibility and Work Oppor-
tunity Reconciliation Act of 1996 (8 
U.S.C. 1612(b)(2)(G)).’’. 
(c) CONFORMING AMENDMENTS.— 
(1) VERIFICATION OF INFORMATION.—Section 
1411 of the Patient Protection and Affordable Care 
Act (42 U.S.C. 18081) is amended— 
(A) in subsection (a)— 
(i) in paragraph (1), by striking ‘‘and 
section 36B(e) of the Internal Revenue 
Code of 1986’’; and 
(ii) in paragraph (2)— 
(I) in subparagraph (A), by strik-
ing ‘‘and’’ at the end; 
(II) in subparagraph (B), by add-
ing ‘‘and’’ at the end; and 
(III) by adding at the end the 
following new subparagraph: 
‘‘(C) in the case such individual is an alien 
lawfully present in the United States, whether 
such individual is an eligible alien (within the 
meaning of section 36B(e)(2) of such Code);’’; 
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(B) in subsection (b)(3), by adding at the 
end the following new subparagraph: 
‘‘(D) IMMIGRATION STATUS.—In the case 
the individual’s eligibility is based on an attes-
tation of the enrollee’s immigration status, an 
attestation that such individual is an eligible 
alien (within the meaning of 36B(e)(2) of the 
Internal Revenue Code of 1986).’’; and 
(C) in subsection (c)(2)(B)(ii), by adding 
at the end the following new subclause: 
‘‘(III) In the case of an indi-
vidual described in clause (i)(I) with 
respect to whom a premium tax credit 
or reduced cost-sharing under section 
36B of the Internal Revenue Code of 
1986 or section 1402 is being claimed, 
the attestation that the individual is 
an eligible alien (within the meaning 
of section 36B(e)(2) of such Code).’’. 
(2) 
ADVANCE
DETERMINATIONS.—Section 
1412(d) of the Patient Protection and Affordable 
Care Act (42 U.S.C. 18082(d)) is amended by in-
serting before the period at the end the following: 
‘‘or, in the case of aliens who are lawfully present, 
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are not eligible aliens (within the meaning of section 
36B(e)(2) of the Internal Revenue Code of 1986)’’. 
(3) 
COST-SHARING
REDUCTIONS.—Section 
1402(e) of the Patient Protection and Affordable 
Care Act (42 U.S.C. 18071(e)) is amended— 
(A) in the header, by inserting ‘‘OR NOT 
ELIGIBLE ALIENS’’ after ‘‘INDIVIDUALS NOT 
LAWFULLY PRESENT’’; 
(B) in paragraph (1), in the matter pre-
ceding subparagraph (A), by inserting ‘‘or, in 
the case of an alien who is lawfully present, is 
not an eligible alien (within the meaning of sec-
tion 36B(e)(2) of the Internal Revenue Code of 
1986)’’ after ‘‘not lawfully present’’; and 
(C) by amending paragraph (2) to read as 
follows: 
‘‘(2) ELIGIBLE ALIENS.—For purposes of this 
section, an individual shall be treated as an eligible 
alien (within the meaning of section 36B(e)(2) of 
the Internal Revenue Code of 1986) if, and only if, 
the individual is, and for the entire period of enroll-
ment for which the cost-sharing reduction under this 
section is being claimed is reasonably expected to be, 
such an alien.’’. 
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(4) 
BASIC
HEALTH
PROGRAMS.—Section 
1331(e)(1) of the Patient Protection and Affordable 
Care Act (42 U.S.C. 18051(e)(1)) is amended by in-
serting before the period at the end the following: 
‘‘or, in the case of an alien who is lawfully present, 
an individual who is not an eligible alien (as defined 
in section 36B(e)(2) of the Internal Revenue Code 
of 1986’’. 
(5) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply with respect to plan 
years beginning on or after January 1, 2027. 
(d) CLERICAL AMENDMENTS.— 
(1) The heading for section 36B(e) is amended 
by inserting ‘‘AND NOT ELIGIBLE ALIENS’’ after 
‘‘INDIVIDUALS NOT LAWFULLY PRESENT’’. 
(2) The heading for section 36B(e)(2) is 
amended by inserting ‘‘; ELIGIBLE ALIENS’’ after 
‘‘LAWFULLY PRESENT’’. 
(e) REQUIREMENT TO MAINTAIN MINIMUM ESSEN-
TIAL COVERAGE.—Section 5000A(d)(3) is amended by 
striking ‘‘an alien lawfully present in the United States’’ 
and inserting ‘‘an eligible alien (within the meaning of sec-
tion 36B(e)(2))’’. 
(f) REGULATIONS.—The Secretary of the Treasury 
and the Secretary of Health and Human Services may 
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each prescribe such rules and other guidance as may be 
necessary or appropriate to carry out the amendments 
made by this section. 
(g) EFFECTIVE DATE.—The amendments made by 
this section (other than the amendments made by sub-
section (c)) shall apply to taxable years beginning after 
December 31, 2026. 
SEC. 112102. DISALLOWING PREMIUM TAX CREDIT DURING 
PERIODS OF MEDICAID INELIGIBILITY DUE 
TO ALIEN STATUS. 
(a) IN GENERAL.—Section 36B(c)(1) is amended by 
striking subparagraph (B) and by redesignating subpara-
graphs (C), (D), and (E) as subparagraphs (B), (C), and 
(D), respectively. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 36B(g)(4)(A) is amended by strik-
ing ‘‘subsection (c)(1)(C)’’ and inserting ‘‘subsection 
(c)(1)(B)’’. 
(2) Section 1331(e)(1)(B) of the Patient Pro-
tection and Affordable Care Act (42 U.S.C. 
18051(e)(1)(B)) is amended by striking ‘‘, or, in the 
case of’’ and all that follows through ‘‘such alien 
status’’. 
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(3) Section 1402(b) of such Act (42 U.S.C. 
18071(b)) is amended by striking the second sen-
tence. 
(c) REGULATIONS.—The Secretary of the Treasury 
and the Secretary of Health and Human Services may 
each prescribe such rules and other guidance as may be 
necessary or appropriate to carry out the amendments 
made by this section. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2025. 
SEC. 112103. LIMITING MEDICARE COVERAGE OF CERTAIN 
INDIVIDUALS. 
Title XVIII of the Social Security Act (42 U.S.C. 
1395 et seq.) is amended by adding at the end the fol-
lowing new section: 
‘‘SEC. 1899C. LIMITING MEDICARE COVERAGE OF CERTAIN 
INDIVIDUALS. 
‘‘(a) IN GENERAL.—Subject to subsection (b), an in-
dividual may be entitled to, or enrolled for, benefits under 
this title only if the individual is— 
‘‘(1) a citizen or national of the United States; 
‘‘(2) an alien who is lawfully admitted for per-
manent residence under the Immigration and Na-
tionality Act; 
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‘‘(3) an alien who— 
‘‘(A) is a citizen or national of the Repub-
lic of Cuba; 
‘‘(B) is the beneficiary of an approved peti-
tion under section 203(a) of the Immigration 
and Nationality Act; 
‘‘(C) meets all eligibility requirements for 
an immigrant visa but for whom such a visa is 
not immediately available; 
‘‘(D) is not otherwise inadmissible under 
section 212(a) of such Act; and 
‘‘(E) is physically present in the United 
States pursuant to a grant of parole in further-
ance of the commitment of the United States to 
the minimum level of annual legal migration of 
Cuban nationals to the United States specified 
in the U.S.-Cuba Joint Communique´ on Migra-
tion, done at New York September 9, 1994, and 
reaffirmed in the Cuba-United States: Joint 
Statement on Normalization of Migration, 
Building on the Agreement of September 9, 
1994, done at New York May 2, 1995; or 
‘‘(4) an individual who lawfully resides in the 
United States in accordance with a Compact of Free 
Association referred to in section 402(b)(2)(G) of 
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the Personal Responsibility and Work Opportunity 
Reconciliation Act of 1996. 
‘‘(b) APPLICATION TO INDIVIDUALS CURRENTLY EN-
TITLED TO OR ENROLLED FOR BENEFITS.— 
‘‘(1) IN GENERAL.—In the case of an individual 
who is entitled to, or enrolled for, benefits under this 
title as of the date of the enactment of this section, 
subsection (a) shall apply beginning on the date that 
is 1 year after such date of enactment. 
‘‘(2) REVIEW BY COMMISSIONER OF SOCIAL SE-
CURITY.— 
‘‘(A) IN
GENERAL.—Not later than 6 
months after the date of the enactment of this 
section, the Commissioner of Social Security 
shall complete a review of individuals entitled 
to, or enrolled for, benefits under this title as 
of such date of enactment for purposes of iden-
tifying individuals not described in any of para-
graphs (1) through (4) of subsection (a). 
‘‘(B) NOTICE.—The Commissioner of So-
cial Security shall notify each individual identi-
fied under the review conducted under subpara-
graph (A) that such individual’s entitlement to, 
or enrollment for, benefits under this title will 
be terminated as of the date that is 1 year after 
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the date of the enactment of this section. Such 
notification shall be made as soon as practicable 
after such identification and in a manner de-
signed to ensure such individual’s comprehen-
sion of such notification.’’. 
SEC. 112104. EXCISE TAX ON REMITTANCE TRANSFERS. 
(a) IN GENERAL.—Chapter 36 is amended by insert-
ing after subchapter B the following new subchapter: 
‘‘Subchapter C—Remittance Transfers 
‘‘Sec. 4475. Imposition of tax. 
‘‘SEC. 4475. IMPOSITION OF TAX. 
‘‘(a) IN GENERAL.—There is hereby imposed on any 
remittance transfer a tax equal to 3.5 percent of the 
amount of such transfer. 
‘‘(b) PAYMENT OF TAX.— 
‘‘(1) IN GENERAL.—The tax imposed by this 
section with respect to any remittance transfer shall 
be paid by the sender with respect to such transfer. 
‘‘(2) COLLECTION.—The remittance transfer 
provider with respect to any remittance transfer 
shall collect the amount of the tax imposed under 
subsection (a) with respect to such transfer from the 
sender and remit such tax quarterly to the Secretary 
at such time and in such manner as provided by the 
Secretary. 
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‘‘(3) SECONDARY
LIABILITY.—Where any tax 
imposed by subsection (a) is not paid at the time the 
transfer is made, then to the extent that such tax 
is not collected, such tax shall be paid by the remit-
tance transfer provider. 
‘‘(c) EXCEPTION
FOR
REMITTANCE
TRANSFERS 
SENT BY CITIZENS AND NATIONALS OF THE UNITED 
STATES THROUGH CERTAIN PROVIDERS.— 
‘‘(1) IN
GENERAL.—Subsection (a) shall not 
apply to any remittance transfer with respect to 
which the remittance transfer provider is a qualified 
remittance transfer provider and the sender is a 
verified United States sender. 
‘‘(2) QUALIFIED REMITTANCE TRANSFER PRO-
VIDER.—For purposes of this subsection, the term 
‘qualified remittance transfer provider’ means any 
remittance transfer provider which enters into a 
written agreement with the Secretary pursuant to 
which such provider agrees to verify the status of 
senders as citizens or nationals of the United States 
in such manner, and in accordance with such proce-
dures, as the Secretary may specify. 
‘‘(3) VERIFIED UNITED STATES SENDER.—For 
purposes of this subsection, the term ‘verified United 
States sender’ means any sender who is verified by 
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a qualified remittance transfer provider as being a 
citizen or national of the United States pursuant to 
an agreement described in paragraph (2). 
‘‘(d) DEFINITIONS.—For purposes of this section, the 
terms ‘remittance transfer’, ‘remittance transfer provider’, 
‘designated recipient’, and ‘sender’ shall each have the re-
spective meanings given such terms by section 920(g) of 
the Electronic Fund Transfer Act (15 U.S.C. 1693o-1; re-
lating to ‘‘Remittance Transfers’’). 
‘‘(e) APPLICATION OF ANTI-CONDUIT RULES.—For 
purposes of section 7701(l) with respect to any multiple- 
party arrangements involving the sender, a remittance 
transfer shall be treated as a financing transaction.’’. 
(b) REFUNDABLE INCOME TAX CREDIT ALLOWED 
TO CITIZENS AND NATIONALS OF THE UNITED STATES 
FOR EXCISE TAX ON REMITTANCE TRANSFERS.—Subpart 
C of part IV of subchapter A of chapter 1 is amended 
by inserting after section 36B the following new section: 
‘‘SEC. 36C. CREDIT FOR EXCISE TAX ON REMITTANCE 
TRANSFERS OF CITIZENS AND NATIONALS OF 
THE UNITED STATES. 
‘‘(a) IN GENERAL.—In the case of any individual, 
there shall be allowed as a credit against the tax imposed 
by this subtitle for any taxable year an amount equal to 
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the aggregate amount of taxes paid by such individual 
under section 4475 during such taxable year. 
‘‘(b) SOCIAL SECURITY NUMBER REQUIREMENT.— 
‘‘(1) IN GENERAL.—No credit shall be allowed 
under this section unless the taxpayer includes on 
the return of tax for the taxable year— 
‘‘(A) the individual’s social security num-
ber, and 
‘‘(B) if the individual is married, the social 
security number of such individuals’s spouse. 
‘‘(2) SOCIAL
SECURITY
NUMBER.—For pur-
poses of this subsection, the term ‘social security 
number’ has the meaning given such term in section 
24(h)(7). 
‘‘(3) MARRIED INDIVIDUALS.—Rules similar to 
the rules of section 32(d) shall apply to this section. 
‘‘(c) SUBSTANTIATION REQUIREMENTS.—No credit 
shall be allowed under this section unless the taxpayer 
demonstrates to the satisfaction of the Secretary that the 
tax under section 4475 with respect to which such credit 
is determined— 
‘‘(1) was paid by the taxpayer, and 
‘‘(2) is with respect to a remittance transfer 
with respect to which the taxpayer provided to the 
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remittance transfer provider the certification and in-
formation referred to in section 6050BB(a)(2). 
‘‘(d) DEFINITIONS.—Any term used in this section 
which is also used in section 4475 shall have the meaning 
given such term in section 4475. 
‘‘(e) APPLICATION OF ANTI-CONDUIT RULES.—For 
rules providing for the application of the anti-conduit rules 
of section 7701(l) to remittance transfers, see section 
4475(e).’’. 
(c) REPORTING BY REMITTANCE TRANSFER PRO-
VIDERS.— 
(1) IN GENERAL.—Subpart B of part III of 
subchapter A of chapter 61, as amended by the pre-
ceding provisions of this Act, is amended by adding 
at the end the following new section: 
‘‘SEC. 
6050BB. 
RETURNS 
RELATING 
TO 
REMITTANCE 
TRANSFERS. 
‘‘(a) IN GENERAL.—Each remittance transfer pro-
vider shall make a return at such time as the Secretary 
may provide setting forth— 
‘‘(1) in the case of a qualified remittance trans-
fer provider with respect to remittance transfers to 
which section 4475(a) does not apply by reason of 
section 4475(c), the aggregate number and value of 
such transfers, 
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‘‘(2) in the case of any remittance transfer not 
described in paragraph (1) and with respect to 
which the sender certifies to the remittance transfer 
provider an intent to claim the credit under section 
36C and provides the information described in para-
graph (1)— 
‘‘(A) the name, address, and social security 
number of the sender, 
‘‘(B) the amount of tax paid by the sender 
under section 4475(b)(1), and 
‘‘(C) the amount of tax remitted by the re-
mittance 
transfer 
provider 
under 
section 
4475(b)(2), and 
‘‘(3) in the case of any remittance transfer not 
included under paragraph (1) or (2)— 
‘‘(A) the aggregate amount of tax paid 
under section 4475(b)(1) with respect to such 
transfers, and 
‘‘(B) the aggregate amount of tax remitted 
under section 4475(b)(2) with respect to such 
transfers. 
‘‘(b) STATEMENT TO BE FURNISHED TO NAMED 
PERSONS.—Every person required to make a return under 
subsection (a) shall furnish, at such time as the Secretary 
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may provide, to each person whose name is required to 
be set forth in such return a written statement showing— 
‘‘(1) the name and address of the information 
contact of the required reporting person, and 
‘‘(2) the information described in subsection 
(a)(2) which relates to such person. 
‘‘(c) DEFINITIONS.—Any term used in this section 
which is also used in section 4475 shall have the meaning 
given such term in such section.’’. 
(2) PENALTIES.—Section 6724(d), as amended 
by the preceding provisions of this Act, is amend-
ed— 
(A) in paragraph (1)(B), by striking ‘‘or’’ 
at the end of clause (xxviii), by striking ‘‘and’’ 
at the end of clause (xxix) and inserting ‘‘or’’, 
and by adding at the end the following new 
clause: 
‘‘(xxx) section 6050BB(a) (relating to 
returns relating to remittance transfers), 
and’’, and 
(B) in paragraph (2), by striking ‘‘or’’ at 
the end of subparagraph (NN), by striking the 
period at the end of subparagraph (OO) and in-
serting ‘‘, or’’, and by inserting after subpara-
graph (OO) the following new subparagraph: 
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‘‘(PP) section 6050BB(b) (relating to 
statements relating to remittance transfers).’’. 
(d) CONFORMING AMENDMENTS.— 
(1) Section 6211(b)(4)(A) is amended by insert-
ing ‘‘36C,’’ after ‘‘36B,’’. 
(2) Section 6213(g)(2), as amended by the pre-
ceding provisions of this Act, is amended by striking 
‘‘and’’ at the end of subparagraph (Z), by the strik-
ing the period at the end of subparagraph (AA) and 
inserting ‘‘, and’’, and by inserting after subpara-
graph (AA) the following new subparagraph: 
‘‘(BB) an omission of a correct social secu-
rity number under section 36C(b) to be in-
cluded on a return.’’. 
(3) Section 1324(b)(2) of title 31, United 
States Code, is amended by inserting ‘‘36C,’’ after 
‘‘36B,’’. 
(4) The table of sections for subpart C of part 
IV of subchapter A of chapter 1 is amended by in-
serting after the item relating to section 36B the fol-
lowing new item: 
‘‘Sec. 36C. Credit for excise tax on remittance transfers of citizens and nation-
als of the United States.’’. 
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(5) The table of sections for subpart B of part 
III of subchapter A of chapter 61 is amended by 
adding at the end the following new item: 
‘‘Sec. 6050BB. Returns relating to remittance transfers.’’. 
(6) The table of subchapters for chapter 36 is 
amended by inserting after the item relating to sub-
chapter B the following new item: 
‘‘SUBCHAPTER C—REMITTANCE TRANSFERS’’. 
(e) EFFECTIVE DATE.— 
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
this section shall apply to transfers made after De-
cember 31, 2025. 
(2) TAX CREDIT.—The amendments made by 
subsection (b), and paragraphs (1) through (4) of 
subsection (d), shall apply to taxable years ending 
after December 31, 2025. 
SEC. 112105. SOCIAL SECURITY NUMBER REQUIREMENT 
FOR AMERICAN OPPORTUNITY AND LIFE-
TIME LEARNING CREDITS. 
(a) SOCIAL SECURITY NUMBER OF TAXPAYER RE-
QUIRED.—Section 25A(g)(1) is amended to read as fol-
lows: 
‘‘(1) IDENTIFICATION REQUIREMENT.— 
‘‘(A) SOCIAL SECURITY NUMBER REQUIRE-
MENT.—No credit shall be allowed under sub-
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section (a) to a taxpayer unless the taxpayer in-
cludes on the return of tax for the taxable 
year— 
‘‘(i) such individual’s social security 
number, 
‘‘(ii) if the individual is married, the 
social security number of such individual’s 
spouse, and 
‘‘(iii) in the case of a credit with re-
spect to the qualified tuition and related 
expenses of an individual other than the 
taxpayer or the taxpayer’s spouse, the 
name and social security number of such 
individual. 
‘‘(B) INSTITUTION.—No American Oppor-
tunity Tax Credit shall be allowed under this 
section unless the taxpayer includes the em-
ployer identification number of any institution 
to which the taxpayer paid qualified tuition and 
related expenses taken into account under this 
section on the return of tax for the taxable 
year. 
‘‘(C) SOCIAL
SECURITY
NUMBER
DE-
FINED.—For purposes of this paragraph, the 
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term ‘social security number’ shall have the 
meaning given such term in section 24(h)(7).’’. 
(b) RULES RELATED TO MARRIED INDIVIDUALS.— 
Section 25A(g)(6) is amended to read as follows: 
‘‘(6) RULES
RELATED
TO
MARRIED
INDIVID-
UALS.—Rules similar to the rules of section 32(d) 
shall apply to this section.’’. 
(c) OMISSION
TREATED
AS
MATHEMATICAL
OR 
CLERICAL ERROR.—Section 6213(g)(2)(J) is amended by 
striking ‘‘TIN’’ and inserting ‘‘social security number or 
employer identification number’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2025. 
PART 3—PREVENTING FRAUD, WASTE, AND 
ABUSE 
SEC. 112201. REQUIRING EXCHANGE VERIFICATION OF ELI-
GIBILITY FOR HEALTH PLAN. 
(a) IN GENERAL.—Section 36B(c) is amended by 
adding at the end the following new paragraphs: 
‘‘(5) EXCHANGE
ENROLLMENT
VERIFICATION 
REQUIREMENT.— 
‘‘(A) IN
GENERAL.—The term ‘coverage 
month’ shall not include, with respect to any in-
dividual covered by a qualified health plan en-
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rolled in through an Exchange, any month be-
ginning before the Exchange verifies, using ap-
plicable enrollment information that shall be 
provided or verified by the applicant, such indi-
vidual’s eligibility— 
‘‘(i) to enroll in the plan through the 
Exchange, 
‘‘(ii) for any advance payment under 
section 1412 of the Patient Protection and 
Affordable Care Act of the credit allowed 
under this section, and 
‘‘(iii) for any reduced cost-sharing 
under section 1402 of such Act. 
‘‘(B) APPLICABLE ENROLLMENT INFORMA-
TION.—For purposes of subparagraph (A), ap-
plicable enrollment information shall at least in-
clude affirmation of the following information 
(to the extent relevant in determining eligibility 
described in subparagraph (A)): 
‘‘(i) Income. 
‘‘(ii) Any immigration status. 
‘‘(iii) Any health coverage status or 
eligibility for coverage. 
‘‘(iv) Place of residence. 
‘‘(v) Family size. 
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‘‘(vi) Such other information as may 
be determined by the Secretary (in con-
sultation with the Secretary of Health and 
Human Services) as necessary to the 
verification prescribed under subparagraph 
(A). 
‘‘(C) VERIFICATION OF PAST MONTHS.—In 
the case of a month that begins before 
verification prescribed by subparagraph (A), 
such month shall be treated as a coverage 
month if, and only if, the Exchange verifies for 
such month (using applicable enrollment infor-
mation that shall be provided or verified by the 
applicant) such individual’s eligibility to have so 
enrolled, for any such advance payment, and for 
any such reduced cost-sharing. 
‘‘(D) EXCHANGE PARTICIPATION; COORDI-
NATION WITH OTHER PROCEDURES FOR DETER-
MINING ELIGIBILITY.—An individual shall not, 
solely by reason of failing to meet the require-
ments of this paragraph with respect to a 
month, be treated for such month as ineligible 
to enroll in a qualified health plan through an 
Exchange. 
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‘‘(6) EXCHANGE COMPLIANCE WITH FILING RE-
QUIREMENTS.—The term ‘coverage month’ shall not 
include, with respect to any individual covered by a 
qualified health plan enrolled in through an Ex-
change, any month for which the Exchange does not 
meet the requirements of section 155.305(f)(4) of 
title 45, Code of Federal Regulations (as published 
in the Federal Register on March 19, 2025 (90 FR 
12942)), with respect to the individual.’’. 
(b) PRE-ENROLLMENT VERIFICATION PROCESS RE-
QUIRED.—Section 36B(c)(3)(A) is amended— 
(1) by striking ‘‘HEALTH
PLAN.—The term’’ 
and inserting the following: ‘‘HEALTH PLAN.— 
‘‘(i) IN GENERAL.—The term’’, and 
(2) by adding at the end the following new 
clause: 
‘‘(ii) PRE-ENROLLMENT VERIFICATION 
PROCESS REQUIRED.—Such term shall not 
include any plan enrolled in through an 
Exchange, unless such Exchange provides 
a process for pre-enrollment verification 
through which any applicant may, begin-
ning not later than August 1, verify with 
the Exchange the applicant’s eligibility for 
enrollment in such plan for plan years be-
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ginning in the subsequent year, for any ad-
vance payment of the credit allowed under 
this section, and for reduced cost-sharing 
under section 1402 of the Patient Protec-
tion and Affordable Care Act.’’. 
(c) REGULATIONS.—The Secretary of the Treasury 
and the Secretary of Health and Human Services may 
each prescribe such rules and other guidance as may be 
necessary or appropriate to carry out the amendments 
made by this section. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2027. 
SEC. 112202. DISALLOWING PREMIUM TAX CREDIT IN CASE 
OF CERTAIN COVERAGE ENROLLED IN DUR-
ING SPECIAL ENROLLMENT PERIOD. 
(a) IN GENERAL.—Section 36B(c)(3)(A), as amend-
ed by the preceding provisions of this Act, is amended by 
adding at the end the following new clause: 
‘‘(iii) EXCEPTION
IN
CASE
OF
CER-
TAIN
SPECIAL
ENROLLMENT
PERIODS.— 
Such term shall not include any plan en-
rolled in during a special enrollment period 
provided for by an Exchange— 
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‘‘(I) on the basis of the relation-
ship of the individual’s expected 
household income to such a percent-
age of the poverty line (or such other 
amount) as is prescribed by the Sec-
retary of Health and Human Services 
for purposes of such period, and 
‘‘(II) not in connection with the 
occurrence of an event or change in 
circumstances specified by the Sec-
retary of Health and Human Services 
for such purposes.’’. 
(b) REGULATIONS.—The Secretary of Treasury and 
the Secretary of Health and Human Services shall pre-
scribe such rules (including interim final and temporary 
regulations) and other guidance as may be necessary to 
carry out the purposes of the amendments made by this 
section. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply with respect to plans enrolled in 
during calendar months beginning after the third calendar 
month ending after the date of the enactment of this Act. 
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SEC. 112203. ELIMINATING LIMITATION ON RECAPTURE OF 
ADVANCE PAYMENT OF PREMIUM TAX CRED-
IT. 
(a) IN GENERAL.—Section 36B(f)(2) is amended by 
striking subparagraph (B). 
(b) CONFORMING AMENDMENTS.— 
(1) Section 36B(f)(2) is amended by striking 
‘‘ADVANCE
PAYMENTS.—’’ and all that follows 
through ‘‘If the advance payments’’ and inserting 
the following: ‘‘ADVANCE
PAYMENTS.—If the ad-
vance payments’’. 
(2) Section 35(g)(12)(B)(ii) is amended by 
striking ‘‘then section 36B(f)(2)(B) shall be applied 
by substituting the amount determined under clause 
(i) for the amount determined under section 
36B(f)(2)(A)’’ and inserting ‘‘then the amount de-
termined under clause (i) shall be substituted for the 
amount determined under section 36B(f)(2)’’. 
(c) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2025. 
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SEC. 112204. IMPLEMENTING ARTIFICIAL INTELLIGENCE 
TOOLS FOR PURPOSES OF REDUCING AND 
RECOUPING IMPROPER PAYMENTS UNDER 
MEDICARE. 
(a) IN GENERAL.—Part E of title XVIII of the Social 
Security Act (42 U.S.C. 1395x et seq.), as amended by 
the preceding provisions of this Act, is amended by adding 
at the end the following new section: 
‘‘SEC. 1899D. IMPLEMENTING ARTIFICIAL INTELLIGENCE 
TOOLS FOR PURPOSES OF REDUCING AND 
RECOUPING IMPROPER PAYMENTS. 
‘‘(a) IN GENERAL.—Not later than January 1, 2027, 
the Secretary shall implement such artificial intelligence 
tools determined appropriate by the Secretary for pur-
poses of— 
‘‘(1) reducing improper payments made under 
parts A and B; and 
‘‘(2) identifying any such improper payments so 
made. 
‘‘(b) CONTRACTS.—The Secretary shall seek to con-
tract with a vendor of artificial intelligence tools and with 
data scientists for purposes of implementing the artificial 
intelligence tools required under subsection (a). 
‘‘(c) RECOUPMENT.—The Secretary shall, to the ex-
tent practicable, recoup payments identified using the arti-
ficial intelligence tools implemented under subsection (a). 
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‘‘(d) REPORT.—Not later than January 1, 2029, and 
not less frequently than annually thereafter, the Secretary 
shall report to Congress on the implementation of artificial 
intelligence tools under subsection (a) and the recoupment 
of improper payments under subsection (c). Such report 
shall include— 
‘‘(1) a description of any opportunities for fur-
ther reducing rates of improper payments described 
in subsection (a)(1) or further increasing rates of 
recoupment of such payments; 
‘‘(2) the total dollar amount of improper pay-
ments recouped in the most recent year for which 
data is available; and 
‘‘(3) in the case that the Secretary fails to re-
duce the rate of improper payments by 50 percent 
in such most recent year as compared to the year 
prior to such most recent year, a description of the 
reasons for such failure.’’. 
(b) IMPLEMENTATION FUNDING.— 
(1) FEDERAL
HOSPITAL
INSURANCE
TRUST 
FUND.—The Secretary of Health and Human Serv-
ices shall provide for the transfer from the Federal 
Hospital Insurance Trust Fund established under 
section 1817 of the Social Security Act (42 U.S.C. 
1395i) to the Centers for Medicare & Medicaid Serv-
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ices Program Management Account of $12,500,000 
for fiscal year 2025 for purposes of carrying out the 
amendment made by this section, to remain available 
until expended. 
(2) FEDERAL
SUPPLEMENTARY
MEDICAL
IN-
SURANCE TRUST FUND.—The Secretary of Health 
and Human Services shall provide for the transfer, 
from the Federal Supplementary Medical Insurance 
Trust Fund established under section 1841 of the 
Social Security Act (42 U.S.C. 1395t) to the Cen-
ters for Medicare & Medicaid Services Program 
Management Account of $12,500,000 for fiscal year 
2025 for purposes of carrying out the amendment 
made by this section, to remain available until ex-
pended. 
SEC. 112205. EARNED INCOME TAX CREDIT REFORMS. 
(a) EARNED INCOME TAX CREDIT CERTIFICATION 
PROGRAM.— 
(1) ESTABLISHMENT OF PROGRAM.— 
(A) IN GENERAL.—Chapter 77 is amended 
by adding at the end the following new section: 
‘‘SEC. 7531. EARNED INCOME TAX CREDIT CERTIFICATION 
PROGRAM. 
‘‘(a) IN GENERAL.—To avoid duplicative and other 
erroneous claims under section 32 with respect to a child 
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of the taxpayer, for taxable years beginning after Decem-
ber 31, 2027, the Secretary shall establish a program 
under which, on the taxpayer’s application with respect 
to the child, the Secretary shall issue an EITC certificate 
for purposes of section 32 establishing such child’s status 
as a qualifying child only of the taxpayer for a taxable 
year. 
‘‘(b) APPLICATION REQUIREMENTS.— 
‘‘(1) IN
GENERAL.—The Secretary shall not 
issue to a taxpayer an EITC certificate with respect 
to a child for a taxable year unless the taxpayer ap-
plies under the program with respect to the child 
and provides such information and supporting docu-
mentation as the Secretary shall by regulation pre-
scribe as necessary to establish such child as a quali-
fying child only of the taxpayer for the taxable year. 
‘‘(2) TIME AND MANNER OF APPLICATION.— 
Such application shall be made, and such informa-
tion and supporting documentation shall be pro-
vided— 
‘‘(A) in such manner as may be provided 
by the Secretary for purposes of this section 
(including establishing an on-line portal), and 
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‘‘(B) not later than the due date for the 
return of tax for the taxable year or (if later) 
when the return is filed. 
‘‘(3) COMPETING CLAIMS.—In the case of more 
than 1 taxpayer making an application with respect 
to a child under the program for a taxable year be-
ginning during a calendar year, the Secretary shall 
not issue an EITC certificate to any such taxpayer 
with respect to such child for such a taxable year 
unless the Secretary can establish such child, based 
on information and supporting documentation pro-
vided under paragraph (1), as the qualifying child 
only of one such taxpayer for such a taxable year. 
‘‘(c) TREATMENT
OF CREDIT WITHOUT CERTIFI-
CATION UNDER PROGRAM.—For taxable years beginning 
after December 31, 2027— 
‘‘(1) IN GENERAL.—In the case of a taxpayer 
who takes into account as a qualifying child under 
section 32 a child for whom an EITC certificate has 
not been issued for the taxable year to the tax-
payer— 
‘‘(A) the Secretary shall not credit the por-
tion of any overpayment for such taxable year 
that is attributable to the taxpayer taking into 
account such child as a qualifying child, unless 
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the taxpayer obtains, not later than the due 
date for the return for the taxable year, an 
EITC certificate with respect to such child for 
such taxable year, and 
‘‘(B) if the taxpayer fails to so obtain an 
EITC certificate, such failure shall be treated— 
‘‘(i) as an omission of information re-
quired by section 32 with respect to such 
child, and 
‘‘(ii) as arising out of a mathematical 
or clerical error and assessed according to 
section 6213(b)(1). 
‘‘(2) TERMINATION OF CERTIFICATION.—In the 
case of a taxpayer who for a taxable year takes into 
account as a qualifying child under section 32 a 
child for whom an EITC certificate is terminated for 
such taxable year, such termination shall be treated 
in the same manner as a failure to obtain an EITC 
certificate under paragraph (1)(B). 
‘‘(d) TRANSITION RULES FOR TAXABLE YEARS BE-
GINNING BEFORE 2028.— 
‘‘(1) IN GENERAL.—If for any taxable year be-
ginning after December 31, 2023, and before Janu-
ary 1, 2027, more than 1 taxpayer makes a claim 
for credit under section 32 taking into account the 
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same child as a qualifying child, then the Secretary 
shall send notice to each such taxpayer (by certified 
or registered mail to the last known address of the 
taxpayer) detailing the resultant treatment of such 
taxpayers under paragraph (2) with respect to such 
child for any subsequent taxable years beginning be-
fore 2028. 
‘‘(2) SUBSEQUENT TAXABLE YEARS BEGINNING 
BEFORE 2028.—In the case of a child with respect 
to whom paragraph (1) applied by reason of claims 
for credit for a taxable year, for any subsequent tax-
able years beginning before January 1, 2028— 
‘‘(A) subject to subparagraph (B), the Sec-
retary shall not credit the portion of any over-
payment for the taxable year that is attrib-
utable to a taxpayer taking into account such 
child as a qualifying child under section 32 
until the 15th day of October following the end 
of the taxable year, and 
‘‘(B) if more than one taxpayer makes a 
claim for such credit for the taxable year taking 
into account such child as a qualifying child, so 
taking such child into account shall be treat-
ed— 
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‘‘(i) as an omission of information re-
quired by section 32 with respect to such 
child, and 
‘‘(ii) as arising out of a mathematical 
or clerical error and assessed according to 
section 6213(b)(1). 
‘‘(e) QUALIFYING CHILD.—For purposes of this sec-
tion, the term ‘qualifying child’ has the meaning given 
such term under section 32(c)(3). 
‘‘(f) REBUTTAL OF TREATMENT.—Treatment under 
subsection (c) or (d)(2)(B) as having omitted information 
required by section 32 may be rebutted by providing such 
information and supporting documentation as satisfac-
torily demonstrates the child is a qualifying child of the 
taxpayer for the taxable year. 
‘‘(g) RESTRICTIONS ON TAXPAYERS WHO IMPROP-
ERLY USE PROGRAM.— 
‘‘(1) IN
GENERAL.—A taxpayer shall not be 
permitted to apply for an EITC certificate under the 
program for any taxable year in the disallowance pe-
riod. 
‘‘(2) DISALLOWANCE PERIOD.—For purposes of 
paragraph (1), the disallowance period is— 
‘‘(A) the period of 10 taxable years after 
the most recent taxable year for which there 
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was a penalty imposed under 6720D on the tax-
payer (but only if such penalty has been im-
posed on such taxpayer more than once, at least 
one instance of which was due to fraud under 
section 6720D(b)), 
‘‘(B) the period of 2 taxable years after 
the most recent taxable year for which there 
was a penalty imposed under 6720D on the tax-
payer (but only if such penalty has been im-
posed on such taxpayer more than once due to 
reckless or intentional disregard of rules and 
regulations (but not imposed due to fraud)), 
and 
‘‘(C) any disallowance period with respect 
to the taxpayer under section 32(k)(1). 
‘‘(h) REGULATIONS.—The Secretary shall prescribe 
such rules as may be necessary or appropriate to carry 
out the program and purposes of this section, including— 
‘‘(1) a process for establishing alternating tax-
able year treatment of a child as a qualifying child 
under a custodial arrangement, 
‘‘(2) notwithstanding subsection (d)(2), a proc-
ess for— 
‘‘(A) establishing the status of a child as 
a qualifying child of the taxpayer under section 
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32 for taxable years to which such subsection 
applies, and 
‘‘(B) allowing credit or refunds attrib-
utable to such status, 
‘‘(3) a simplified process for re-certifying a 
child as a qualifying child only of the taxpayer for 
a taxable year, and 
‘‘(4) a process for terminating EITC certifi-
cates in the case of competing claims with respect to 
a child or in cases in which issuance of the certifi-
cate is determined by the Secretary to be erro-
neous.’’. 
(B) CONFORMING
AMENDMENT.—Section 
32 amended by adding at the end the following 
new subsection: 
‘‘(o) EITC CERTIFICATE WITH RESPECT TO QUALI-
FYING CHILDREN.—For rules relating to EITC certifi-
cates with respect to qualifying children and duplicate 
claims for the credit allowed under this section, see section 
7531.’’. 
(C) CLERICAL AMENDMENT.—The table of 
sections for chapter 77 is amended by adding at 
the end the following new item: 
‘‘Sec. 7531. Earned income tax credit certification program.’’. 
(2) PENALTIES FOR IMPROPER USE OF EITC 
CERTIFICATE PROGRAM.— 
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(A) IN GENERAL.—Part I of subchapter B 
of chapter 68 is amended by adding at the end 
the following new section: 
‘‘SEC. 6720D. PENALTIES WITH RESPECT TO EITC CERTIFI-
CATE PROGRAM. 
‘‘(a) RECKLESS OR INTENTIONAL DISREGARD.—If— 
‘‘(1) any person makes a material misstatement 
or inaccurate representation in an application under 
section 7531 for an EITC certificate, and 
‘‘(2) such misstatement or representation was 
due to reckless or intentional disregard of rules and 
regulations (but not due to fraud), 
such person shall pay a penalty of $100 for each EITC 
certificate with respect to which such misstatement or rep-
resentation was made. 
‘‘(b) FRAUD.—If a misstatement or representation 
described in subsection (a)(1) is due to fraud on the part 
of the person making such misstatement or representa-
tion, in addition to any criminal penalty, such person shall 
pay a penalty of $500 for each EITC certificate with re-
spect to which such a misstatement or representation was 
made.’’. 
(B) CLERICAL AMENDMENT.—The table of 
sections for part I of subchapter B of chapter 
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68 is amended by adding at the end the fol-
lowing new item: 
‘‘Sec. 6720D. Penalties with respect to EITC certificate program.’’. 
(3) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to taxable years begin-
ning after December 31, 2024. 
(b) TASK FORCE
TO DESIGN
A PRIVATE DATA 
BOUNCING SYSTEM FOR IMPROVEMENTS TO THE EARNED 
INCOME TAX CREDIT.—Out of any money in the Treasury 
not otherwise appropriated, there is hereby appropriated 
$10,000,000 for the fiscal year ending on September 30, 
2026, for necessary expenses of the Department of the 
Treasury, to establish, within 90 days following the date 
of the enactment of this Act, a task force to provide to 
the Secretary of the Treasury a report on the following 
with respect to the administration of the earned income 
tax credit: 
(1) Recommendations for improvement of the 
integrity of such administration. 
(2) The potential use of third-party payroll and 
consumption datasets to verify income. 
(3) The integration of automated databases to 
allow horizontal verification to reduce improper pay-
ments, fraud, and abuse. 
(c) INCREASED EARNED INCOME TAX CREDIT FOR 
PURPLE HEART RECIPIENTS WHOSE SOCIAL SECURITY 
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DISABILITY BENEFITS ARE TERMINATED BY REASON OF 
WORK ACTIVITY.— 
(1) IN GENERAL.—Section 32, as amended by 
the preceding provisions of this Act, is amended by 
adding at the end the following new subsection: 
‘‘(p) INCREASE IN CREDIT FOR PURPLE HEART RE-
CIPIENTS WHOSE SOCIAL SECURITY DISABILITY BENE-
FITS ARE TERMINATED BY REASON OF WORK ACTIV-
ITY.— 
‘‘(1) IN GENERAL.—In the case of a specified 
Purple Heart recipient, the credit otherwise deter-
mined under subsection (a) for the taxable year shall 
be increased (whether or not such specified Purple 
Heart recipient is an eligible individual) by the sum 
of the SSDI benefit substitution amounts with re-
spect to qualified benefit termination months during 
such taxable year. 
‘‘(2) SPECIFIED PURPLE HEART RECIPIENT.— 
For purposes of this subsection, the term ‘specified 
Purple Heart recipient’ means any individual— 
‘‘(A) who received the Purple Heart, 
‘‘(B) who received disability insurance ben-
efit payments under section 223(a) of the So-
cial Security Act, and 
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