100 
commensurate with the ability of the 
institution to carry out that plan; 
‘‘(II) that the institution consult 
with community-based organizations 
and other community stakeholders in 
developing the community benefits 
plan; and 
‘‘(III) a public hearing for any 
bank that has received a ‘need-to-im-
prove’ or ‘low satisfactory’ grade in 
any assessment area during the last 
examination under the Community 
Reinvestment Act of 1977 (12 U.S.C. 
2901 et seq.).’’. 
(d) TECHNICAL AND CONFORMING AMENDMENT.— 
Section 10(c)(2)(H)(i) of the Home Owners’ Loan Act (12 
U.S.C. 1467a(c)(2)(H)(i)) is amended by striking ‘‘section 
804(c) of the Community Reinvestment Act of 1977 (12 
U.S.C. 2903(c))’’ and inserting ‘‘section 804(f) of the 
Community Reinvestment Act of 1977 (12 U.S.C. 
2903(f))’’. 
SEC. 204. AMENDMENTS RELATING TO CREDIT UNION 
SERVICE TO UNDERSERVED AREAS. 
(a) IN GENERAL.—The Federal Credit Union Act (12 
U.S.C. 1751 et seq.) is amended— 
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101 
(1) in section 101 (12 U.S.C. 1752)— 
(A) in paragraph (8), by striking ‘‘and’’ at 
the end; 
(B) in paragraph (9), by striking the pe-
riod at the end and inserting ‘‘; and’’; and 
(C) by adding at the end the following: 
‘‘(10) the term ‘underserved area’— 
‘‘(A) means a local community, neighbor-
hood, or rural district that— 
‘‘(i) is an investment area, as defined 
in section 103 of the Community Develop-
ment Banking and Financial Institutions 
Act of 1994 (12 U.S.C. 4702), that meets 
such additional requirements that the 
Board may impose; and 
‘‘(ii) is underserved, based on data of 
the Board and the Federal banking agen-
cies (as defined in section 3 of the Federal 
Deposit Insurance Act (12 U.S.C. 1813)), 
by other depository institutions (as defined 
in section 19(b)(1)(A) of the Federal Re-
serve Act (12 U.S.C. 461(b)(1)(A)); and 
‘‘(B) notwithstanding subparagraph (A), 
includes, with respect to any Federal credit 
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union, any geographic area within which the 
credit union— 
‘‘(i) has received approval to provide 
service as an underserved area before the 
date of enactment of this paragraph from 
the Administration; and 
‘‘(ii) has established a service facility 
before that date of enactment.’’; 
(2) in section 106 (12 U.S.C. 1756)— 
(A) in the first sentence, by striking ‘‘Fed-
eral’’ and inserting ‘‘(a) Federal’’; and 
(B) by adding at the end the following: 
‘‘(b) The Board shall monitor adherence by a Federal 
credit union to a significant unmet needs plan submitted 
under section 109(h) by that Federal credit union that 
describes how the Federal credit union will serve the de-
posit and other financial needs of the community.’’; 
(3) in section 109 (12 U.S.C. 1759)— 
(A) in subsection (c), by amending para-
graph (2) to read as follows: 
‘‘(2) EXCEPTION FOR UNDERSERVED AREAS.— 
‘‘(A) IN GENERAL.—Notwithstanding sub-
section (b), the Board may approve an applica-
tion by a Federal credit union to allow the 
membership of the credit union to include any 
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103 
person or organization whose principal resi-
dence or place of business is located within a 
local community, neighborhood, or rural district 
if— 
‘‘(i) the Board determines— 
‘‘(I) at any time after August 7, 
1998, that the local community, 
neighborhood, or rural district taken 
into account for purposes of this para-
graph is an underserved area; and 
‘‘(II) at the time of the approval, 
that the credit union is well capital-
ized or adequately capitalized (as de-
fined in section 216(c)(1)); and 
‘‘(ii) before the end of the 24-month 
period beginning on the date of the ap-
proval, the credit union has established 
and maintains an ongoing method to pro-
vide services in the local community, neigh-
borhood, or rural district. 
‘‘(B) TERMINATION OF APPROVAL.— 
‘‘(i) IN GENERAL.—Any failure of a 
Federal credit union to meet the require-
ment of clause (ii) of subparagraph (A) by 
the end of the 24-month period referred to 
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in that clause shall constitute a termi-
nation, as a matter of law, of any approval 
of an application under this paragraph by 
the Board with respect to the membership 
of the credit union. 
‘‘(ii) SIGNIFICANT
UNMET
NEEDS 
PLAN.—The Board may terminate the ap-
proval of an application under this para-
graph with respect to the membership of a 
Federal credit union upon a finding that 
the credit union is not meeting the terms 
of the significant unmet needs plan of the 
credit union submitted under subsection 
(h)(1). 
‘‘(C) CREDIT UNION REPORTING REQUIRE-
MENT.—Any Federal credit union that has an 
application approved under this paragraph 
shall, as part of the ordinary course of the ex-
amination cycle and supervision process, submit 
a report to the Administration that includes— 
‘‘(i) the number of members of the 
credit union who are members by reason of 
the application; 
‘‘(ii) the number of offices or facilities 
maintained by the credit union in the local 
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community, neighborhood, or rural district 
taken into account by the Board in approv-
ing the application; and 
‘‘(iii) evidence, as specified by the 
Board by regulation, demonstrating com-
pliance by the credit union with the signifi-
cant unmet needs plan submitted by the 
credit union under subsection (h)(1), as 
specified by the Administration. 
‘‘(D) 
PUBLICATION
BY
ADMINISTRA-
TION.—The Administration shall publish an an-
nual report containing— 
‘‘(i) a list of all the applications ap-
proved under this paragraph before the 
date on which the report is published; 
‘‘(ii) the number and locations of the 
underserved areas taken into account in 
approving those applications; 
‘‘(iii) the total number of members of 
credit unions who are members by reason 
of the approval of those applications; and 
‘‘(iv) evidence demonstrating compli-
ance by credit unions with significant 
unmet needs plans submitted by the credit 
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106 
unions under subsection (h)(1), as speci-
fied by the Administration.’’; 
(B) in subsection (e)(2), by inserting ‘‘sub-
section (c)(2) and’’ after ‘‘provided in’’; and 
(C) by adding at the end the following: 
‘‘(h) ADDITIONAL REQUIREMENTS FOR COMMUNITY 
CREDIT UNIONS.— 
‘‘(1) IN GENERAL.—A Federal credit union de-
siring a field of membership as a credit union de-
scribed in subsection (b)(3) shall submit to the 
Board a business plan, which shall include, among 
other issues, a marketing plan that identifies— 
‘‘(A) the unique needs of the various demo-
graphic groups in the proposed community; and 
‘‘(B) how the credit union will market to 
each group, particularly underserved groups, to 
address those needs. 
‘‘(2) PUBLIC COMMENT AND HEARING.—With 
respect to a Federal credit union desiring a field of 
membership as a credit union described in sub-
section (b)(3) for an area with multiple political ju-
risdictions with a population of not less than 
2,500,000, the Administration shall— 
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107 
‘‘(A) publish a notice in the Federal Reg-
ister seeking comment from interested parties 
about the proposed community; and 
‘‘(B) conduct a public hearing regarding 
the application of the Federal credit union.’’. 
(b) REGULATIONS.—Not later than 1 year after the 
date of enactment of this Act, the National Credit Union 
Administration Board shall issue final regulations to im-
plement the amendments made by subsection (a). 
SEC. 205. RAISING PUBLIC WELFARE CAPS. 
(a) NATIONAL BANKS.—The paragraph designated 
as the ‘‘Eleventh.’’ of section 5136 of the Revised Statutes 
of the United States (12 U.S.C. 24) is amended to read 
as follows: ‘‘Eleventh. To make investments directly or in-
directly, each of which promotes the public welfare by ben-
efitting primarily low- and moderate-income communities 
or families (such as by providing housing, services, or 
jobs). An association shall not make any such investment 
if the investment would expose the association to unlimited 
liability. The Comptroller of the Currency shall limit an 
association’s investments in any 1 project and an associa-
tion’s aggregate investments under this paragraph. Aggre-
gate investments for associations that do not meet the cri-
teria of being well capitalized, as defined in section 24.2(e) 
of title 12, Code of Federal Regulations, or any successor 
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regulation, under this paragraph shall not exceed an 
amount equal to the sum of 5 percent of the association’s 
capital stock actually paid in and unimpaired and 5 per-
cent of the association’s unimpaired surplus fund, unless 
the Comptroller determines by order that the higher 
amount will pose no significant risk to the affected deposit 
insurance fund, and the association is adequately capital-
ized. In no case shall aggregate investments of an associa-
tion that do not meet the criteria for being well capitalized 
under this paragraph exceed an amount equal to the sum 
of 15 percent of the association’s capital stock actually 
paid in and unimpaired and 15 percent of the association’s 
unimpaired surplus fund. Aggregate investments of well 
capitalized associations, as defined in section 24.2(e) of 
title 12, Code of Federal Regulations, or any successor 
regulation, under this paragraph shall not exceed an 
amount equal to the sum of 15 percent of the association’s 
capital stock actually paid in and unimpaired and 15 per-
cent of the association’s unimpaired surplus fund, unless 
the Comptroller determines by order that the higher 
amount will pose no significant risk to the affected deposit 
insurance fund. With respect to any association that meets 
the criteria for being well capitalized, as defined in section 
24.2(e) of title 12, Code of Federal Regulations, or any 
successor regulation, aggregate investments under this 
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paragraph shall not exceed an amount equal to the sum 
of 25 percent of the association’s capital stock actually 
paid in and unimpaired and 25 percent of the association’s 
unimpaired surplus fund. The foregoing standards and 
limitations apply to investments under this paragraph 
made by a national bank directly and by its subsidiaries.’’. 
(b) CONFORMING AMENDMENTS FOR STATE MEM-
BER BANKS.—The 23rd undesignated paragraph of sec-
tion 9 of the Federal Reserve Act (12 U.S.C. 338a) is 
amended to read as follows: 
‘‘A State member bank may make investments di-
rectly or indirectly, each of which promotes the pub-
lic welfare by benefitting primarily low- and mod-
erate-income communities or families (such as by 
providing housing, services, or jobs), to the extent 
permissible under State law. A State member bank 
shall not make any such investment if the invest-
ment would expose the State member bank to unlim-
ited liability. Aggregate investments for State mem-
ber banks that do not meet the criteria of being well 
capitalized, as defined in section 208.43(b) of title 
12, Code of Federal Regulations, or any successor 
regulation, under this paragraph shall not exceed an 
amount equal to the sum of 5 percent of the associa-
tion’s capital stock actually paid in and unimpaired 
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110 
and 5 percent of the association’s unimpaired sur-
plus fund, unless the Board determines by order 
that the higher amount will pose no significant risk 
to the affected deposit insurance fund, and the asso-
ciation is adequately capitalized. In no case shall ag-
gregate investments of a State member bank that 
does not meet the criteria for being well capitalized 
under this paragraph exceed an amount equal to the 
sum of 15 percent of the association’s capital stock 
actually paid in and unimpaired and 15 percent of 
the association’s unimpaired surplus fund. Aggre-
gate investments of well capitalized State member 
banks, as defined in section 208.43(b) of title 12, 
Code of Federal Regulations, or any successor regu-
lation, with an examination rating under section 804 
of the Community Reinvestment Act of 1977 (12 
U.S.C. 2903) of ‘outstanding’ or ‘satisfactory’, 
under this paragraph shall not exceed an amount 
equal to the sum of 15 percent of the State member 
bank’s capital stock actually paid in and unimpaired 
and 15 percent of the state member Bank’s 
unimpaired surplus fund, unless the Board deter-
mines by order that the higher amount will pose no 
significant risk to the affected deposit insurance 
fund. With respect to any State member bank that 
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111 
meets meet the criteria for being well capitalized as 
defined in section 208.43(b) of title 12, Code of 
Federal Regulations, or any successor regulation, 
with an examination rating under section 804 of the 
Community Reinvestment Act of 1977 (12 U.S.C. 
2903) of ‘outstanding’ or ‘satisfactory’, aggregate 
investments under this paragraph shall not exceed 
an amount equal to the sum of 25 percent of the 
State member bank’s capital stock actually paid in 
and unimpaired and 25 percent of the State member 
bank’s unimpaired surplus fund. The foregoing 
standards and limitations apply to investments 
under this paragraph made by a State member bank 
directly and by its subsidiaries.’’. 
SEC. 206. TEMPORARY ELIGIBILITY OF CERTAIN DIRECT 
DESCENDANTS OF CERTAIN VETERANS FOR 
HOUSING LOANS GUARANTEED BY THE SEC-
RETARY OF VETERANS AFFAIRS. 
(a) IN GENERAL.—During the period described in 
subsection (b)— 
(1) section 3701(b) of title 38, United States 
Code, shall be applied and administered by adding at 
the end the following new paragraph: 
‘‘(8)(A) The term ‘veteran’ also includes, for 
purposes of home loans, any direct descendant of a 
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112 
veteran described in subparagraph (B) if the de-
scendant— 
‘‘(i) is living on the date of the enactment 
of the American Housing and Economic Mobil-
ity Act of 2024; 
‘‘(ii) is a first-time homebuyer; and 
‘‘(iii) is a first-generation homebuyer. 
‘‘(B) A veteran described in this clause is a vet-
eran who— 
‘‘(i) served on active duty at any time dur-
ing the period between June 22, 1944, and 
April 11, 1968; 
‘‘(ii) is deceased; and 
‘‘(iii) did not receive a housing loan benefit 
under this chapter during his or her lifetime. 
‘‘(C) In this paragraph: 
‘‘(i) The term ‘direct descendant’ includes 
a legally adopted descendant. 
‘‘(ii) The terms ‘first-generation home-
buyer’ and ‘first-time homebuyer’ have the 
meanings given those terms in section 201(a) of 
the American Housing and Economic Mobility 
Act of 2024.’’; and 
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113 
(2) section 3702(a)(2) of such title shall be ap-
plied and administered by adding at the end the fol-
lowing new subparagraph: 
‘‘(H) Each direct descendant described in sec-
tion 3701(b)(8) of this title.’’. 
(b) PERIOD DESCRIBED.—The period described in 
this subsection is the period beginning one year after the 
date of the enactment of this Act and ending ten years 
after the date on which the Secretary of Veterans Affairs 
prescribes the regulations required by subsection (c). 
(c) REGULATIONS.— 
(1) IN
GENERAL.—Not later than 180 days 
after the date of the enactment of this Act, the Sec-
retary of Veterans Affairs shall prescribe regulations 
to carry out this section. 
(2) ELEMENTS.—The regulations required by 
paragraph (1) shall provide rules and procedures for 
determining— 
(A) the eligibility of a direct descendant 
for housing loan benefits under this section 
when the records of the Veterans Benefits Ad-
ministration are incomplete or otherwise inad-
equate to verify eligibility; and 
(B) appropriate implementation of this sec-
tion if more than one direct descendant of a 
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veteran seeks housing loan benefits under this 
section. 
TITLE III—REMOVING BARRIERS 
THAT ISOLATE COMMUNITIES 
SEC. 301. EXPANDING RIGHTS UNDER THE FAIR HOUSING 
ACT. 
(a) PURPOSES.—The purposes of the amendments 
made by this section are— 
(1) to expand, as well as clarify, confirm, and 
create greater consistency in, the protections against 
discrimination on the basis of all covered character-
istics; and 
(2) to provide guidance and notice to individ-
uals, organizations, corporations, and agencies re-
garding their obligations under Federal law. 
(b) AMENDMENTS TO THE FAIR HOUSING ACT.— 
The Fair Housing Act (42 U.S.C. 3601 et seq.) is amend-
ed— 
(1) in section 802 (42 U.S.C. 3602), by adding 
at the end the following: 
‘‘(p) ‘Gender identity’ means the gender-related iden-
tity, appearance, or mannerisms or other gender-related 
characteristics of an individual, regardless of the individ-
ual’s designated sex at birth. 
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115 
‘‘(q) ‘Marital status’ has the meaning given the term 
in section 202.2 of title 12, Code of Federal Regulations, 
or any successor regulation. 
‘‘(r) ‘Sexual orientation’ means homosexuality, het-
erosexuality, or bisexuality. 
‘‘(s) ‘Source of income’ includes income for which 
there is a reasonable expectation that the income will con-
tinue from— 
‘‘(1) a profession, occupation, or job; 
‘‘(2) any government or private assistance, 
grant, loan, or rental assistance program, including 
vouchers issued under the United States Housing 
Act of 1937 (42 U.S.C. 1437 et seq.); 
‘‘(3) a gift, an inheritance, a pension, an annu-
ity, alimony, child support, or other consideration or 
benefit; or 
‘‘(4) the sale or pledge of property or an inter-
est in property. 
‘‘(t) ‘Veteran status’ means— 
‘‘(1) a member of the uniformed services, as de-
fined in section 101 of title 10, United States Code; 
or 
‘‘(2) a veteran, as defined in section 101 of title 
38, United States Code.’’; 
(2) in section 804 (42 U.S.C. 3604)— 
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(A) by inserting ‘‘actual or perceived’’ be-
fore ‘‘race, color’’ each place that term appears; 
(B) by striking ‘‘sex,’’ each place that term 
appears and inserting ‘‘sex (including sexual 
orientation and gender identity), marital status, 
source of income, veteran status,’’; and 
(C) in subsection (c)— 
(i) by inserting ‘‘(1)’’ before ‘‘To 
make’’; and 
(ii) by adding at the end the fol-
lowing: 
‘‘(2) Nothing in this title shall be construed to— 
‘‘(A) prohibit a lender from implementing a 
loan program for veterans or based upon veteran 
status; or 
‘‘(B) prohibit an entity from providing housing 
assistance under— 
‘‘(i) section 8(o)(19) of the United States 
Housing Act of 1937 (42 U.S.C. 1437f(o)(19)); 
‘‘(ii) the Homeless Providers Grant and 
Per Diem program of the Department of Vet-
erans Affairs; or 
‘‘(iii) any other Federal housing assistance 
program for veterans or based on veteran sta-
tus.’’; 
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118 
(2) by striking ‘‘sex,’’ each place that term ap-
pears and inserting ‘‘sex (including sexual orienta-
tion (as such term is defined in section 802 of this 
Act) and gender identity (as defined in section 802 
of this Act)), marital status (as defined in section 
802), source of income (as defined in section 802), 
veteran status (as defined in section 802),’’. 
(d) RULE
OF
CONSTRUCTION.—Nothing in the 
amendments made by this section shall be construed to 
mean that a particular class of individuals was not pro-
tected against discrimination under Federal law as in ef-
fect on the day before the date of enactment of this Act. 
SEC. 302. IMPROVING OUTCOMES IN HOUSING ASSISTANCE 
PROGRAMS. 
(a) INDIAN HOUSING ASSISTANCE.—Section 502 of 
the Native American Housing Assistance and Self-Deter-
mination Act of 1996 (25 U.S.C. 4181) is amended by 
adding at the end the following: 
‘‘(c) APPLICABILITY.—Subsections (a) and (b) shall 
not apply with respect to tenant-based assistance provided 
under section 8(o) of the United States Housing Act of 
1937 (42 U.S.C. 1437f(o)).’’. 
(b) SUPPLEMENTAL ADMINISTRATIVE FEE.—Section 
8(q)(2)(B) of the United States Housing Act of 1937 (42 
U.S.C. 1437f(q)(2)(B)) is amended by inserting ‘‘, includ-
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ing the cost of assisting families with children or families 
with a member with a disability that move to lower pov-
erty, higher opportunity neighborhoods (as determined by 
the Secretary based on objective, evidence-based criteria)’’ 
after ‘‘programs’’. 
(c) REGIONAL PLANNING TO INCREASE ACCESS TO 
HIGHER OPPORTUNITY AREAS.—Section 8(o) of the 
United States Housing Act of 1937 (42 U.S.C. 1437f(o)) 
is amended by adding at the end the following: 
‘‘(22) INCREASING ACCESS TO HIGHER OPPOR-
TUNITY AREAS.— 
‘‘(A) LOCATION ANALYSIS.— 
‘‘(i) IN GENERAL.—A public housing 
agency that administers the program 
under this subsection in a metropolitan 
area shall— 
‘‘(I) analyze the locations where 
the participants in the program of the 
public housing agency live; and 
‘‘(II) based on the analysis de-
scribed in subclause (I), establish poli-
cies and practices to reduce disparities 
and barriers to access to locations 
throughout the metropolitan area that 
evidence indicates are more likely to 
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improve outcomes for children or 
adults. 
‘‘(ii) CONSIDERATIONS.—The location 
analysis required under this subparagraph 
shall— 
‘‘(I) consider separately the loca-
tions of families with children, house-
holds that include a person with dis-
abilities, and other groups protected 
under the Fair Housing Act (42 
U.S.C. 3601 et seq.); and 
‘‘(II) include an analysis of the 
locations in relation to dwelling units 
with rents that are potentially afford-
able to voucher holders and the likely 
impact of key neighborhood attributes 
on their well-being and long-term suc-
cess, based on Federal and available 
local data. 
‘‘(iii) MAPPING
TOOLS.—The Sec-
retary shall— 
‘‘(I) provide mapping tools and 
other information necessary for a pub-
lic housing agency to perform the lo-
cation analysis under this subpara-
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121 
graph using the demographic data on 
participating families submitted to the 
Secretary under part 908 of title 24, 
Code of Federal Regulations, or any 
successor regulation; 
‘‘(II) publish a notice in the Fed-
eral Register, subject to public com-
ment, that specifies the data sources 
and definitions that will be incor-
porated in each mapping tool required 
under subclause (I); and 
‘‘(III) update the notice required 
under subclause (II) as needed based 
on changes in the availability of rel-
evant data or evidence of neighbor-
hood attributes likely to impact the 
well-being and long-term success of 
participants in the program under this 
subsection. 
‘‘(iv) 
FREQUENCY
AND
AVAIL-
ABILITY.—The location analysis required 
under this subparagraph shall— 
‘‘(I) be performed by each public 
housing agency described in clause (i) 
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not less frequently than once every 5 
years; 
‘‘(II) be performed by all public 
housing agencies in a metropolitan 
area in the same year, as determined 
by the Secretary; and 
‘‘(III) be made available to the 
public in a manner that protects the 
privacy of program participants. 
‘‘(B) REGIONAL
POLICIES
TO
INCREASE 
ACCESS TO HIGHER OPPORTUNITY NEIGHBOR-
HOODS.—Each public housing agency described 
in subparagraph (A)(i) shall— 
‘‘(i) consult with other such public 
housing agencies in the same metropolitan 
area, or smaller regional area approved by 
the Secretary, about the possible barriers 
and other reasons for the disparities iden-
tified in the location analysis required 
under subparagraph (A); 
‘‘(ii) identify policies or practices that 
those public housing agencies could adopt 
individually or in collaboration, or other 
strategies that recipients of grants or other 
funding from the Secretary could adopt, to 
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reduce the barriers and disparities and in-
crease the share of families with children 
and other demographic groups using 
vouchers in higher-opportunity neighbor-
hoods in the metropolitan area or region; 
and 
‘‘(iii) include in the administrative 
plan required under section 982.54 of title 
24, Code of Federal Regulations, or any 
successor regulation, the policies that the 
public housing agency has adopted under 
this paragraph. 
‘‘(C) ASSESSMENT.—The Secretary shall 
include public housing agency performance in 
achieving the goal described in subparagraph 
(A)(i)(II) in the periodic assessment of agency 
performance in managing the program under 
this subsection required under part 985 of title 
24, Code of Federal Regulations, or any suc-
cessor regulation.’’. 
(d) REQUIRED REGULATORY CHANGES TO PUBLIC 
HOUSING AGENCY CONSORTIA.— 
(1) DEFINITIONS.—In this subsection: 
(A) MOVING
TO
WORK
DEMONSTRATION 
PROGRAM.—The term ‘‘Moving to Work dem-
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onstration program’’ means the program estab-
lished under section 204 of the Departments of 
Veterans Affairs and Housing and Urban De-
velopment, and Independent Agencies Appro-
priations Act, 1996 (Public Law 104–134; 110 
Stat. 1321–281). 
(B) PUBLIC HOUSING AGENCY.—The term 
‘‘public housing agency’’ has the meaning given 
the term in section 3(b)(6) of the United States 
Housing Act of 1937 (42 U.S.C. 1437a(b)(6)). 
(2) REQUIREMENT.—Not later than 1 year 
after the date of enactment of this Act, the Sec-
retary of Housing and Urban Development shall es-
tablish policies and procedures that— 
(A) enable public housing agencies that 
elect to operate in consortia under section 13(a) 
of the United States Housing Act of 1937 (42 
U.S.C. 1437k(a)), excluding public housing 
agencies participating in the Moving to Work 
demonstration program— 
(i) to consolidate their funding con-
tracts for assistance provided under section 
8(o) of such Act (42 U.S.C. 1437f(o)) into 
a single contract; 
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(ii) to consolidate their funding con-
tracts for assistance provided under sub-
sections (d) and (e) of section 9 of such 
Act (42 U.S.C. 1437g); or 
(iii) to exercise the consolidation op-
tions under each of clauses (i) and (ii); and 
(B) enable public housing agencies to form 
partial consortia under such section 13(a) (42 
U.S.C. 1437k(a)) that consolidate the adminis-
tration of certain aspects of their housing pro-
grams to increase access to higher-opportunity 
areas or for other purposes, subject to such re-
quirements as the Secretary may establish. 
(3) MOVING TO WORK AGENCIES.—Any flexi-
bility or waiver applicable to the Moving to Work 
demonstration program shall not apply to any activi-
ties or funds administered through a partial consor-
tium formed under paragraph (2)(B) by 1 or more 
public housing agencies participating in the Moving 
to Work demonstration program. 
TITLE IV—ESTATE TAX REFORM 
SEC. 401. AMENDMENT TO INTERNAL REVENUE CODE OF 
1986. 
Except as otherwise expressly provided, whenever in 
this title an amendment or repeal is expressed in terms 
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of an amendment to, or repeal of, a section or other provi-
sion, the reference shall be considered to be made to a 
section or other provision of the Internal Revenue Code 
of 1986. 
SEC. 402. RATE ADJUSTMENT. 
(a) INCREASE IN ESTATE TAX RATES.—The table 
contained in section 2001(c) is amended to read as follows: 
If the amount with respect to 
which the tentative tax to 
be computed is: 
The tentative tax is: 
Not over $13,000,000 ...................
55 percent of such amount. 
Over $13,000,000 but not over 
$93,000,000.
$7,150,000, plus 60 percent of the 
excess 
of 
such 
amount 
over 
$13,000,000. 
Over $93,000,000 ..........................
$55,150,000, plus 65 percent of the 
excess 
of 
such 
amount 
over 
$93,000,000. 
(b) REDUCTION OF BASIC EXCLUSION AMOUNT.— 
Paragraph (3) of section 2010(c) is amended to read as 
follows: 
‘‘(3) BASIC
EXCLUSION
AMOUNT.—For pur-
poses of this subsection, the basic exclusion amount 
is $3,500,000.’’. 
(c) SURTAX ON BILLION DOLLAR ESTATES.—Section 
2001 is amended— 
(1) in subsection (b), by striking ‘‘The tax’’ and 
inserting ‘‘Subject to subsection (h), the tax’’, and 
(2) by adding at the end the following new sub-
section: 
‘‘(h) SURTAX ON BILLION DOLLAR ESTATES.— 
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‘‘(1) IN GENERAL.—In the case of a taxable es-
tate for which the applicable amount is in excess of 
$1,000,000,000, the tax determined under sub-
section (b) shall be increased by an amount equal to 
10 percent of such applicable amount. 
‘‘(2) APPLICABLE AMOUNT.—For purposes of 
this subsection, the applicable amount shall be equal 
to the sum of the amounts under subparagraphs (A) 
and (B) of paragraph (1) of subsection (b) for the 
taxable estate.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to estates of decedents dying, and 
generation-skipping transfers and gifts made, after the 
date of the enactment of this Act. 
SEC. 403. REQUIRED MINIMUM 10-YEAR TERM, ETC., FOR 
GRANTOR RETAINED ANNUITY TRUSTS. 
(a) IN GENERAL.—Subsection (b) of section 2702 is 
amended— 
(1) by redesignating paragraphs (1), (2), and 
(3) as subparagraphs (A), (B), and (C), respectively, 
and by moving such subparagraphs (as so redesig-
nated) 2 ems to the right; 
(2) by striking ‘‘For purposes of’’ and inserting 
the following: 
‘‘(1) IN GENERAL.—For purposes of’’; 
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(3) by striking ‘‘paragraph (1) or (2)’’ in para-
graph (1)(C) (as so redesignated) and inserting 
‘‘subparagraph (A) or (B)’’; and 
(4) by adding at the end the following new 
paragraph: 
‘‘(2) ADDITIONAL
REQUIREMENTS
WITH
RE-
SPECT
TO
GRANTOR
RETAINED
ANNUITIES.—For 
purposes of subsection (a), in the case of an interest 
described in paragraph (1)(A) (determined without 
regard to this paragraph) which is retained by the 
transferor, such interest shall be treated as de-
scribed in such paragraph only if— 
‘‘(A) the right to receive the fixed amounts 
referred to in such paragraph is for a term of 
not less than 10 years, 
‘‘(B) such fixed amounts, when determined 
on an annual basis, do not decrease relative to 
any prior year during the first 10 years of the 
term referred to in subparagraph (A), and 
‘‘(C) the remainder interest has a value 
equal to or greater than 10 percent of the value 
of the assets transferred to the trust, deter-
mined as of the time of the transfer.’’. 
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129 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to transfers made after the date 
of the enactment of this Act. 
SEC. 404. CERTAIN TRANSFER TAX RULES APPLICABLE TO 
GRANTOR TRUSTS. 
(a) IN GENERAL.—Subtitle B is amended by adding 
at the end the following new chapter: 
‘‘CHAPTER 16—SPECIAL RULES FOR 
GRANTOR TRUSTS 
‘‘Sec. 2901. Application of transfer taxes. 
‘‘SEC. 2901. APPLICATION OF TRANSFER TAXES. 
‘‘(a) IN GENERAL.—In the case of any portion of a 
trust to which this section applies— 
‘‘(1) the value of the gross estate of the de-
ceased deemed owner of such portion shall include 
all assets attributable to that portion at the time of 
the death of such owner, 
‘‘(2) any distribution from such portion to one 
or more beneficiaries during the life of the deemed 
owner of such portion shall be treated as a transfer 
by gift for purposes of chapter 12, and 
‘‘(3) if at any time during the life of the 
deemed owner of such portion, such owner ceases to 
be treated as the owner of such portion under sub-
part E of part 1 of subchapter J of chapter 1, all 
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130 
assets attributable to such portion at such time shall 
be treated for purposes of chapter 12 as a transfer 
by gift made by the deemed owner. 
‘‘(b) PORTION OF TRUST TO WHICH SECTION AP-
PLIES.—This section shall apply to— 
‘‘(1) the portion of a trust with respect to 
which the grantor is the deemed owner, and 
‘‘(2) the portion of the trust to which a person 
who is not the grantor is a deemed owner by reason 
of the rules of subpart E of part 1 of subchapter J 
of chapter 1, and such deemed owner engages in a 
sale, exchange, or comparable transaction with the 
trust that is disregarded for purposes of subtitle A. 
For purposes of paragraph (2), the portion of the trust 
described with respect to a transaction is the portion of 
the trust attributable to the property received by the trust 
in such transaction, including all retained income there-
from, appreciation thereon, and reinvestments thereof, net 
of the amount of consideration received by the deemed 
owner in such transaction. 
‘‘(c) EXCEPTIONS.—This section shall not apply to— 
‘‘(1) any trust that is includible in the gross es-
tate of the deemed owner (without regard to sub-
section (a)(1)), and 
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131 
‘‘(2) any other type of trust that the Secretary 
determines by regulations or other guidance does not 
have as a significant purpose the avoidance of trans-
fer taxes. 
‘‘(d) DEEMED OWNER DEFINED.—For purposes of 
this section, the term ‘deemed owner’ means any person 
who is treated as the owner of a portion of a trust under 
subpart E of part 1 of subchapter J of chapter 1. 
‘‘(e) REDUCTION FOR TAXABLE GIFTS TO TRUST 
MADE BY OWNER.—The amount to which subsection (a) 
applies shall be reduced by the value of any transfer by 
gift by the deemed owner to the trust previously taken 
into account by the deemed owner under chapter 12. 
‘‘(f) LIABILITY FOR PAYMENT OF TAX.—Any tax im-
posed pursuant to subsection (a) shall be a liability of the 
trust.’’. 
(b) CLERICAL AMENDMENT.—The table of chapters 
for subtitle B is amended by adding at the end the fol-
lowing new item: 
‘‘CHAPTER 16. SPECIAL RULES FOR GRANTOR TRUSTS’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply— 
(1) to trusts created on or after the date of the 
enactment of this Act; 
(2) to any portion of a trust established before 
the date of the enactment of this Act which is attrib-
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132 
utable to a contribution made on or after such date; 
and 
(3) to any portion of a trust established before 
the date of the enactment of this Act to which sec-
tion 2901(a) of the Internal Revenue Code of 1986 
(as added by subsection (a)) applies by reason of a 
transaction described in section 2901(b)(2) of such 
Code on or after such date. 
SEC. 405. ELIMINATION OF GENERATION-SKIPPING TRANS-
FER TAX EXEMPTION FOR TRANSFERS TO 
CERTAIN PERSONS. 
(a) IN GENERAL.—Section 2642 is amended by add-
ing at the end the following new subsection: 
‘‘(h) ELIMINATION OF GST EXEMPTION FOR TRANS-
FERS TO CERTAIN PERSONS.— 
‘‘(1) IN GENERAL.— 
‘‘(A) TRANSFER
TO
NON-EXEMPT
PER-
SON.—In the case of any direct skip or taxable 
distribution made to any person who is not an 
exempt person, the inclusion ratio shall be 1. 
‘‘(B) TAXABLE
TERMINATION.—In the 
case of any taxable termination which occurs at 
any time immediately after no exempt person is 
a beneficiary of the trust, the inclusion ratio 
shall be 1. 
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‘‘(C) EXEMPT PERSON.— 
‘‘(i) IN
GENERAL.—For purposes of 
this subsection, the term ‘exempt person’ 
means— 
‘‘(I) a natural person— 
‘‘(aa) who is assigned to a 
generation which is 2 or fewer 
generations below the generation 
assignment of the transferor, or 
‘‘(bb) whose date of birth 
precedes the date on which the 
trust was created, or 
‘‘(II) a trust in which all inter-
ests are held by persons described in 
subclause (I). 
‘‘(ii) EXCEPTION.—For purposes of 
clause (i)(II), any interest which is used 
primarily to postpone or avoid the applica-
tion of this subsection shall be disregarded. 
‘‘(2) DATE OF CREATION.— 
‘‘(A) IN GENERAL.—For purposes of deter-
mining the date on which a trust was created 
under paragraph (1)(C)(i)(I)(bb), if the trust 
was created before January 1, 2024, such trust 
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134 
shall be deemed to have been created on Janu-
ary 1, 2024. 
‘‘(B) DATE OF CREATION OF POUR-OVER 
TRUSTS.— 
‘‘(i) IN GENERAL.—In the case of any 
generation-skipping transfer of property 
which involves the transfer of property 
from one trust to another trust, the date 
of the creation of the transferee trust shall 
be treated as being the earlier of— 
‘‘(I) the date of the creation of 
such transferee trust, or 
‘‘(II) the date of the creation of 
the transferor trust. 
‘‘(ii) MULTIPLE TRANSFERS.—In the 
case of multiple transfers to which clause 
(i) applies— 
‘‘(I) the date of the creation of 
the transferor trust shall be deter-
mined under such clause, and 
‘‘(II) subsequent to the deter-
mination described in subclause (I), 
the date of the creation of the trans-
feree trust shall be determined under 
such clause. 
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135 
‘‘(3) GENERATION ASSIGNMENT.—For purposes 
of this subsection, the provisions of section 2653(a) 
shall not apply. 
‘‘(4) REGULATIONS.—The Secretary may pre-
scribe such regulations or other guidance as may be 
necessary or appropriate to carry out this sub-
section.’’. 
(b) REPEAL.—Section 1433(b)(2) of the Tax Reform 
Act of 1986 (Public Law 99–514) is repealed. 
(c) EFFECTIVE DATES.— 
(1) IN
GENERAL.—The amendment made by 
subsection (a) shall take effect on the date of the en-
actment of this Act. 
(2) REPEAL.—The amendment made by sub-
section (b) shall apply to generation-skipping trans-
fers (within the meaning of section 2611 of the In-
ternal Revenue Code of 1986) made after the date 
of enactment of this Act. 
SEC. 406. SIMPLIFYING GIFT TAX EXCLUSION FOR ANNUAL 
GIFTS. 
(a) IN GENERAL.—Paragraph (1) of section 2503(b) 
is amended to read as follows: 
‘‘(1) IN GENERAL.— 
‘‘(A) LIMIT PER DONEE.—In the case of 
gifts made to any person by the donor during 
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136 
the calendar year, the first $10,000 of such 
gifts to such person shall not, for purposes of 
subsection (a), be included in the total amount 
of gifts made during such year. 
‘‘(B) CUMULATIVE LIMIT PER DONOR.— 
‘‘(i) IN
GENERAL.—The aggregate 
amount excluded under subparagraph (A) 
with respect to all transfers described in 
clause (ii) made by the donor during the 
calendar year shall not exceed twice the 
dollar amount in effect under such sub-
paragraph for such calendar year. 
‘‘(ii) TRANSFERS SUBJECT TO LIMITA-
TION.—The transfers described in this 
clause are— 
‘‘(I) a transfer in trust, 
‘‘(II) a transfer of an interest in 
a passthrough entity, 
‘‘(III) a transfer of an interest 
subject to a prohibition on sale, and 
‘‘(IV) any other transfer of prop-
erty that, without regard to with-
drawal, put, or other such rights in 
the donee, cannot immediately be liq-
uidated by the donee.’’. 
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137 
(b) CONFORMING AMENDMENT.—Section 2503 is 
amended by striking subsection (c). 
(c) REGULATIONS.—The Secretary of the Treasury, 
or the Secretary of the Treasury’s delegate, may prescribe 
such regulations or 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 any calendar year beginning 
after the date of the enactment of this Act. 
SEC. 407. CLARIFICATION REGARDING DISALLOWANCE OF 
STEP-UP IN BASIS FOR PROPERTY HELD IN 
CERTAIN GRANTOR TRUSTS. 
(a) IN GENERAL.—Section 1014 is amended— 
(1) by redesignating subsection (f) as sub-
section (g), and 
(2) by inserting after subsection (e) the fol-
lowing: 
‘‘(f) PROPERTY
HELD
IN
CERTAIN
GRANTOR 
TRUSTS.—This section shall not apply to property— 
‘‘(1) held in a trust of which the transferor is 
considered the owner under subpart E of part I of 
subchapter J, and 
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138 
‘‘(2) if, after the transfer of such property to 
the trust, such property is not includible in the gross 
estate of the transferor for purposes of chapter 11.’’. 
(b) CONFORMING AMENDMENT.—Section 6662(k) is 
amended by striking ‘‘1014(f)’’ and inserting ‘‘1014(g)’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to transfers after the date of the 
enactment of this Act. 
(d) NO INFERENCE.—No inference may be drawn 
from the amendments made by this section with respect 
to the application of section 1014 of the Internal Revenue 
Code of 1986 to property described in subsection (f) of 
such section (as added by subsection (a)) which was trans-
ferred on or before the date of enactment of this Act. 
SEC. 408. LIMITATION ON DISCOUNTS; VALUATION RULES 
FOR CERTAIN TRANSFERS OF NONBUSINESS 
ASSETS. 
(a) IN GENERAL.—Chapter 14 of subtitle B is 
amended by adding at the end the following new section: 
‘‘SEC. 2705. LIMITATION ON DISCOUNTS; VALUATION RULES 
FOR CERTAIN TRANSFERS OF NONBUSINESS 
ASSETS. 
‘‘(a) LIMITATION ON DISCOUNT BY REASON OF FAM-
ILY CONTROL.— 
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‘‘(1) IN GENERAL.—For purposes of this sub-
title, in the case of the transfer of any interest in 
an entity other than an interest which is actively 
traded (within the meaning of section 1092), if the 
transferor, the transferee, and members of the fam-
ily of the transferor and transferee have control of 
such entity immediately before such transfer, no dis-
count shall be allowed— 
‘‘(A) by reason of the fact that the trans-
feror or transferee does not have control of 
such entity, 
‘‘(B) by reason of the lack of marketability 
of the interest, or 
‘‘(C) for any other reason. 
‘‘(2) DEFINITIONS.—In this subsection, the 
terms ‘control’ and ‘member of the family’ have the 
same meanings given such terms in section 2704(c). 
‘‘(3) ATTRIBUTION.—For purposes of this sec-
tion, the rule of section 2701(e)(3) shall apply for 
purposes of determining the interests held by any in-
dividual. 
‘‘(b) VALUATION RULES FOR CERTAIN TRANSFERS 
OF NONBUSINESS ASSETS.— 
‘‘(1) IN GENERAL.—For purposes of this sub-
title, in the case of the transfer of any interest in 
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140 
an entity other than an interest which is actively 
traded (within the meaning of section 1092)— 
‘‘(A) the value of any nonbusiness assets 
held by the entity with respect to such interest 
shall be determined as if the transferor had 
transferred such assets directly to the trans-
feree (and no valuation discount shall be al-
lowed with respect to such nonbusiness assets), 
and 
‘‘(B) such nonbusiness assets shall not be 
taken into account in determining the value of 
the interest in the entity. 
‘‘(2) NONBUSINESS ASSETS.—For purposes of 
this subsection— 
‘‘(A) IN
GENERAL.—The term ‘nonbusi-
ness asset’ means any asset other than an asset 
which is used in the active conduct of a trade 
or business. 
‘‘(B) PASSIVE ASSETS TREATED AS NON-
BUSINESS ASSETS.— 
‘‘(i) IN
GENERAL.—For purposes of 
subparagraph (A), a passive asset shall be 
treated as a nonbusiness asset unless— 
‘‘(I) the asset is property de-
scribed in paragraph (1) or (4) of sec-
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141 
tion 1221(a) or is a hedge with re-
spect to such property, or 
‘‘(II) the asset is real property 
used in the active conduct of 1 or 
more real property trades or busi-
nesses (within the meaning of section 
469(c)(7)(C)) in which the transferor 
materially participates and with re-
spect to which the transferor meets 
the 
requirements 
of 
section 
469(c)(7)(B)(ii). 
‘‘(ii) MATERIAL PARTICIPATION.—For 
purposes of clause (i)(II), material partici-
pation shall be determined under the rules 
of section 469(h), except that section 
469(h)(3) shall be applied without regard 
to the limitation to farming activity. 
‘‘(C) WORKING
CAPITAL
TREATED
AS 
USED IN TRADE OR BUSINESS.—Any asset (in-
cluding a passive asset) which is held as a part 
of the reasonably required working capital 
needs of a trade or business shall be treated as 
used in the active conduct of a trade or busi-
ness. 
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‘‘(3) PASSIVE
ASSET.—For purposes of this 
subsection, the term ‘passive asset’ means any— 
‘‘(A) cash or cash equivalents, 
‘‘(B) stock in a corporation or any other 
equity, profits, or capital interest in any entity, 
‘‘(C) evidence of indebtedness, option, for-
ward or futures contract, notional principal con-
tract, or derivative, 
‘‘(D) asset described in clause (iii), (iv), or 
(v) of section 351(e)(1)(B), 
‘‘(E) annuity, 
‘‘(F) real property used in 1 or more real 
property trades or businesses (as defined in sec-
tion 469(c)(7)(C)), 
‘‘(G) asset (other than a patent, trade-
mark, or copyright) which produces royalty in-
come, 
‘‘(H) commodity, 
‘‘(I) collectible (within the meaning of sec-
tion 408(m)), or 
‘‘(J) any other asset specified in regula-
tions prescribed by the Secretary. 
‘‘(4) LOOK-THRU RULE.— 
‘‘(A) IN GENERAL.—If a nonbusiness asset 
of an entity described in paragraph (1) consists 
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143 
of a 10-percent interest in any other entity, this 
subsection shall be applied by disregarding the 
10-percent interest and by treating the entity 
as holding directly its ratable share of the as-
sets of the other entity. 
‘‘(B) 10-PERCENT
INTEREST.—The term 
‘10-percent interest’ means— 
‘‘(i) in the case of an interest in a cor-
poration, direct ownership of at least 10 
percent (by vote or value) of the stock in 
such corporation, 
‘‘(ii) in the case of an interest in a 
partnership, direct ownership of at least 10 
percent of the capital or profits interest in 
the partnership, and 
‘‘(iii) in any other case, direct owner-
ship of at least 10 percent of the beneficial 
interests in the entity.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 2031(b) of the Internal Revenue 
Code of 1986 is amended by inserting ‘‘(after appli-
cation of section 2705(b))’’ after ‘‘shall be deter-
mined’’. 
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144 
(2) The table of sections of chapter 14 of sub-
title B of such Code is amended by adding at the 
end the following: 
‘‘Sec. 2705. Limitation on discounts; valuation rules for certain transfers of 
nonbusiness assets.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to transfers after the date of the 
enactment of this Act. 
SEC. 409. SURCHARGE ON HIGH INCOME ESTATES AND 
TRUSTS. 
(a) IN GENERAL.—Subchapter A of chapter 1 is 
amended by adding at the end the following new part: 
‘‘PART VIII—SURCHARGE ON HIGH INCOME 
ESTATES AND TRUSTS 
‘‘Sec. 59B. Surcharge on high income estates and trusts. 
‘‘SEC. 59B. SURCHARGE ON HIGH INCOME ESTATES AND 
TRUSTS. 
‘‘(a) GENERAL RULE.—In the case of an estate or 
trust, there is hereby imposed (in addition to any other 
tax imposed by this subtitle) a tax equal to the sum of— 
‘‘(1) 5 percent of so much of the modified ad-
justed gross income of the taxpayer as exceeds 
$200,000, plus 
‘‘(2) 3 percent of so much of the modified ad-
justed gross income of the taxpayer as exceeds 
$500,000. 
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145 
‘‘(b) MODIFIED ADJUSTED GROSS INCOME.—For 
purposes of this section— 
‘‘(1) IN
GENERAL.—The term ‘modified ad-
justed gross income’ means adjusted gross income 
reduced by any deduction (not taken into account in 
determining adjusted gross income) allowed for in-
vestment interest (as defined in section 163(d)) or 
business interest (as defined in section 163(j)). 
‘‘(2) ADJUSTED
GROSS
INCOME.—Adjusted 
gross income shall be determined as provided in sec-
tion 67(e) and reduced by the amount allowed as a 
deduction under section 642(c). 
‘‘(c) SPECIAL RULES.— 
‘‘(1) CHARITABLE
TRUSTS.—Subsection (a) 
shall not apply to a trust all the unexpired interests 
in which are devoted to one or more of the purposes 
described in section 170(c)(2)(B). 
‘‘(2) NOT TREATED AS TAX IMPOSED BY THIS 
CHAPTER
FOR
CERTAIN
PURPOSES.—The tax im-
posed under this section shall not be treated as tax 
imposed by this chapter for purposes of determining 
the amount of any credit under this chapter (other 
than sections 27 and 901) or for purposes of section 
55. 
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146 
‘‘(3) ELECTING SMALL BUSINESS TRUSTS.—For 
purposes of the determination of adjusted gross in-
come, section 641(c)(1)(A) shall not apply and all 
portions of any electing small business trust shall be 
treated as a single trust. 
‘‘(d) 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 to prevent the avoidance 
of the purposes of this section.’’. 
(b) COORDINATION WITH CERTAIN PROVISIONS.— 
(1) INTEREST ON CERTAIN DEFERRED TAX LI-
ABILITY.—Section 453A(c) is amended by redesig-
nating paragraph (6) as paragraph (7) and by in-
serting after paragraph (5) the following new para-
graph: 
‘‘(6) SURCHARGE ON HIGH INCOME ESTATES 
AND
TRUSTS
TAKEN
INTO
ACCOUNT
IN
DETER-
MINING MAXIMUM RATE OF TAX.—For purposes of 
paragraph (3)(B), in the case of an estate or trust, 
the maximum rate of tax in effect under section 1 
shall be treated as being equal to the sum of such 
rate and the rates in effect under paragraphs (1) 
and (2) of section 59B(a).’’. 
(2) LIMITATION ON FOREIGN TAX CREDIT.— 
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(A) Section 904(b)(3)(E)(i)(I) is amended 
by inserting ‘‘increased, in the case of an estate 
or trust, by the sum of the rates set forth in 
paragraphs (1) and (2) of section 1A(a)’’ after 
‘‘(whichever applies)’’. 
(B) Section 904(d)(2)(F) is amended by 
adding at the end the following: ‘‘For purposes 
of the first sentence of this subparagraph, in 
the case of an estate or trust, the highest rate 
of tax specified in section 1 shall be treated as 
being equal to the sum of such rate and the 
rates in effect under paragraphs (1) and (2) of 
section 59B(a).’’. 
(3) ELECTION BY INDIVIDUALS TO BE SUBJECT 
TO TAX AT CORPORATE RATES.—Section 962(a)(1) 
is amended by striking ‘‘and 55’’ and inserting ‘‘55, 
and 59B’’. 
(4) INTEREST ON CERTAIN TAX DEFERRAL.— 
Section 1291(c)(2) is amended by adding at the end 
the following: ‘‘For purposes of the preceding sen-
tence, in the case of an estate or trust, the highest 
rate of tax in effect under section 1 shall be treated 
as being equal to the sum of such rate and the rates 
in effect under paragraphs (1) and (2) of section 
59B(a).’’. 
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(5) WITHHOLDING OF TAX ON FOREIGN PART-
NERS’ SHARE
OF
EFFECTIVELY
CONNECTED
IN-
COME.—Section 1446(b)(2) is amended by adding at 
the end the following flush sentence: 
‘‘For purposes of subparagraph (A), in the case of 
a partner which is an estate or trust, the highest 
rate of tax in effect under section 1 shall be treated 
as being equal to the sum of such rate and the rates 
in effect under paragraphs (1) and (2) of section 
59B(a).’’. 
(6) PARTNERSHIP ADJUSTMENTS.— 
(A) Section 6225(b)(1) is amended by add-
ing at the end the following flush sentence: 
‘‘For purposes of subparagraph (B), in the case of 
an estate or trust, the highest rate of tax in effect 
under section 1 shall be treated as being equal to 
the sum of such rate and the rates in effect under 
paragraphs (1) and (2) of section 59B(a).’’. 
(B) Section 6225(c)(4)(A) is amended— 
(i) by striking ‘‘subsection (b)(1)(A)’’ 
and inserting ‘‘subsection (b)(1)(B)’’, and 
(ii) by striking ‘‘or’’ at the end of 
clause (i), by adding ‘‘or’’ at the end of 
clause (ii), and by inserting after clause 
(ii) the following new clause: 
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