H. R. 1—191 
‘‘(II) equal or exceed the threshold percentage 
which would otherwise apply with respect to such 
applicable critical mineral under such clause for 
such calendar year, taking into account— 
‘‘(aa) domestic geographic availability, 
‘‘(bb) supply chain constraints, 
‘‘(cc) domestic processing capacity needs, 
and 
‘‘(dd) national security concerns. 
‘‘(D) MATERIAL ASSISTANCE COST RATIO.— 
‘‘(i) QUALIFIED
FACILITIES
AND
ENERGY
STORAGE 
TECHNOLOGY.—For purposes of subparagraph (A)(i), 
the term ‘material assistance cost ratio’ means the 
amount (expressed as a percentage) equal to the 
quotient of— 
‘‘(I) an amount equal to— 
‘‘(aa) the total direct costs to the taxpayer 
attributable to all manufactured products 
(including components) which are incorporated 
into the qualified facility or energy storage 
technology upon completion of construction, 
minus 
‘‘(bb) the total direct costs to the taxpayer 
attributable to all manufactured products 
(including components) which are— 
‘‘(AA) incorporated into the qualified 
facility or energy storage technology upon 
completion of construction, and 
‘‘(BB) mined, produced, or manufac-
tured by a prohibited foreign entity, 
divided by 
‘‘(II) the amount described in subclause (I)(aa). 
‘‘(ii) ELIGIBLE
COMPONENTS.—For purposes of 
subparagraph (A)(ii), the term ‘material assistance cost 
ratio’ means the amount (expressed as a percentage) 
equal to the quotient of— 
‘‘(I) an amount equal to— 
‘‘(aa) with respect to an eligible compo-
nent, the total direct material costs that are 
paid or incurred (within the meaning of section 
461 and any regulations issued under section 
263A) by the taxpayer for production of such 
eligible component, minus 
‘‘(bb) with respect to an eligible compo-
nent, the total direct material costs that are 
paid or incurred (within the meaning of section 
461 and any regulations issued under section 
263A) by the taxpayer for production of such 
eligible component that are mined, produced, 
or manufactured by a prohibited foreign entity, 
divided by 
‘‘(II) the amount described in subclause (I)(aa). 
‘‘(iii) SAFE HARBOR TABLES.— 
‘‘(I) IN
GENERAL.—Not later than December 
31, 2026, the Secretary shall issue safe harbor 
tables (and such other guidance as deemed nec-
essary) to—
H. R. 1—192 
‘‘(aa) identify the percentage of total direct 
costs of any manufactured product which is 
attributable to a prohibited foreign entity, 
‘‘(bb) identify the percentage of total direct 
material costs of any eligible component which 
is attributable to a prohibited foreign entity, 
and 
‘‘(cc) provide all rules necessary to deter-
mine the amount of a taxpayer’s material 
assistance from a prohibited foreign entity 
within the meaning of this paragraph. 
‘‘(II) SAFE HARBORS PRIOR TO ISSUANCE.—For 
purposes of this paragraph, prior to the date on 
which the Secretary issues the safe harbor tables 
described in subclause (I), and for construction 
of a qualified facility or energy storage technology 
which begins on or before the date which is 60 
days after the date of issuance of such tables, 
a taxpayer may— 
‘‘(aa) use the tables included in Internal 
Revenue Service Notice 2025–08 to establish 
the percentage of the total direct costs of any 
listed eligible component and any manufac-
tured product, and 
‘‘(bb) rely on a certification by the supplier 
of the manufactured product, eligible compo-
nent, or constituent element, material, or sub-
component of an eligible component— 
‘‘(AA) of the total direct costs or the 
total direct material costs, as applicable, 
of such product or component that was 
not produced or manufactured by a 
prohibited foreign entity, or 
‘‘(BB) that such product or component 
was not produced or manufactured by a 
prohibited foreign entity. 
‘‘(III) 
EXCEPTION.—Notwithstanding 
sub-
clauses (I) and (II)— 
‘‘(aa) if the taxpayer knows (or has reason 
to know) that a manufactured product or 
eligible component was produced or manufac-
tured by a prohibited foreign entity, the tax-
payer shall treat all direct costs with respect 
to such manufactured product, or all direct 
material costs with respect to such eligible 
component, as attributable to a prohibited for-
eign entity, and 
‘‘(bb) if the taxpayer knows (or has reason 
to know) that the certification referred to in 
subclause (II)(bb) pertaining to a manufac-
tured product or eligible component is inac-
curate, the taxpayer may not rely on such 
certification. 
‘‘(IV) 
CERTIFICATION
REQUIREMENT.—In 
a 
manner consistent with Treasury Regulation sec-
tion 1.45X–4(c)(4)(i) (as in effect on the date of
H. R. 1—193 
enactment of this paragraph), the certification 
referred to in subclause (II)(bb) shall— 
‘‘(aa) include— 
‘‘(AA) the supplier’s employer identi-
fication number, or 
‘‘(BB) any such similar identification 
number issued by a foreign government, 
‘‘(bb) be signed under penalties of perjury, 
‘‘(cc) be retained by the supplier and the 
taxpayer for a period of not less than 6 years 
and shall be provided to the Secretary upon 
request, and 
‘‘(dd) be from the supplier from which the 
taxpayer 
purchased 
any 
manufactured 
product, eligible component, or constituent ele-
ments, materials, or subcomponents of an 
eligible component, stating— 
‘‘(AA) that such property was not pro-
duced or manufactured by a prohibited 
foreign entity and that the supplier does 
not know (or have reason to know) that 
any prior supplier in the chain of produc-
tion of that property is a prohibited for-
eign entity, 
‘‘(BB) for purposes of section 45X, the 
total direct material costs for each compo-
nent, constituent element, material, or 
subcomponent that were not produced or 
manufactured by a prohibited foreign 
entity, or 
‘‘(CC) for purposes of section 45Y or 
section 48E, the total direct costs attrib-
utable to all manufactured products that 
were not produced or manufactured by a 
prohibited foreign entity. 
‘‘(iv) EXISTING
CONTRACT.—Upon the election of 
the taxpayer (in such form and manner as the Sec-
retary shall designate), in the case of any manufac-
tured product, eligible component, or constituent ele-
ment, material, or subcomponent of an eligible compo-
nent which is— 
‘‘(I) acquired by the taxpayer, or manufactured 
or assembled by or for the taxpayer, pursuant 
to a binding written contract which was entered 
into prior to June 16, 2025, and 
‘‘(II)(aa) placed into service before January 1, 
2030 (or, in the case of an applicable facility, as 
defined in section 45Y(d)(4)(B), before January 1, 
2028) in a facility the construction of which began 
before August 1, 2025, or 
‘‘(bb) in the case of a constituent element, 
material, or subcomponent, used in a product sold 
before January 1, 2030, 
the cost to the taxpayer with respect to such product, 
component, element, material, or subcomponent shall 
not be included for purposes of determining the mate-
rial assistance cost ratio under this subparagraph.
H. R. 1—194 
‘‘(v) ANTI-CIRCUMVENTION RULES.—The Secretary 
shall prescribe such regulations and guidance as may 
be necessary or appropriate to prevent circumvention 
of the rules under this subparagraph, including preven-
tion of— 
‘‘(I) any abuse of the exception provided under 
clause (iv) through the stockpiling of any manufac-
tured product, eligible component, or constituent 
element, material, or subcomponent of an eligible 
component during any period prior to the applica-
tion of the requirements under this paragraph, 
or 
‘‘(II) any evasion with respect to the require-
ments of this subparagraph where the facts and 
circumstances demonstrate that the beginning of 
construction of a qualified facility or energy storage 
technology has not in fact occurred. 
‘‘(E) OTHER DEFINITIONS.—For purposes of this para-
graph— 
‘‘(i) ELIGIBLE
COMPONENT.—The term ‘eligible 
component’ means— 
‘‘(I) any property described in section 45X(c)(1), 
or 
‘‘(II) any component which is identified by the 
Secretary pursuant to regulations or guidance 
issued under subparagraph (G). 
‘‘(ii) ENERGY
STORAGE
TECHNOLOGY.—The term 
‘energy storage technology’ has the same meaning 
given such term under section 48E(c)(2). 
‘‘(iii) MANUFACTURED PRODUCT.—The term ‘manu-
factured product’ means— 
‘‘(I) a manufactured product which is a compo-
nent of a qualified facility, as described in section 
45Y(g)(11)(B) and any guidance issued thereunder, 
or 
‘‘(II) any product which is identified by the 
Secretary pursuant to regulations or guidance 
issued under subparagraph (G). 
‘‘(iv) QUALIFIED
FACILITY.—The term ‘qualified 
facility’ means— 
‘‘(I) a qualified facility, as defined in section 
45Y(b)(1), 
‘‘(II) a qualified facility, as defined in section 
48E(b)(3), and 
‘‘(III) any qualified interconnection property 
(as defined in section 48E(b)(4)) which is part of 
the qualified investment with respect to a qualified 
facility (as described in section 48E(b)(1)). 
‘‘(F) DETERMINATION
OF
OWNERSHIP; BEGINNING
OF 
CONSTRUCTION.—Rules similar to the rules under subpara-
graphs (H) and (J) of paragraph (51) shall apply for pur-
poses of this paragraph. 
‘‘(G) REGULATIONS AND GUIDANCE.—The Secretary may 
prescribe such regulations and guidance as may be nec-
essary or appropriate to carry out the provisions of this 
paragraph, including—
H. R. 1—195 
‘‘(i) identification of components or products for 
purposes of clauses (i) and (iii) of subparagraph (E), 
and 
‘‘(ii) for purposes of subparagraph (A)(ii), rules to 
address facilities which produce more than one eligible 
component.’’. 
(d) DENIAL OF CREDIT FOR CERTAIN WIND AND SOLAR LEASING 
ARRANGEMENTS.—Section 45Y is amended by adding at the end 
the following new subsection: 
‘‘(h) DENIAL OF CREDIT FOR WIND AND SOLAR LEASING ARRANGE-
MENTS.—No credit shall be determined under this section with 
respect to any production of electricity during the taxable year 
with respect to property described in paragraph (1) or (4) of section 
25D(d) (as applied by substituting ‘lessee’ for ‘taxpayer’) if the 
taxpayer rents or leases such property to a third party during 
such taxable year.’’. 
(e) EMISSIONS RATES TABLES.—Section 45Y(b)(2)(C) is amended 
by adding at the end the following new clause: 
‘‘(iii) EXISTING STUDIES.—For purposes of clause 
(i), in determining greenhouse gas emissions rates for 
types or categories of facilities for the purpose of deter-
mining whether a facility satisfies the requirements 
under paragraph (1), the Secretary shall consider 
studies published on or before the date of enactment 
of this clause which demonstrate a net lifecycle green-
house gas emissions rate which is not greater than 
zero using widely accepted lifecycle assessment con-
cepts, such as concepts described in standards devel-
oped by the International Organization for Standard-
ization.’’. 
(f) NUCLEAR ENERGY COMMUNITIES.— 
(1) IN GENERAL.—Section 45(b)(11) is amended— 
(A) in subparagraph (B)— 
(i) in clause (ii)(II), by striking ‘‘or’’ at the end, 
(ii) in clause (iii)(II), by striking the period at 
the end and inserting ‘‘, or’’, and 
(iii) by adding at the end the following new clause: 
‘‘(iv) for purposes of any qualified facility which 
is an advanced nuclear facility, a metropolitan statis-
tical area which has (or, at any time during the period 
beginning after December 31, 2009, had) 0.17 percent 
or greater direct employment related to the advance-
ment of nuclear power, including employment related 
to— 
‘‘(I) an advanced nuclear facility, 
‘‘(II) advanced nuclear power research and 
development, 
‘‘(III) nuclear fuel cycle research, development, 
or production, including mining, enrichment, 
manufacture, storage, disposal, or recycling of 
nuclear fuel, and 
‘‘(IV) the manufacturing or assembly of compo-
nents used in an advanced nuclear facility.’’, and 
(B) by adding at the end the following new subpara-
graph: 
‘‘(C) ADVANCED NUCLEAR FACILITIES.—
H. R. 1—196 
‘‘(i) IN GENERAL.—Subject to clause (ii), for pur-
poses of subparagraph (B)(iv), the term ‘advanced 
nuclear facility’ means any nuclear facility the reactor 
design for which is approved in the manner described 
in section 45J(d)(2). 
‘‘(ii) SPECIAL RULE.—For purposes of clause (i), a 
facility shall be deemed to have a reactor design which 
is approved in the manner described in section 
45J(d)(2) if the Nuclear Regulatory Commission has 
authorized construction and issued a site-specific 
construction permit or combined license with respect 
to such facility (without regard to whether the reactor 
design was approved after December 31, 1993).’’. 
(2) NONAPPLICATION FOR CLEAN ELECTRICITY INVESTMENT 
CREDIT.—Section 48E(a)(3)(A)(i) is amended by inserting ‘‘, as 
applied without regard to clause (iv) thereof’’ after ‘‘section 
45(b)(11)(B)’’. 
(g) 
CONFORMING
AMENDMENTS.—Section 
45Y(b)(1) 
is 
amended— 
(1) by redesignating subparagraph (D) as subparagraph 
(E), and 
(2) by inserting after subparagraph (C) the following new 
subparagraph: 
‘‘(D) DETERMINATION
OF
CAPACITY.—For purposes of 
subparagraph (C), additions of capacity of a facility shall 
be determined in any reasonable manner, including based 
on— 
‘‘(i) determinations by, or reports to, the Federal 
Energy Regulatory Commission (including interconnec-
tion agreements), the Nuclear Regulatory Commission, 
or any similar entity, reflecting additions of capacity, 
‘‘(ii) determinations or reports reflecting additions 
of capacity made by an independent professional engi-
neer, 
‘‘(iii) reports to, or issued by, regional transmission 
organizations 
or 
independent 
system 
operators 
reflecting additions of capacity, or 
‘‘(iv) any other method or manner provided by 
the Secretary.’’. 
(h) PROHIBITION ON TRANSFER OF CREDITS TO SPECIFIED FOR-
EIGN ENTITIES.—Section 6418(g) is amended by adding at the end 
the following new paragraph: 
‘‘(5) PROHIBITION ON TRANSFER OF CREDITS TO SPECIFIED 
FOREIGN ENTITIES.—With respect to any eligible credit described 
in clause (iii), (iv), (vi), (vii), (viii), or (xi) of subsection (f)(1)(A), 
an eligible taxpayer may not elect to transfer any portion 
of such credit to a taxpayer that is a specified foreign entity 
(as defined in section 7701(a)(51)(B)).’’. 
(i) EXTENSION OF PERIOD OF LIMITATIONS FOR ERRORS RELATING 
TO DETERMINING OF MATERIAL ASSISTANCE FROM A PROHIBITED 
FOREIGN ENTITY.—Section 6501 is amended— 
(1) by redesignating subsection (o) as subsection (p), and 
(2) by inserting after subsection (n) the following new sub-
section: 
‘‘(o) MATERIAL
ASSISTANCE
FROM
A
PROHIBITED
FOREIGN 
ENTITY.—In the case of a deficiency attributable to an error with
H. R. 1—197 
respect to the determination under section 7701(a)(52) for any tax-
able year, such deficiency may be assessed at any time within 
6 years after the return for such year was filed.’’. 
(j) IMPOSITION OF ACCURACY-RELATED PENALTIES.— 
(1) IN GENERAL.—Section 6662 is amended by adding at 
the end the following new subsection: 
‘‘(m) SUBSTANTIAL UNDERSTATEMENT OF INCOME TAX DUE TO 
DISALLOWANCE OF APPLICABLE ENERGY CREDITS.— 
‘‘(1) IN
GENERAL.—In the case of a taxpayer for which 
there is a disallowance of an applicable energy credit for any 
taxable year, for purposes of determining whether there is 
a substantial understatement of income tax for such taxable 
year, subsection (d)(1) shall be applied— 
‘‘(A) in subparagraphs (A) and (B), by substituting 
‘1 percent’ for ‘10 percent’ each place it appears, and 
‘‘(B) without regard to subparagraph (C). 
‘‘(2) DISALLOWANCE OF AN APPLICABLE ENERGY CREDIT.— 
For purposes of this subsection, the term ‘disallowance of an 
applicable energy credit’ means the disallowance of a credit 
under section 45X, 45Y, or 48E by reason of overstating the 
material assistance cost ratio (as determined under section 
7701(a)(52)) with respect to any qualified facility, energy stor-
age technology, or facility which produces eligible components.’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
6417(d)(6) 
is 
amended by adding at the end the following new subparagraph: 
‘‘(D) 
DISALLOWANCE
OF
AN
APPLICABLE
ENERGY 
CREDIT.—In the case of an applicable entity which made 
an election under subsection (a) with respect to an 
applicable credit for which there is a disallowance described 
in section 6662(m)(2), subparagraph (A) shall apply with 
respect to any excessive payment resulting from such dis-
allowance.’’. 
(k) PENALTY
FOR SUBSTANTIAL MISSTATEMENTS
ON CERTIFI-
CATION PROVIDED BY SUPPLIER.— 
(1) IN GENERAL.—Part I of subchapter B of chapter 68 
is amended by inserting after section 6695A the following new 
section: 
‘‘SEC. 6695B. PENALTY FOR SUBSTANTIAL MISSTATEMENTS ON CER-
TIFICATION PROVIDED BY SUPPLIER. 
‘‘(a) IMPOSITION OF PENALTY.—If— 
‘‘(1) a person— 
‘‘(A) provides a certification described in clause 
(iii)(II)(bb) of section 7701(a)(52)(D) with respect to any 
manufactured product, eligible component, or constituent 
element, material, or subcomponent of an eligible compo-
nent, and 
‘‘(B) knows, or reasonably should have known, that 
the certification would be used in connection with a deter-
mination under such section, 
‘‘(2) such person knows, or reasonably should have known, 
that such certification is inaccurate or false with respect to— 
‘‘(A) whether such property was produced or manufac-
tured by a prohibited foreign entity, or 
‘‘(B) the total direct costs or total direct material costs 
of such property that was not produced or manufactured
H. R. 1—198 
by a prohibited foreign entity that were provided on such 
certification, and 
‘‘(3) the inaccuracy or falsity described in paragraph (2) 
resulted in the disallowance of an applicable energy credit 
(as defined in section 6662(m)(2)) and an understatement of 
income tax (within the meaning of section 6662(d)(2)) for the 
taxable year in an amount which exceeds the lesser of— 
‘‘(A) 5 percent of the tax required to be shown on 
the return for the taxable year, or 
‘‘(B) $100,000, 
then such person shall pay a penalty in the amount determined 
under subsection (b). 
‘‘(b) AMOUNT OF PENALTY.—The amount of the penalty imposed 
under subsection (a) on any person with respect to a certification 
shall be equal to the greater of— 
‘‘(1) 10 percent of the amount of the underpayment (as 
defined in section 6664(a)) solely attributable to the inaccuracy 
or falsity described in subsection (a)(2), or 
‘‘(2) $5,000. 
‘‘(c) EXCEPTION.—No penalty shall be imposed under subsection 
(a) if the person establishes to the satisfaction of the Secretary 
that any inaccuracy or falsity described in subsection (a)(2) is due 
to a reasonable cause and not willful neglect. 
‘‘(d) DEFINITIONS.—Any term used in this section which is also 
used in section 7701(a)(52) shall have the meaning given such 
term in such section.’’. 
(2) CLERICAL AMENDMENTS.— 
(A) Section 6696 is amended— 
(i) in the heading, by striking ‘‘AND 6695A’’ and 
inserting ‘‘6695A, AND 6695B’’, 
(ii) in subsections (a), (b), and (e), by striking ‘‘and 
6695A’’ each place it appears and inserting ‘‘6695A, 
and 6695B’’, 
(iii) in subsection (c), by striking ‘‘or 6695A’’ and 
inserting ‘‘6695A, or 6695B’’, and 
(iv) in subsection (d)— 
(I) in paragraph (1), by inserting ‘‘(or, in the 
case of any penalty under section 6695B, 6 years)’’ 
after ‘‘assessed within 3 years’’, and 
(II) in paragraph (2), by inserting ‘‘(or, in the 
case of any claim for refund of an overpayment 
of any penalty assessed under section 6695B, 6 
years)’’ after ‘‘filed within 3 years’’. 
(B) The table of sections for part I of subchapter B 
of chapter 68 is amended by inserting after item relating 
to section 6695A the following new item: 
‘‘Sec. 6695B. Penalty for substantial misstatements on certification provided by 
supplier.’’. 
(l) EFFECTIVE DATES.— 
(1) IN GENERAL.—Except as provided in paragraphs (2), 
(3), and (4), the amendments made by this section shall apply 
to taxable years beginning after the date of enactment of this 
Act. 
(2) MATERIAL ASSISTANCE FROM PROHIBITED FOREIGN ENTI-
TIES.—The amendments made by subsection (b)(1) shall apply 
to facilities for which construction begins after December 31, 
2025.
H. R. 1—199 
(3) PENALTY FOR SUBSTANTIAL MISSTATEMENTS ON CERTIFI-
CATION PROVIDED BY SUPPLIER.—The amendments made by sub-
section (k) shall apply to certifications provided after December 
31, 2025. 
(4) TERMINATION FOR WIND AND SOLAR FACILITIES.—The 
amendments made by subsection (a) shall apply to facilities 
the construction of which begins after the date which is 12 
months after the date of enactment of this Act. 
SEC. 70513. TERMINATION AND RESTRICTIONS ON CLEAN ELEC-
TRICITY INVESTMENT CREDIT. 
(a) TERMINATION FOR WIND AND SOLAR FACILITIES.—Section 
48E(e) is amended— 
(1) in paragraph (1), by striking ‘‘The amount of’’ and 
inserting ‘‘Subject to paragraph (4), the amount of’’, and 
(2) by adding at the end the following new paragraph: 
‘‘(4) TERMINATION FOR WIND AND SOLAR FACILITIES.— 
‘‘(A) IN GENERAL.—This section shall not apply to any 
qualified property placed in service by the taxpayer after 
December 31, 2027, which is part of an applicable facility. 
‘‘(B) APPLICABLE FACILITY.—For purposes of this para-
graph, the term ‘applicable facility’ means a qualified 
facility which— 
‘‘(i) uses wind to produce electricity (within the 
meaning of such term as used in section 45(d)(1), as 
determined without regard to any requirement under 
such section with respect to the date on which construc-
tion of property begins), or 
‘‘(ii) uses solar energy to produce electricity (within 
the meaning of such term as used in section 45(d)(4), 
as determined without regard to any requirement 
under such section with respect to the date on which 
construction of property begins). 
‘‘(C) EXCEPTION.—This paragraph shall not apply with 
respect to any energy storage technology which is placed 
in service at any applicable facility.’’. 
(b) RESTRICTIONS RELATING
TO PROHIBITED FOREIGN ENTI-
TIES.— 
(1) IN GENERAL.—Section 48E is amended— 
(A) in subsection (b)— 
(i) by redesignating paragraph (6) as paragraph 
(7), and 
(ii) by inserting after paragraph (5) the following 
new paragraph: 
‘‘(6) MATERIAL ASSISTANCE FROM PROHIBITED FOREIGN ENTI-
TIES.—The terms ‘qualified facility’ and ‘qualified interconnec-
tion property’ shall not include any facility or property the 
construction, reconstruction, or erection of which begins after 
December 31, 2025, if the construction, reconstruction, or erec-
tion of such facility or property includes any material assistance 
from a prohibited 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 ENTI-
TIES.—The term ‘energy storage technology’ shall not include 
any property the construction of which begins after December
H. R. 1—200 
31, 2025, if the construction of such property includes any 
material assistance from a prohibited foreign entity (as defined 
in section 7701(a)(52)).’’. 
(2) ADDITIONAL RESTRICTIONS.—Section 48E(d) is amended 
by adding at the end the following new paragraph: 
‘‘(6) RESTRICTIONS RELATING TO PROHIBITED FOREIGN ENTI-
TIES.— 
‘‘(A) IN GENERAL.—No credit shall be determined under 
subsection (a) for any taxable year if the taxpayer is— 
‘‘(i) a specified foreign entity (as defined in section 
7701(a)(51)(B)), or 
‘‘(ii) a foreign-influenced entity (as defined in sec-
tion 7701(a)(51)(D), without regard to clause (i)(II) 
thereof). 
‘‘(B) EFFECTIVE CONTROL.—In the case of a taxpayer 
for which section 7701(a)(51)(D)(i)(II) is determined to 
apply for any taxable year, no credit shall be determined 
under subsection (a) for such taxable year if such deter-
mination relates to a qualified facility described in sub-
section (b)(3) or energy storage technology described in 
subsection (c)(2).’’. 
(3) RECAPTURE.— 
(A) IN GENERAL.—Section 50(a) is amended— 
(i) by redesignating paragraphs (4) through (6) 
as paragraphs (5) through (7), respectively, 
(ii) by inserting after paragraph (3) the following 
new paragraph: 
‘‘(4) PAYMENTS TO PROHIBITED FOREIGN ENTITIES.— 
‘‘(A) IN GENERAL.—If there is an applicable payment 
made by a specified taxpayer before the close of the 10- 
year period beginning on the date such taxpayer placed 
in service investment 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 percent of the aggregate decrease in the credits 
allowed under section 38 for all prior taxable years which 
would have resulted solely from reducing to zero any credit 
determined under section 46 which is attributable to the 
clean electricity investment credit under section 48E(a) 
with respect to such property. 
‘‘(B) APPLICABLE PAYMENT.—For purposes of this para-
graph, the term ‘applicable payment’ means, with respect 
to any taxable year, a payment or payments described 
in section 7701(a)(51)(D)(i)(II). 
‘‘(C) SPECIFIED TAXPAYER.—For purposes of this para-
graph, the term ‘specified taxpayer’ means any taxpayer 
who has been allowed 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.’’, 
(iii) in paragraph (5), as redesignated by clause 
(i), by striking ‘‘or any applicable transaction to which 
paragraph 
(3)(A) 
applies,’’ 
and 
inserting 
‘‘any 
applicable transaction to which paragraph (3)(A) 
applies, or any applicable payment to which paragraph 
(4)(A) applies,’’, and
H. R. 1—201 
(iv) in paragraph (7), as redesignated by clause 
(i), by striking ‘‘or (3)’’ and inserting ‘‘(3), or (4)’’. 
(B) CONFORMING AMENDMENTS.— 
(i) Section 1371(d)(1) is amended by striking ‘‘sec-
tion 50(a)(5)’’ and inserting ‘‘section 50(a)(6)’’. 
(ii) Section 6418(g)(3) is amended by striking ‘‘sub-
section (a)(5)’’ each place it appears and inserting ‘‘sub-
section (a)(7)’’. 
(c) DENIAL OF CREDIT FOR EXPENDITURES FOR CERTAIN WIND 
AND SOLAR LEASING ARRANGEMENTS.— 
(1) IN GENERAL.—Section 48E is amended— 
(A) by redesignating subsection (i) as subsection (j), 
and 
(B) by inserting after subsection (h) the following new 
subsection: 
‘‘(i) DENIAL OF CREDIT FOR EXPENDITURES FOR WIND AND SOLAR 
LEASING ARRANGEMENTS.—No credit shall be determined under 
this section for any qualified investment during the taxable year 
with respect to property described in paragraph (1) or (4) of section 
25D(d) (as applied by substituting ‘lessee’ for ‘taxpayer’) if the 
taxpayer rents or leases such property to a third party during 
such taxable year.’’. 
(2) CONFORMING RULES.—Section 50 is amended by adding 
at the end the following new subsection: 
‘‘(e) RULES FOR GEOTHERMAL HEAT PUMPS.—For purposes of 
this section and section 168, the ownership of energy property 
described in section 48(a)(3)(A)(vii) shall be determined without 
regard to whether such property is readily usable by a person 
other than the lessee or service recipient.’’. 
(d) DOMESTIC CONTENT RULES.—Subparagraph (B) of section 
48E(a)(3) is amended to read as follows: 
‘‘(B) DOMESTIC CONTENT.—Rules similar to the rules 
of section 48(a)(12) shall apply, except that, for purposes 
of subparagraph (B) of such section and the application 
of rules similar to the rules of section 45(b)(9)(B), the 
adjusted 
percentage 
(as 
determined 
under 
section 
45(b)(9)(C)) shall be determined as follows: 
‘‘(i) In the case of any qualified investment with 
respect to any qualified facility or energy storage tech-
nology the construction of which begins before June 
16, 2025, 40 percent (or, in the case of a qualified 
facility which is an offshore wind facility, 20 percent). 
‘‘(ii) In the case of any qualified investment with 
respect to any qualified facility or energy storage tech-
nology the construction of which begins on or after 
June 16, 2025, and before January 1, 2026, 45 percent 
(or, in the case of a qualified facility which is an 
offshore wind facility, 27.5 percent). 
‘‘(iii) In the case of any qualified investment with 
respect to any qualified facility or energy storage tech-
nology the construction of which begins during cal-
endar year 2026, 50 percent (or, in the case of a quali-
fied facility which is an offshore wind facility, 35 per-
cent).
H. R. 1—202 
‘‘(iv) In the case of any qualified investment with 
respect to any qualified facility or energy storage tech-
nology the construction of which begins after December 
31, 2026, 55 percent.’’. 
(e) ELIMINATION OF ENERGY CREDIT FOR CERTAIN ENERGY PROP-
ERTY.—Section 48(a)(2) is amended— 
(1) in subparagraph (A)(ii), by striking ‘‘2 percent’’ and 
inserting ‘‘0 percent’’, and 
(2) by adding at the end the following new subparagraph: 
‘‘(C) NONAPPLICATION
OF
INCREASES
TO
ENERGY 
PERCENTAGE.—For purposes of energy property described 
in subparagraph (A)(ii), the energy percentage applicable 
to such property pursuant to such subparagraph shall not 
be increased or otherwise adjusted by any provision of 
this section.’’. 
(f) APPLICATION OF CLEAN ELECTRICITY INVESTMENT CREDIT 
TO QUALIFIED FUEL CELL PROPERTY.—Section 48E, as amended 
by subsection (c), is amended— 
(1) by redesignating subsection (j) as subsection (k), and 
(2) by inserting after subsection (i) the following new sub-
section: 
‘‘(j) APPLICATION TO QUALIFIED FUEL CELL PROPERTY.—For pur-
poses of this section, in the case of any qualified fuel cell property 
(as defined in section 48(c)(1), as applied without regard to subpara-
graph (E) thereof)— 
‘‘(1) subsection (b)(3)(A) shall be applied without regard 
to clause (iii) thereof, 
‘‘(2) for purposes of subsection (a)(1), the applicable percent-
age shall be 30 percent and such percentage shall not be 
increased or otherwise adjusted by any other provision of this 
section, and 
‘‘(3) subsection (g) shall not apply.’’. 
(g) EFFECTIVE DATES.— 
(1) IN GENERAL.—Except as provided in paragraphs (2), 
(3), (4), and (5), the amendments made by this section shall 
apply to taxable years beginning after the date of enactment 
of this Act. 
(2) DOMESTIC CONTENT RULES.—The amendment made by 
subsection (d) shall apply on or after June 16, 2025. 
(3) ELIMINATION OF ENERGY CREDIT FOR CERTAIN ENERGY 
PROPERTY.—The amendments made by subsection (e) shall 
apply to property the construction of which begins on or after 
June 16, 2025. 
(4) APPLICATION OF CLEAN ELECTRICITY INVESTMENT CREDIT 
TO QUALIFIED FUEL CELL PROPERTY.—The amendments made 
by subsection (f) shall apply to property the construction of 
which begins after December 31, 2025. 
(5) TERMINATION FOR WIND AND SOLAR FACILITIES.—The 
amendments made by subsection (a) shall apply to facilities 
the construction of which begins after the date which is 12 
months after the date of enactment of this Act. 
SEC. 70514. PHASE-OUT AND RESTRICTIONS ON ADVANCED MANUFAC-
TURING PRODUCTION CREDIT. 
(a) MODIFICATION
OF
PROVISION
RELATING
TO
SALE
OF 
INTEGRATED COMPONENTS.—Paragraph (4) of section 45X(d) is 
amended to read as follows:
H. R. 1—203 
‘‘(4) SALE OF INTEGRATED COMPONENTS.— 
‘‘(A) IN GENERAL.—For purposes of this section, a per-
son shall be treated as having sold an eligible component 
to an unrelated person if— 
‘‘(i) such component (referred to in this paragraph 
as the ‘primary component’) is integrated, incorporated, 
or assembled into another eligible component (referred 
to in this paragraph as the ‘secondary component’) 
produced within the same manufacturing facility as 
the primary component, and 
‘‘(ii) the secondary component is sold to an unre-
lated person. 
‘‘(B) ADDITIONAL
REQUIREMENTS.—Subparagraph (A) 
shall only apply with respect to a secondary component 
for which not less than 65 percent of the total direct mate-
rial costs which are paid or incurred (within the meaning 
of section 461 and any regulations issued under section 
263A) by the taxpayer to produce such secondary compo-
nent are attributable to primary components which are 
mined, produced, or manufactured in the United States.’’. 
(b) PHASE
OUT
AND
TERMINATION.—Section 45X(b)(3) is 
amended— 
(1) in the heading, by inserting ‘‘AND TERMINATION’’ after 
‘‘PHASE OUT’’, 
(2) in subparagraph (A), in the matter preceding clause 
(i), by striking ‘‘subparagraph (C)’’ and inserting ‘‘subpara-
graphs (C) and (D)’’, and 
(3) by striking subparagraph (C) and inserting the fol-
lowing: 
‘‘(C) PHASE OUT FOR APPLICABLE CRITICAL MINERALS 
OTHER THAN METALLURGICAL COAL.— 
‘‘(i) IN GENERAL.—In the case of any applicable 
critical mineral (other than metallurgical coal) pro-
duced after December 31, 2030, the amount determined 
under this subsection with respect to such mineral 
shall be equal to the product of— 
‘‘(I) the amount determined under paragraph 
(1) with respect to such mineral, as determined 
without regard to this subparagraph, multiplied 
by 
‘‘(II) the phase out percentage under clause 
(ii). 
‘‘(ii) PHASE OUT PERCENTAGE FOR APPLICABLE CRIT-
ICAL MINERALS OTHER THAN METALLURGICAL COAL.— 
The phase out percentage under this clause is equal 
to— 
‘‘(I) in the case of any applicable critical min-
eral produced during calendar year 2031, 75 per-
cent, 
‘‘(II) in the case of any applicable critical min-
eral produced during calendar year 2032, 50 per-
cent, 
‘‘(III) in the case of any applicable critical min-
eral produced during calendar year 2033, 25 per-
cent, and 
‘‘(IV) in the case of any applicable critical min-
eral produced after December 31, 2033, 0 percent.
H. R. 1—204 
‘‘(D) TERMINATION FOR WIND ENERGY COMPONENTS.— 
This section shall not apply to any wind energy component 
produced and sold after December 31, 2027. 
‘‘(E) TERMINATION
FOR
METALLURGICAL
COAL.—This 
section shall not apply to any metallurgical coal produced 
after December 31, 2029.’’. 
(c) RESTRICTIONS RELATING
TO PROHIBITED FOREIGN ENTI-
TIES.—Section 45X is amended— 
(1) in subsection (c)(1), by adding at the end the following 
new subparagraph: 
‘‘(C) MATERIAL ASSISTANCE FROM PROHIBITED FOREIGN 
ENTITIES.—In the case of taxable years beginning after 
the date of enactment of this subparagraph, the term 
‘eligible component’ shall not include any property which 
includes any material assistance from a prohibited foreign 
entity (as defined in section 7701(a)(52), as applied by 
substituting ‘used in a product sold before January 1, 2027’ 
for ‘used in a product sold before January 1, 2030’ in 
subparagraph (D)(iv)(II)(bb) thereof).’’, and 
(2) in subsection (d), as amended by subsection (a) of this 
section, by adding at the end the following new paragraph: 
‘‘(4) RESTRICTIONS RELATING TO PROHIBITED FOREIGN ENTI-
TIES.— 
‘‘(A) IN GENERAL.—No credit shall be determined under 
subsection (a) for any taxable year if the taxpayer is— 
‘‘(i) a specified foreign entity (as defined in section 
7701(a)(51)(B)), or 
‘‘(ii) a foreign-influenced entity (as defined in sec-
tion 7701(a)(51)(D), without regard to clause (i)(II) 
thereof). 
‘‘(B) EFFECTIVE CONTROL.—In the case of a taxpayer 
for which section 7701(a)(51)(D)(i)(II) is determined to 
apply for any taxable year, no credit shall be determined 
under subsection (a) for such taxable year if such deter-
mination relates to an eligible component described in sub-
section (c)(1).’’. 
(d) MODIFICATION OF DEFINITION OF BATTERY MODULE.—Sec-
tion 45X(c)(5)(B)(iii) is amended— 
(1) in subclause (I)(bb), by striking ‘‘and’’ at the end, 
(2) in subclause (II), by striking the period at the end 
and inserting ‘‘, and’’, and 
(3) by adding at the end the following new subclause: 
‘‘(III) which is comprised of all other essential 
equipment needed for battery functionality, such 
as current collector assemblies and voltage sense 
harnesses, or any other essential energy collection 
equipment.’’. 
(e) INCLUSION OF METALLURGICAL COAL AS AN APPLICABLE CRIT-
ICAL MINERAL FOR PURPOSES OF THE ADVANCED MANUFACTURING 
PRODUCTION CREDIT.— 
(1) IN GENERAL.—Section 45X(c)(6) is amended— 
(A) by redesignating subparagraphs (R) through (Z) 
as subparagraphs (S) through (AA), respectively, and 
(B) by inserting after subparagraph (Q) the following 
new subparagraph: 
‘‘(R) METALLURGICAL COAL.—Metallurgical coal which 
is suitable for use in the production of steel (within the
H. R. 1—205 
meaning of the notice published by the Department of 
Energy entitled ‘Critical Material List; Addition of Met-
allurgical Coal Used for Steelmaking’ (90 Fed. Reg. 22711 
(May 29, 2025))), regardless of whether such production 
occurs inside or outside of the United States.’’. 
(2) CREDIT AMOUNT.—Section 45X(b)(1)(M) is amended by 
inserting ‘‘(2.5 percent in the case of metallurgical coal)’’ after 
‘‘10 percent’’. 
(f) EFFECTIVE DATES.— 
(1) IN GENERAL.—Except as provided in paragraph (2), the 
amendments made by this section shall apply to taxable years 
beginning after the date of enactment of this Act. 
(2) MODIFICATION
OF
PROVISION
RELATING
TO
SALE
OF 
INTEGRATED
COMPONENTS.—The amendment made by sub-
section (a) shall apply to components sold during taxable years 
beginning after December 31, 2026. 
SEC. 70515. RESTRICTION ON THE EXTENSION OF ADVANCED ENERGY 
PROJECT CREDIT PROGRAM. 
(a) IN GENERAL.—Section 48C(e)(3)(C) is amended by striking 
‘‘shall be increased’’ and inserting ‘‘shall not be increased’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall take effect on the date of enactment of this Act. 
Subchapter B—Enhancement of America-first Energy Policy 
SEC. 70521. EXTENSION AND MODIFICATION OF CLEAN FUEL PRODUC-
TION 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, 
(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 feed-
stock which was produced or grown in the United 
States, Mexico, or Canada.’’. 
(2) EFFECTIVE DATE.—The amendments made by this sub-
section shall apply to transportation fuel produced after 
December 31, 2025. 
(b) PROHIBITION ON NEGATIVE EMISSION RATES.— 
(1) IN GENERAL.—Section 45Z(b)(1) is amended— 
(A) by striking subparagraph (C) and inserting the 
following: 
‘‘(C) ROUNDING
OF
EMISSIONS
RATE.—The Secretary 
may round the emissions rates under subparagraph (B) 
to the nearest multiple of 5 kilograms of CO2e per 
mmBTU.’’, and 
(B) by adding at the end the following new subpara-
graph: 
‘‘(E) PROHIBITION ON NEGATIVE EMISSION RATES.—For 
purposes of this section, the emissions rate for a transpor-
tation fuel may not be less than zero.’’. 
(2) EFFECTIVE DATE.—The amendments made by this sub-
section shall apply to emissions rates published for transpor-
tation fuel produced after December 31, 2025. 
(c) DETERMINATION OF EMISSIONS RATE.—
H. R. 1—206 
(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 (i), (ii), and (iii), the emissions 
rate shall be adjusted as necessary to exclude any 
emissions attributed to indirect land use change. Any 
such adjustment shall be based on regulations or meth-
odologies determined by the Secretary. 
‘‘(v) ANIMAL
MANURES.—With respect to any 
transportation fuel which is derived from animal 
manure, the Secretary— 
‘‘(I) shall provide a distinct emissions rate with 
respect to such fuel based on the specific animal 
manure feedstock, which may include dairy 
manure, swine manure, poultry manure, or any 
other sources as are determined appropriate by 
the Secretary, and 
‘‘(II) notwithstanding subparagraph (E), may 
provide an emissions rate that is less than zero.’’. 
(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 sub-
section shall apply to emissions rates published for transpor-
tation fuel produced after December 31, 2025. 
(d) EXTENSION OF CLEAN FUEL PRODUCTION CREDIT.—Section 
45Z(g) is amended by striking ‘‘December 31, 2027’’ and inserting 
‘‘December 31, 2029’’. 
(e) 
PREVENTING
DOUBLE
CREDIT.—Section 
45Z(d)(5) 
is 
amended— 
(1) in subparagraph (A)— 
(A) in clause (ii), by striking ‘‘and’’ at the end, 
(B) in clause (iii), by striking the period at the end 
and inserting ‘‘, and’’, and 
(C) by adding at the end the following new clause: 
‘‘(iv) is not produced from a fuel for which a credit 
under this section is allowable.’’, and 
(2) by adding at the end the following new subparagraph: 
‘‘(C) REGULATIONS AND GUIDANCE.—The Secretary shall 
issue such regulations or other guidance as the Secretary 
determines necessary to carry out the purposes of subpara-
graph (A)(iv).’’. 
(f) SALES
TO
UNRELATED
PERSONS.—Section 45Z(f)(3) is 
amended by adding at the end the following: ‘‘The Secretary may 
prescribe additional related person rules similar to the rule 
described in the preceding sentence for entities which are not 
described in such sentence, including rules for related persons with 
respect to which the taxpayer has reason to believe will sell fuel 
to an unrelated person in a manner described in subsection (a)(4).’’. 
(g) TREATMENT OF SUSTAINABLE AVIATION FUEL.— 
(1) COORDINATION OF CREDITS.— 
(A) IN
GENERAL.—Section 6426(k) is amended by 
adding at the end the following new paragraph: 
‘‘(4) COORDINATION OF CREDITS.—With respect to any gallon 
of sustainable aviation fuel in a qualified mixture, this sub-
section shall not apply to any such gallon for which a credit
H. R. 1—207 
under section 45Z is allowable (as determined without regard 
to subsection (a)(1)(A) of such section).’’. 
(B) EFFECTIVE DATE.—The amendment made by this 
paragraph shall apply to— 
(i) fuel sold or used on or after the date of the 
enactment of this Act, and 
(ii) fuel sold or used before the date of enactment 
of this Act, but only to the extent that claims for 
the credit under section 6426(k) of the Internal Rev-
enue Code of 1986 with respect to such sale or use 
have not been paid or allowed as of such date. 
(2) ELIMINATION OF SPECIAL RATE.— 
(A) IN GENERAL.—Paragraph (3) of section 45Z(a) is 
amended to read as follows: 
‘‘(3) DEFINITION OF SUSTAINABLE AVIATION FUEL.—For pur-
poses of this section, the term ‘sustainable aviation fuel’ means 
liquid fuel, the portion of which is not kerosene, which is 
sold for use in an aircraft and which— 
‘‘(A) meets the requirements of— 
‘‘(i) ASTM International Standard D7566, or 
‘‘(ii) the Fischer Tropsch provisions of ASTM Inter-
national Standard D1655, Annex A1, and 
‘‘(B) is not derived from palm fatty acid distillates 
or petroleum.’’. 
(B) CONFORMING
AMENDMENT.—Section 45Z(c)(1) is 
amended by striking ‘‘, the $1.00 amount in subsection 
(a)(2)(B), the 35 cent amount in subsection (a)(3)(A)(i), and 
the $1.75 amount in subsection (a)(3)(A)(ii)’’ and inserting 
‘‘and the $1.00 amount in subsection (a)(2)(B)’’. 
(C) EFFECTIVE DATE.—The amendments made by this 
paragraph shall apply to fuel produced after December 
31, 2025. 
(h) SUSTAINABLE AVIATION FUEL CREDIT.—Section 6426(k), as 
amended by the preceding provisions of this Act, is amended by 
adding at the end the following new paragraph: 
‘‘(5) TERMINATION.—This subsection shall not apply to any 
sale or use for any period after September 30, 2025.’’. 
(i) REGISTRATION OF PRODUCERS OF FUEL ELIGIBLE FOR CLEAN 
FUEL PRODUCTION CREDIT.— 
(1) IN GENERAL.—Section 13704(b)(5) of Public Law 117- 
169 is amended by striking ‘‘after ‘section 6426(k)(3)),’ ’’ and 
inserting ‘‘after ‘section 40B),’ ’’. 
(2) EFFECTIVE DATE.—The amendment made by this sub-
section shall apply to transportation fuel produced after 
December 31, 2024. 
(j) EXTENSION AND MODIFICATION OF SMALL AGRI-BIODIESEL 
PRODUCER CREDIT.— 
(1) IN GENERAL.—Section 40A is amended— 
(A) in subsection (b)(4)— 
(i) in subparagraph (A), by striking ‘‘10 cents’’ and 
inserting ‘‘20 cents’’, 
(ii) in subparagraph (B), by inserting ‘‘in a manner 
which complies with the requirements under section 
45Z(f)(1)(A)(iii)’’ after ‘‘produced by an eligible small 
agri-biodiesel producer’’, and 
(iii) by adding at the end the following new 
subparagraph:
H. R. 1—208 
‘‘(D) COORDINATION
WITH
CLEAN
FUEL
PRODUCTION 
CREDIT.—The credit determined under this paragraph with 
respect to any gallon of fuel shall be in addition to any 
credit determined under section 45Z with respect to such 
gallon of fuel.’’, and 
(B) in subsection (g), by inserting ‘‘(or, in the case 
of the small agri-biodiesel producer credit, any sale or 
use after December 31, 2026)’’ after ‘‘December 31, 2024’’. 
(2) TRANSFER OF CREDIT.—Section 6418(f)(1)(A) is amended 
by adding at the end the following new clause: 
‘‘(xii) So much of the biodiesel fuels credit deter-
mined under section 40A which consists of the small 
agri-biodiesel producer credit determined under sub-
section (b)(4) of such section.’’. 
(3) EFFECTIVE DATE.—The amendments made by this sub-
section shall apply to fuel sold or used after June 30, 2025. 
(k) RESTRICTIONS RELATING
TO PROHIBITED FOREIGN ENTI-
TIES.— 
(1) IN GENERAL.—Section 45Z(f) is amended by adding at 
the end the following new paragraph: 
‘‘(8) RESTRICTIONS RELATING TO PROHIBITED FOREIGN ENTI-
TIES.— 
‘‘(A) IN GENERAL.—No credit shall be determined under 
subsection (a) 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 ENTITIES.—No credit 
shall be determined under subsection (a) 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-influenced 
entity 
(as 
defined 
in 
section 
7701(a)(51)(D), without regard to clause (i)(II) thereof).’’. 
(2) EFFECTIVE DATE.—The amendment made by this sub-
section shall apply to taxable years beginning after the date 
of enactment of this Act. 
SEC. 70522. RESTRICTIONS ON CARBON OXIDE SEQUESTRATION 
CREDIT. 
(a) RESTRICTIONS RELATING
TO PROHIBITED FOREIGN ENTI-
TIES.—Section 45Q(f) is amended by adding at the end the following 
new paragraph: 
‘‘(10) RESTRICTIONS RELATING TO PROHIBITED FOREIGN ENTI-
TIES.—No credit shall be determined under subsection (a) for 
any taxable year beginning after the date of enactment of 
this paragraph if the taxpayer is— 
‘‘(A) a specified foreign entity (as defined in section 
7701(a)(51)(B)), or 
‘‘(B) a foreign-influenced entity (as defined in section 
7701(a)(51)(D), determined without regard to clause (i)(II) 
thereof).’’. 
(b) PARITY FOR DIFFERENT USES AND UTILIZATIONS OF QUALI-
FIED CARBON OXIDE.—Section 45Q is amended— 
(1) in subsection (a)— 
(A) in paragraph (2)(B)(ii), by adding ‘‘and’’ at the 
end,
H. R. 1—209 
(B) in paragraph (3), by striking subparagraph (B) 
and inserting the following: 
‘‘(B)(i) disposed of by the taxpayer in secure geological 
storage and not used by the taxpayer as described in clause 
(ii) or (iii), 
‘‘(ii) used by the taxpayer as a tertiary injectant in 
a qualified enhanced oil or natural gas recovery project 
and disposed of by the taxpayer in secure geological storage, 
or 
‘‘(iii) utilized by the taxpayer in a manner described 
in subsection (f)(5).’’, and 
(C) by striking paragraph (4), 
(2) in subsection (b)— 
(A) in paragraph (1)— 
(i) by striking subparagraph (A) and inserting the 
following: 
‘‘(A) IN GENERAL.—Except as provided in subparagraph 
(B) or (C), the applicable dollar amount shall be an amount 
equal to— 
‘‘(i) for any taxable year beginning in a calendar 
year after 2024 and before 2027, $17, and 
‘‘(ii) for any taxable year beginning in a calendar 
year after 2026, an amount equal to the product of 
$17 and the inflation adjustment factor for such cal-
endar year determined under section 43(b)(3)(B) for 
such calendar year, determined by substituting ‘2025’ 
for ‘1990’.’’, and 
(ii) in subparagraph (B), by striking ‘‘shall be 
applied’’ and all that follows through the period and 
inserting ‘‘shall be applied by substituting ‘$36’ for 
‘$17’ each place it appears.’’, 
(B) in paragraph (2)(B), by striking ‘‘paragraphs (3)(A) 
and (4)(A)’’ and inserting ‘‘paragraph (3)(A)’’, and 
(C) in paragraph (3), by striking ‘‘the dollar amounts 
applicable under paragraph (3) or (4)’’ and inserting ‘‘the 
dollar amount applicable under paragraph (3)’’, 
(3) in subsection (f)— 
(A) in paragraph (5)(B)(i), by striking ‘‘(4)(B)(ii)’’ and 
inserting ‘‘(3)(B)(iii)’’, and 
(B) in paragraph (9), by striking ‘‘paragraphs (3) and 
(4) of subsection (a)’’ and inserting ‘‘subsection (a)(3)’’, and 
(4) in subsection (h)(3)(A)(ii), by striking ‘‘paragraph (3)(A) 
or (4)(A) of subsection (a)’’ and inserting ‘‘subsection (a)(3)(A)’’. 
(c) CONFORMING AMENDMENT.—Section 6417(d)(3)(C)(i)(II)(bb) 
is amended by striking ‘‘paragraph (3)(A) or (4)(A) of section 45Q(a)’’ 
and inserting ‘‘section 45Q(a)(3)(A)’’. 
(d) EFFECTIVE DATES.— 
(1) RESTRICTIONS RELATING TO PROHIBITED FOREIGN ENTI-
TIES.—The amendment made by subsection (a) shall apply to 
taxable years beginning after the date of enactment of this 
Act. 
(2) PARITY FOR DIFFERENT USES AND UTILIZATIONS OF QUALI-
FIED CARBON OXIDE.—The amendments made subsections (b) 
and (c) shall apply to facilities or equipment placed in service 
after the date of enactment of this Act.
H. R. 1—210 
SEC. 70523. INTANGIBLE DRILLING AND DEVELOPMENT COSTS TAKEN 
INTO 
ACCOUNT 
FOR 
PURPOSES 
OF 
COMPUTING 
ADJUSTED FINANCIAL STATEMENT INCOME. 
(a) IN GENERAL.—Section 56A(c)(13) is amended— 
(1) by striking subparagraph (A) and inserting the fol-
lowing: 
‘‘(A) reduced by— 
‘‘(i) depreciation deductions allowed under section 
167 with respect to property to which section 168 
applies to the extent of the amount allowed as deduc-
tions in computing taxable income for the year, and 
‘‘(ii) any deduction allowed for expenses under sec-
tion 263(c) (including any deduction for such expenses 
under section 59(e) or 291(b)(2)) with respect to prop-
erty described therein to the extent of the amount 
allowed as deductions in computing taxable income 
for the year, and’’, and 
(2) by striking subparagraph (B)(i) and inserting the fol-
lowing: 
‘‘(i) to disregard any amount of— 
‘‘(I) depreciation expense that is taken into 
account on the taxpayer’s applicable financial 
statement with respect to such property, and 
‘‘(II) depletion expense that is taken into 
account on the taxpayer’s applicable financial 
statement with respect to the intangible drilling 
and development costs of such property, and’’. 
(b) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 2025. 
SEC. 70524. INCOME FROM HYDROGEN STORAGE, CARBON CAPTURE, 
ADVANCED 
NUCLEAR, 
HYDROPOWER, 
AND 
GEO-
THERMAL ENERGY ADDED TO QUALIFYING INCOME OF 
CERTAIN PUBLICLY TRADED PARTNERSHIPS. 
(a) IN GENERAL.—Section 7704(d)(1)(E) is amended— 
(1) by striking ‘‘income and gains derived from the explo-
ration’’ and inserting the following: ‘‘income and gains derived 
from— 
‘‘(i) the exploration’’. 
(2) by inserting ‘‘or’’ before ‘‘industrial source’’, and 
(3) by striking ‘‘or the transportation or storage’’ and all 
that follows and inserting the following: 
‘‘(ii) the transportation or storage of— 
‘‘(I) any fuel described in subsection (b), (c), 
(d), (e), or (k) of section 6426, or any alcohol fuel 
defined in section 6426(b)(4)(A) or any biodiesel 
fuel as defined in section 40A(d)(1) or sustainable 
aviation fuel as defined in section 40B(d)(1), or 
‘‘(II) 
liquified 
hydrogen 
or 
compressed 
hydrogen, 
‘‘(iii) in the case of a qualified facility (as defined 
in section 45Q(d), without regard to any date by which 
construction of the facility or equipment is required 
to begin) not less than 50 percent of the total carbon 
oxide production of which is qualified carbon oxide 
(as defined in section 45Q(c))—
H. R. 1—211 
‘‘(I) the generation, availability for such 
generation, or storage of electric power at such 
facility, or 
‘‘(II) the capture of carbon dioxide by such 
facility, 
‘‘(iv) the production of electricity from any 
advanced nuclear facility (as defined in section 
45J(d)(2)), 
‘‘(v) the production of electricity or thermal energy 
exclusively using a qualified energy resource described 
in subparagraph (D) or (H) of section 45(c)(1), or 
‘‘(vi) the operation of energy property described 
in clause (iii) or (vii) of section 48(a)(3)(A) (determined 
without regard to any requirement under such section 
with respect to the date on which construction of prop-
erty begins).’’. 
(b) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 2025. 
SEC. 70525. ALLOW FOR PAYMENTS TO CERTAIN INDIVIDUALS WHO 
DYE FUEL. 
(a) IN GENERAL.—Subchapter B of chapter 65, as amended 
by the preceding provisions of this Act, is amended by adding 
at the end the following new section: 
‘‘SEC. 6435. DYED FUEL. 
‘‘(a) IN GENERAL.—If a person establishes to the satisfaction 
of the Secretary that such person meets the requirements of sub-
section (b) with respect to diesel fuel or kerosene, then the Secretary 
shall pay to such person an amount (without interest) equal to 
the tax described in subsection (b)(2)(A) with respect to such diesel 
fuel or kerosene. 
‘‘(b) REQUIREMENTS.— 
‘‘(1) IN
GENERAL.—A person meets the requirements of 
this subsection with respect to diesel fuel or kerosene if such 
person removes from a terminal eligible indelibly dyed diesel 
fuel or kerosene. 
‘‘(2) ELIGIBLE INDELIBLY DYED DIESEL FUEL OR KEROSENE 
DEFINED.—The term ‘eligible indelibly dyed diesel fuel or ker-
osene’ means diesel fuel or kerosene— 
‘‘(A) with respect to which a tax under section 4081 
was previously paid (and not credited or refunded), and 
‘‘(B) which is exempt from taxation under section 
4082(a). 
‘‘(c) CROSS REFERENCE.—For civil penalty for excessive claims 
under this section, see section 6675.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 6206 is amended— 
(A) by striking ‘‘or 6427’’ each place it appears and 
inserting ‘‘6427, or 6435’’, and 
(B) by striking ‘‘6420 and 6421’’ and inserting ‘‘6420, 
6421, and 6435’’. 
(2) Section 6430 is amended— 
(A) by striking ‘‘or’’ at the end of paragraph (2), by 
striking the period at the end of paragraph (3) and inserting 
‘‘, or’’, and by adding at the end the following new para-
graph:
H. R. 1—212 
‘‘(4) which are removed as eligible indelibly dyed diesel 
fuel or kerosene under section 6435.’’. 
(3) Section 6675 is amended— 
(A) in subsection (a), by striking ‘‘or 6427 (relating 
to fuels not used for taxable purposes)’’ and inserting ‘‘6427 
(relating to fuels not used for taxable purposes), or 6435 
(relating to eligible indelibly dyed fuel)’’, and 
(B) in subsection (b)(1), by striking ‘‘6421, or 6427,’’ 
and inserting ‘‘6421, 6427, or 6435,’’. 
(4) The table of sections for subchapter B of chapter 65, 
as amended by the preceding provisions of this Act, is amended 
by adding at the end the following new item: 
‘‘Sec. 6435. Dyed fuel.’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to eligible indelibly dyed diesel fuel or kerosene removed 
on or after the date that is 180 days after the date of the enactment 
of this section. 
Subchapter C—Other Reforms 
SEC. 70531. MODIFICATIONS TO DE MINIMIS ENTRY PRIVILEGE 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 permitted by law, a civil penalty of up to $5,000 
for the first 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 EXCEPTION.— 
(1) REPEAL.—Section 321(a)(2) of such Act (19 U.S.C. 
1321(a)(2)) is amended by striking ‘‘of this Act, or’’ and all 
that follows through ‘‘subdivision (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 sub-
section shall take effect on July 1, 2027. 
CHAPTER 6—ENHANCING DEDUCTION AND INCOME TAX 
CREDIT GUARDRAILS, AND OTHER REFORMS 
SEC. 70601. MODIFICATION AND EXTENSION OF LIMITATION ON 
EXCESS BUSINESS LOSSES OF NONCORPORATE TAX-
PAYERS. 
(a) RULE MADE PERMANENT.—Section 461(l)(1) is amended by 
striking ‘‘and before January 1, 2029,’’ each place it appears. 
(b) ADJUSTMENT OF AMOUNTS FOR CALCULATION OF EXCESS 
BUSINESS LOSS.—Section 461(l)(3)(C) is amended—
H. R. 1—213 
(1) in the matter preceding clause (i), by striking ‘‘December 
31, 2018’’ and inserting ‘‘December 31, 2025’’, and 
(2) in clause (ii), by striking ‘‘2017’’ and inserting ‘‘2024’’. 
(c) EFFECTIVE DATES.— 
(1) RULE MADE PERMANENT.—The amendments made by 
subsection (a) shall apply to taxable years beginning after 
December 31, 2026. 
(2) ADJUSTMENT OF AMOUNTS FOR CALCULATION OF EXCESS 
BUSINESS LOSS.—The amendments made by subsection (b) shall 
apply to taxable years beginning after December 31, 2025. 
SEC. 70602. TREATMENT OF PAYMENTS FROM PARTNERSHIPS 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 section, or the 
amendments made by this section, shall be construed to create 
any inference with respect to the proper treatment under section 
707(a) of the Internal Revenue Code of 1986 with respect to pay-
ments from a partnership to a partner for services performed, 
or property transferred, on or before the date of the enactment 
of this Act. 
SEC. 70603. EXCESSIVE EMPLOYEE REMUNERATION FROM CON-
TROLLED 
GROUP 
MEMBERS 
AND 
ALLOCATION 
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 corpora-
tion) provides applicable 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 respect to such specified 
covered employee exceeds $1,000,000— 
‘‘(I) paragraph (1) shall apply to such person 
with respect to such remuneration, and 
‘‘(II) paragraph (1) shall apply to such publicly 
held corporation and to each such related person 
by substituting ‘the allocable limitation amount’ 
for ‘$1,000,000’. 
‘‘(B) ALLOCABLE LIMITATION AMOUNT.—For purposes of 
this paragraph, the term ‘allocable 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 employee remunera-
tion provided by such member with respect to such 
specified covered employee, bears to
H. R. 1—214 
‘‘(ii) the aggregate amount of applicable employee 
remuneration provided by all such members with 
respect to such specified covered employee. 
‘‘(C) SPECIFIED COVERED EMPLOYEE.—For purposes of 
this paragraph, the term ‘specified covered employee’ 
means, with respect to any controlled group— 
‘‘(i) any employee described in subparagraph (A), 
(B), or (D) of paragraph (3), with respect to the publicly 
held corporation which is a member of such controlled 
group, and 
‘‘(ii) any employee who would be described in 
subparagraph (C) of paragraph (3) if such subpara-
graph were applied by taking into account the 
employees of all members of the controlled group. 
‘‘(D) CONTROLLED GROUP.—For purposes of this para-
graph, 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. 70604. EXCISE TAX ON CERTAIN REMITTANCE TRANSFERS. 
(a) IN GENERAL.—Chapter 36 is amended by inserting 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 1 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 OF TAX.—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, 
‘‘(3) SECONDARY LIABILITY.—Where any tax imposed by sub-
section (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 remittance transfer provider. 
‘‘(c) TAX LIMITED TO CASH AND SIMILAR INSTRUMENTS.—The 
tax imposed under subsection (a) shall apply only to any remittance 
transfer for which the sender provides cash, a money order, a 
cashier’s check, or any other similar physical instrument (as deter-
mined by the Secretary) to the remittance transfer provider. 
‘‘(d) NONAPPLICATION
TO
CERTAIN
NONCASH
REMITTANCE 
TRANSFERS.—Subsection (a) shall not apply to any remittance 
transfer for which the funds being transferred are— 
‘‘(1) withdrawn from an account held in or by a financial 
institution—
H. R. 1—215 
‘‘(A) which is described in subparagraphs (A) through 
(H) of section 5312(a)(2) of title 31, United States Code, 
and 
‘‘(B) that is subject to the requirements under sub-
chapter II of chapter 53 of such title, or 
‘‘(2) funded with a debit card or a credit card which is 
issued in the United States. 
‘‘(e) DEFINITIONS.—For purposes of this section— 
‘‘(1) IN GENERAL.—The terms ‘remittance transfer’, ‘remit-
tance transfer provider’, and ‘sender’ shall each have the respec-
tive meanings given such terms by section 919(g) of the Elec-
tronic Fund Transfer Act (15 U.S.C. 1693o–1(g)). 
‘‘(2) CREDIT CARD.—The term ‘credit card’ has the same 
meaning given such term under section 920(c)(3) of the Elec-
tronic Fund Transfer Act (15 U.S.C. 1693o–2(c)(3)). 
‘‘(3) DEBIT
CARD.—The term ‘debit card’ has the same 
meaning given such term under section 920(c)(2) of the Elec-
tronic Fund Transfer Act (15 U.S.C. 1693o–2(c)(2)), without 
regard to subparagraph (B) of such section. 
‘‘(f) 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) CONFORMING AMENDMENT.—The table of subchapters for 
chapter 36 is amended by inserting after the item relating to 
subchapter B the following new item: 
‘‘SUBCHAPTER C—REMITTANCE TRANSFERS’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to transfers made after December 31, 2025. 
SEC. 70605. ENFORCEMENT PROVISIONS WITH RESPECT TO COVID- 
RELATED EMPLOYEE RETENTION CREDITS. 
(a) ASSESSABLE PENALTY FOR FAILURE TO COMPLY WITH DUE 
DILIGENCE REQUIREMENTS.— 
(1) IN GENERAL.—Any COVID–ERTC promoter which pro-
vides aid, assistance, or advice with respect to any COVID– 
ERTC document and which fails to comply with due diligence 
requirements imposed by the Secretary with respect to deter-
mining eligibility for, or the amount of, any credit or advance 
payment of a credit under section 3134 of the Internal Revenue 
Code of 1986, shall pay a penalty of $1,000 for each such 
failure. 
(2) DUE
DILIGENCE
REQUIREMENTS.—The due diligence 
requirements referred to in paragraph (1) shall be similar to 
the due diligence requirements imposed under section 6695(g) 
of the Internal Revenue Code of 1986. 
(3) RESTRICTION TO DOCUMENTS USED IN CONNECTION WITH 
RETURNS
OR
CLAIMS
FOR
REFUND.—Paragraph (1) shall not 
apply with respect to any COVID–ERTC document unless such 
document constitutes, or relates to, a return or claim for refund. 
(4) TREATMENT AS ASSESSABLE PENALTY, ETC.—For purposes 
of the Internal Revenue Code of 1986, the penalty imposed 
under paragraph (1) shall be treated as a penalty which is 
imposed under section 6695(g) of such Code and assessed under 
section 6201 of such Code.
H. R. 1—216 
(5) SECRETARY.—For purposes of this subsection, the term 
‘‘Secretary’’ means the Secretary of the Treasury or the Sec-
retary’s delegate. 
(b) COVID–ERTC PROMOTER.—For purposes of this section— 
(1) IN
GENERAL.—The term ‘‘COVID–ERTC promoter’’ 
means, with respect to any COVID–ERTC document, any per-
son which provides aid, assistance, or advice with respect to 
such document if— 
(A) such person charges or receives a fee for such 
aid, assistance, or advice which is based on the amount 
of the refund or credit with respect to such document 
and, with respect to such person’s taxable year in which 
such person provided such assistance or the preceding tax-
able year, the aggregate of the gross receipts of such person 
for aid, assistance, and advice with respect to all COVID- 
ERTC documents exceeds 20 percent of the gross receipts 
of such person for such taxable year, or 
(B) with respect to such person’s taxable year in which 
such person provided such assistance or the preceding tax-
able year— 
(i) the aggregate of the gross receipts of such per-
son for aid, assistance, and advice with respect to 
all COVID–ERTC documents exceeds 50 percent of 
the gross receipts of such person for such taxable year, 
or 
(ii) both— 
(I) such aggregate gross receipts exceed 20 
percent of the gross receipts of such person for 
such taxable year, and 
(II) the aggregate of the gross receipts of such 
person for aid, assistance, and advice with respect 
to all COVID–ERTC documents (determined after 
application of paragraph (3)) exceeds $500,000. 
(2) EXCEPTION
FOR
CERTIFIED
PROFESSIONAL
EMPLOYER 
ORGANIZATIONS.—The term ‘‘COVID–ERTC promoter’’ shall not 
include a certified professional employer organization (as 
defined in section 7705 of the Internal Revenue Code of 1986). 
(3) AGGREGATION RULE.—For purposes of paragraph (1), 
all persons treated as a single employer under subsection (a) 
or (b) of section 52 of the Internal Revenue Code of 1986, 
or subsection (m) or (o) of section 414 of such Code, shall 
be treated as 1 person. 
(4) SHORT
TAXABLE
YEARS.—In the case of any taxable 
year of less than 12 months, a person shall be treated as 
a COVID-ERTC promoter if such person is described in para-
graph (1) either with respect to such taxable year or by treating 
any reference to such taxable year as a reference to the calendar 
year in which such taxable year begins. 
(c) COVID–ERTC DOCUMENT.—For purposes of this section, 
the term ‘‘COVID–ERTC document’’ means any return, affidavit, 
claim, or other document related to any credit or advance payment 
of a credit under section 3134 of the Internal Revenue Code of 
1986, including any document related to eligibility for, or the cal-
culation or determination of any amount directly related to, any 
such credit or advance payment. 
(d) LIMITATION ON CREDITS AND REFUNDS.—Notwithstanding 
section 6511 of the Internal Revenue Code of 1986, no credit under
H. R. 1—217 
section 3134 of the Internal Revenue Code of 1986 shall be allowed, 
and no refund with respect to any such credit shall be made, 
after the date of the enactment of this Act, unless a claim for 
such credit or refund was filed by the taxpayer on or before January 
31, 2024. 
(e) EXTENSION OF LIMITATION ON ASSESSMENT.—Section 3134(l) 
is amended to read as follows: 
‘‘(l) EXTENSION OF LIMITATION ON ASSESSMENT.— 
‘‘(1) IN
GENERAL.—Notwithstanding section 6501, the 
limitation on the time period for the assessment of any amount 
attributable to a credit claimed under this section shall not 
expire before the date that is 6 years after the latest of— 
‘‘(A) the date on which the original return which 
includes the calendar quarter with respect to which such 
credit is determined is filed, 
‘‘(B) the date on which such return is treated as filed 
under section 6501(b)(2), or 
‘‘(C) the date on which the claim for credit or refund 
with respect to such credit is made. 
‘‘(2) DEDUCTION FOR WAGES TAKEN INTO ACCOUNT IN DETER-
MINING IMPROPERLY CLAIMED CREDIT.— 
‘‘(A) IN GENERAL.—Notwithstanding section 6511, in 
the case of an assessment attributable to a credit claimed 
under this section, the limitation on the time period for 
credit or refund of any amount attributable to a deduction 
for improperly claimed ERTC wages shall not expire before 
the time period for such assessment expires under para-
graph (1). 
‘‘(B) IMPROPERLY CLAIMED ERTC WAGES.—For purposes 
of this paragraph, the term ‘improperly claimed ERTC 
wages’ means, with respect to an assessment attributable 
to a credit claimed under this section, the wages with 
respect to which a deduction would not have been allowed 
if the portion of the credit to which such assessment relates 
had been properly claimed.’’. 
(f) AMENDMENT
TO
PENALTY
FOR
ERRONEOUS
CLAIM
FOR 
REFUND
OR
CREDIT.—Section 6676(a) is amended by striking 
‘‘income tax’’ and inserting ‘‘income or employment tax’’. 
(g) EFFECTIVE DATES.— 
(1) IN GENERAL.—The provisions of this section shall apply 
to aid, assistance, and advice provided after the date of the 
enactment of this Act. 
(2) LIMITATION ON CREDITS AND REFUNDS.—Subsection (d) 
shall apply to credits and refunds allowed or made after the 
date of the enactment of this Act. 
(3) EXTENSION
OF
LIMITATION
ON
ASSESSMENT.—The 
amendment made by subsection (e) shall apply to assessments 
made after the date of the enactment of this Act. 
(4) AMENDMENT TO PENALTY FOR ERRONEOUS CLAIM FOR 
REFUND OR CREDIT.—The amendment made by subsection (f) 
shall apply to claims for credit or refund after the date of 
the enactment of this Act. 
(h) REGULATIONS.—The Secretary (as defined in subsection 
(a)(5)) shall issue such regulations or other guidance as may be 
necessary or appropriate to carry out the purposes of this section 
(and the amendments made by this section).
H. R. 1—218 
SEC. 70606. SOCIAL SECURITY NUMBER REQUIREMENT FOR AMERICAN 
OPPORTUNITY AND LIFETIME LEARNING CREDITS. 
(a) SOCIAL SECURITY NUMBER OF TAXPAYER REQUIRED.—Section 
25A(g)(1) is amended to read as follows: 
‘‘(1) IDENTIFICATION REQUIREMENT.— 
‘‘(A) SOCIAL
SECURITY
NUMBER
REQUIREMENT.—No 
credit shall be allowed under subsection (a) to an individual 
unless the individual includes on the return of tax for 
the taxable year— 
‘‘(i) such individual’s social security number, and 
‘‘(ii) in the case of a credit with respect 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 Opportunity Tax 
Credit shall be allowed under this section unless the tax-
payer includes the employer 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 DEFINED.—For purposes 
of this paragraph, the term ‘social security number’ shall 
have the meaning given such term in section 24(h)(7).’’. 
(b) 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’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 2025. 
SEC. 70607. TASK FORCE ON THE REPLACEMENT OF DIRECT FILE. 
Out of any money in the Treasury not otherwise appropriated, 
there is hereby appropriated for the fiscal year ending September 
30, 2026, $15,000,000, to remain available until September 30, 
2026, for necessary expenses of the Department of the Treasury 
to deliver to Congress, within 90 days following the date of the 
enactment of this Act, a report on— 
(1) the cost of enhancing and establishing public-private 
partnerships which provide for free tax filing for up to 70 
percent of all taxpayers calculated by adjusted gross income, 
and to replace any direct e-file programs run by the Internal 
Revenue Service; 
(2) taxpayer opinions and preferences regarding a taxpayer- 
funded, government-run service or a free service provided by 
the private sector; 
(3) assessment of the feasibility of a new approach, how 
to make the options consistent and simple for taxpayers across 
all participating providers, and how to provide features to 
address taxpayer needs; and 
(4) the cost (including options for differential coverage 
based on taxpayer adjusted gross income and return complexity) 
of developing and running a free direct e-file tax return system, 
including costs to build and administer each release.
H. R. 1—219 
Subtitle B—Health 
CHAPTER 1—MEDICAID 
Subchapter A—Reducing Fraud and Improving Enrollment 
Processes 
SEC. 71101. MORATORIUM ON IMPLEMENTATION OF RULE RELATING 
TO 
ELIGIBILITY 
AND 
ENROLLMENT 
IN 
MEDICARE 
SAVINGS PROGRAMS. 
(a) IN GENERAL.—The Secretary of Health and Human Services 
shall not, during the period beginning on the date of the enactment 
of this section and ending September 30, 2034, implement, admin-
ister, or enforce the amendments made by the provisions of the 
final rule published by the Centers for Medicare & Medicaid Serv-
ices on September 21, 2023, and titled ‘‘Streamlining Medicaid; 
Medicare Savings Program Eligibility Determination and Enroll-
ment’’ (88 Fed. Reg. 65230) to the following sections of title 42, 
Code of Federal Regulations: 
(1) Section 406.21(c). 
(2) Section 435.4. 
(3) Section 435.601. 
(4) Section 435.911. 
(5) Section 435.952. 
(b) IMPLEMENTATION FUNDING.—For the purposes of carrying 
out the provisions of this section and section 71102, there are 
appropriated, out of any monies in the Treasury not otherwise 
appropriated, to the Administrator of the Centers for Medicare 
& Medicaid Services, $1,000,000 for fiscal year 2026, to remain 
available until expended. 
SEC. 71102. MORATORIUM ON IMPLEMENTATION OF RULE RELATING 
TO ELIGIBILITY AND ENROLLMENT FOR MEDICAID, 
CHIP, AND THE BASIC HEALTH PROGRAM. 
The Secretary of Health and Human Services shall not, during 
the period beginning on the date of the enactment of this section 
and ending September 30, 2034, implement, administer, or enforce 
the amendments made by the provisions of the final rule published 
by the Centers for Medicare & Medicaid Services on April 2, 2024, 
and titled ‘‘Medicaid Program; Streamlining the Medicaid, Chil-
dren’s Health Insurance Program, and Basic Health Program 
Application, Eligibility Determination, Enrollment, and Renewal 
Processes’’ (89 Fed. Reg. 22780) to the following sections of title 
42, Code of Federal Regulations: 
(1) PART 431.— 
(A) Section 431.213(d). 
(2) PART 435.— 
(A) Section 435.222. 
(B) Section 435.407. 
(C) Section 435.907. 
(D) Section 435.911(c). 
(E) Section 435.912. 
(F) Section 435.916. 
(G) Section 435.919. 
(H) Section 435.1200(b)(3)(i)-(v). 
(I) Section 435.1200(e )(1)(ii). 
(J) Section 435.1200(h)(1).
H. R. 1—220 
(3) PART 447.—Section 447.56(a)(1)(v). 
(4) PART 457.— 
(A) Section 457.344. 
(B) Section 457.960. 
(C) Section 457.1140(d)(4). 
(D) Section 457.1170. 
(E) Section 457.1180. 
SEC. 71103. REDUCING DUPLICATE ENROLLMENT UNDER THE MED-
ICAID AND CHIP PROGRAMS. 
(a) MEDICAID.— 
(1) IN GENERAL.—Section 1902 of the Social Security Act 
(42 U.S.C. 1396a) is amended— 
(A) in subsection (a)— 
(i) in paragraph (86), by striking ‘‘and’’ at the 
end; 
(ii) in paragraph (87), by striking the period and 
inserting ‘‘; and’’; and 
(iii) by inserting after paragraph (87) the following 
new paragraph: 
‘‘(88) provide— 
‘‘(A) beginning not later than January 1, 2027, in the 
case of 1 of the 50 States and the District of Columbia, 
for a process to regularly obtain address information for 
individuals enrolled under such plan (or a waiver of such 
plan) in accordance with subsection (vv); and 
‘‘(B) beginning not later than October 1, 2029— 
‘‘(i) for the State to submit to the system estab-
lished by the Secretary under subsection (uu), with 
respect to an individual enrolled or seeking to enroll 
under such plan, not less frequently than once each 
month and during each determination or redetermina-
tion of the eligibility of such individual for medical 
assistance under such plan (or waiver of such plan)— 
‘‘(I) the social security number of such indi-
vidual, if such individual has a social security 
number and is required to provide such number 
to enroll under such plan (or waiver); and 
‘‘(II) such other information with respect to 
such individual as determined necessary by the 
Secretary for purposes of preventing individuals 
from simultaneously being enrolled under State 
plans (or waivers of such plans) of multiple States; 
‘‘(ii) for the use of such system to prevent such 
simultaneous enrollment; and 
‘‘(iii) in the case that such system indicates that 
an individual enrolled or seeking to enroll under such 
plan (or waiver of such plan) is enrolled under a State 
plan (or waiver of such a plan) of another State, for 
the taking of appropriate action (as determined by 
the Secretary) to identify whether such an individual 
resides in the State and disenroll an individual from 
the State plan of such State if such individual does 
not reside in such State (unless such individual meets 
such an exception as the Secretary may specify).’’; and 
(B) by adding at the end the following new subsections:
H. R. 1—221 
‘‘(uu) PREVENTION OF ENROLLMENT UNDER MULTIPLE STATE 
PLANS.— 
‘‘(1) IN
GENERAL.—Not later than October 1, 2029, the 
Secretary shall establish a system to be utilized by the Sec-
retary and States to prevent an individual from being simulta-
neously enrolled under the State plans (or waivers of such 
plans) of multiple States. Such system shall— 
‘‘(A) provide for the receipt of information submitted 
by a State under subsection (a)(88)(B)(i); and 
‘‘(B) not less than once each month, transmit informa-
tion to a State (or allow the Secretary to transmit informa-
tion to a State) regarding whether an individual enrolled 
or seeking to enroll under the State plan of such State 
(or waiver of such plan) is enrolled under the State plan 
(or waiver of such plan) of another State. 
‘‘(2) STANDARDS.—The Secretary shall establish such stand-
ards as determined necessary by the Secretary to limit and 
protect information submitted under such system and ensure 
the privacy of such information, consistent with subsection 
(a)(7). 
‘‘(3) IMPLEMENTATION
FUNDING.—There are appropriated 
to the Administrator of the Centers for Medicare & Medicaid 
Services, out of amounts in the Treasury not otherwise appro-
priated, in addition to amounts otherwise available— 
‘‘(A) for fiscal year 2026, $10,000,000 for purposes of 
establishing the system and standards required under this 
subsection, to remain available until expended; and 
‘‘(B) for fiscal year 2029, $20,000,000 for purposes of 
maintaining such system, to remain available until 
expended. 
‘‘(vv) PROCESS TO OBTAIN ENROLLEE ADDRESS INFORMATION.— 
‘‘(1) IN GENERAL.—For purposes of subsection (a)(88)(A), 
a process to regularly obtain address information for individuals 
enrolled under a State plan (or a waiver of such plan) shall 
obtain address information from reliable data sources described 
in paragraph (2) and take such actions as the Secretary shall 
specify with respect to any changes to such address based 
on such information. 
‘‘(2) RELIABLE DATA SOURCES DESCRIBED.—For purposes of 
paragraph (1), the reliable data sources described in this para-
graph are the following: 
‘‘(A) Mail returned to the State by the United States 
Postal Service with a forwarding address. 
‘‘(B) The National Change of Address Database main-
tained by the United States Postal Service. 
‘‘(C) A managed care entity (as defined in section 
1932(a)(1)(B)) or prepaid inpatient health plan or prepaid 
ambulatory health plan (as such terms are defined in sec-
tion 1903(m)(9)(D)) that has a contract under the State 
plan if the address information is provided to such entity 
or plan directly from, or verified by such entity or plan 
directly with, such individual. 
‘‘(D) Other data sources as identified by the State 
and approved by the Secretary.’’. 
(2) CONFORMING AMENDMENTS.— 
(A) PARIS.—Section 1903(r)(3) of the Social Security 
Act (42 U.S.C. 1396b(r)(3)) is amended—
H. R. 1—222 
(i) by striking ‘‘In order’’ and inserting ‘‘(A) In 
order’’; 
(ii) by striking ‘‘through the Public’’ and inserting 
‘‘through— 
‘‘(i) the Public’’; 
(iii) by striking the period at the end and inserting 
‘‘; and 
‘‘(ii) beginning October 1, 2029, the system established 
by the Secretary under section 1902(uu).’’; and 
(iv) by adding at the end the following new 
subparagraph: 
‘‘(B) Beginning October 1, 2029, the Secretary may deter-
mine that a State is not required to have in operation an 
eligibility determination system which provides for data 
matching (for purposes of address verification under section 
1902(vv)) through the system described in subparagraph (A)(i) 
to meet the requirements of this paragraph.’’. 
(B) MANAGED CARE.—Section 1932 of the Social Secu-
rity Act (42 U.S.C. 1396u–2) is amended by adding at 
the end the following new subsection: 
‘‘(j) TRANSMISSION
OF
ADDRESS
INFORMATION.—Beginning 
January 1, 2027, each contract under a State plan with a managed 
care entity (as defined in section 1932(a)(1)(B)) or with a prepaid 
inpatient health plan or prepaid ambulatory health plan (as such 
terms are defined in section 1903(m)(9)(D)), shall provide that such 
entity or plan shall promptly transmit to the State any address 
information for an individual enrolled with such entity or plan 
that is provided to such entity or plan directly from, or verified 
by such entity or plan directly with, such individual.’’. 
(b) CHIP.— 
(1) IN GENERAL.—Section 2107(e)(1) of the Social Security 
Act (42 U.S.C. 1397gg(e)(1)) is amended— 
(A) by redesignating subparagraphs (H) through (U) 
as subparagraphs (I) through (V), respectively; and 
(B) by inserting after subparagraph (G) the following 
new subparagraph: 
‘‘(H) Section 1902(a)(88) (relating to address informa-
tion for enrollees and prevention of simultaneous enroll-
ments).’’. 
(2) MANAGED CARE.—Section 2103(f)(3) of the Social Secu-
rity Act (42 U.S.C. 1397cc(f)(3)) is amended by striking ‘‘and 
(e)’’ and inserting ‘‘(e), and (j)’’. 
SEC. 71104. ENSURING DECEASED INDIVIDUALS DO NOT REMAIN 
ENROLLED. 
Section 1902 of the Social Security Act (42 U.S.C. 1396a), 
as amended by section 71103, is further amended— 
(1) in subsection (a)— 
(A) in paragraph (87), by striking ‘‘; and’’ and inserting 
a semicolon; 
(B) in paragraph (88), by striking the period at the 
end and inserting ‘‘; and’’; and 
(C) by inserting after paragraph (88) the following 
new paragraph: 
‘‘(89) provide that the State shall comply with the eligibility 
verification requirements under subsection (ww), except that
H. R. 1—223 
this paragraph shall apply only in the case of the 50 States 
and the District of Columbia.’’; and 
(2) by adding at the end the following new subsection: 
‘‘(ww) VERIFICATION OF CERTAIN ELIGIBILITY CRITERIA.— 
‘‘(1) IN GENERAL.—For purposes of subsection (a)(89), the 
eligibility verification requirements, beginning January 1, 2027, 
are as follows: 
‘‘(A) QUARTERLY
SCREENING
TO
VERIFY
ENROLLEE 
STATUS.—The State shall, not less frequently than quar-
terly, review the Death Master File (as such term is defined 
in section 203(d) of the Bipartisan Budget Act of 2013) 
or a successor system that provides such information 
needed to determine whether any individuals enrolled for 
medical assistance under the State plan (or waiver of such 
plan) are deceased. 
‘‘(B) DISENROLLMENT UNDER STATE PLAN.—If the State 
determines, based on information obtained from the Death 
Master File, that an individual enrolled for medical assist-
ance under the State plan (or waiver of such plan) is 
deceased, the State shall— 
‘‘(i) treat such information as factual information 
confirming the death of a beneficiary; 
‘‘(ii) disenroll such individual from the State plan 
(or waiver of such plan) in accordance with subsection 
(a)(3); and 
‘‘(iii) discontinue any payments for medical assist-
ance under this title made on behalf of such individual 
(other than payments for any items or services fur-
nished to such individual prior to the death of such 
individual). 
‘‘(C) REINSTATEMENT OF COVERAGE IN THE EVENT OF 
ERROR.—If a State determines that an individual was 
misidentified as deceased based on information obtained 
from the Death Master File and was erroneously 
disenrolled from medical assistance under the State plan 
(or waiver of such plan) based on such misidentification, 
the State shall immediately re-enroll such individual under 
the State plan (or waiver of such plan), retroactive to 
the date of such disenrollment. 
‘‘(2) RULE
OF
CONSTRUCTION.—Nothing under this sub-
section shall be construed to preclude the ability of a State 
to use other electronic data sources to timely identify potentially 
deceased beneficiaries, so long as the State is also in compliance 
with the requirements of this subsection (and all other require-
ments under this title relating to Medicaid eligibility determina-
tion and redetermination).’’. 
SEC. 71105. ENSURING DECEASED PROVIDERS DO NOT REMAIN 
ENROLLED. 
Section 1902(kk)(1) of the Social Security Act (42 U.S.C. 
1396a(kk)(1)) is amended— 
(1) by striking ‘‘The State’’ and inserting: 
‘‘(A) IN GENERAL.—The State’’; and 
(2) by adding at the end the following new subparagraph: 
‘‘(B) PROVIDER
SCREENING
AGAINST
DEATH
MASTER 
FILE.—Beginning January 1, 2028, as part of the enrollment 
(or reenrollment or revalidation of enrollment) of a provider
H. R. 1—224 
or supplier under this title, and not less frequently than 
quarterly during the period that such provider or supplier 
is so enrolled, the State conducts a check of the Death 
Master File (as such term is defined in section 203(d) 
of the Bipartisan Budget Act of 2013) to determine whether 
such provider or supplier is deceased.’’. 
SEC. 71106. PAYMENT REDUCTION RELATED TO CERTAIN ERRONEOUS 
EXCESS PAYMENTS UNDER MEDICAID. 
(a) IN GENERAL.—Section 1903(u)(1) of the Social Security Act 
(42 U.S.C. 1396b(u)(1)) is amended— 
(1) in subparagraph (A)— 
(A) by inserting ‘‘for audits conducted by the Secretary, 
or, at the option of the Secretary, audits conducted by 
the State’’ after ‘‘exceeds 0.03’’; and 
(B) by inserting ‘‘, to the extent practicable’’ before 
the period at the end; 
(2) in subparagraph (B)— 
(A) by striking ‘‘The Secretary’’ and inserting ‘‘(i) Sub-
ject to clause (ii), the Secretary’’; and 
(B) by adding at the end the following new clause: 
‘‘(ii) The amount waived under clause (i) for a fiscal year 
may not exceed an amount equal to the erroneous excess pay-
ments for medical assistance described in subparagraph 
(D)(i)(II) made for such fiscal year that exceed the allowable 
error rate of 0.03.’’. 
(3) in subparagraph (C), by striking ‘‘he’’ in each place 
it appears and inserting ‘‘the Secretary’’ in each such place; 
and 
(4) in subparagraph (D)(i)— 
(A) in subclause (I), by striking ‘‘and’’ at the end; 
(B) in subclause (II), by striking the period at the 
end and inserting ‘‘, or payments where insufficient 
information is available to confirm eligibility, and’’; and 
(C) by adding at the end the following new subclause: 
‘‘(III) payments (other than payments described in sub-
clause (I)) for items and services furnished to an individual 
who is not eligible for medical assistance under the State plan 
(or a waiver of such plan) with respect to such items and 
services, or payments where insufficient information is avail-
able to confirm eligibility.’’. 
(b) EFFECTIVE DATE.—The amendments made by subsection 
(a) shall apply beginning with respect to fiscal year 2030. 
SEC. 71107. ELIGIBILITY REDETERMINATIONS. 
(a) IN GENERAL.—Section 1902(e)(14) of the Social Security 
Act (42 U.S.C. 1396a(e)(14)) is amended by adding at the end 
the following new subparagraph: 
‘‘(L) FREQUENCY OF ELIGIBILITY REDETERMINATIONS FOR 
CERTAIN INDIVIDUALS.— 
‘‘(i) IN
GENERAL.—Subject to clause (ii), with 
respect to redeterminations of eligibility for medical 
assistance under a State plan (or waiver of such plan) 
scheduled on or after the first day of the first quarter 
that begins after December 31, 2026, a State shall 
make such a redetermination once every 6 months 
for the following individuals:
H. R. 1—225 
‘‘(I) Individuals enrolled under subsection 
(a)(10)(A)(i)(VIII). 
‘‘(II) Individuals described in such subsection 
who are otherwise enrolled under a waiver of such 
plan that provides coverage that is equivalent to 
minimum essential coverage (as described in sec-
tion 5000A(f)(1)(A) of the Internal Revenue Code 
of 1986 and determined in accordance with stand-
ards prescribed by the Secretary in regulations) 
to 
all 
individuals 
described 
in 
subsection 
(a)(10)(A)(i)(VIII). 
‘‘(ii) EXEMPTION.—The requirements described in 
clause (i) shall not apply to any individual described 
in subsection (xx)(9)(A)(ii)(II). 
‘‘(iii) 
STATE
DEFINED.—For 
purposes 
of 
this 
subparagraph, the term ‘State’ means 1 of the 50 States 
or the District of Columbia.’’. 
(b) GUIDANCE.—Not later than 180 days after the date of enact-
ment of this section, the Secretary of Health and Human Services, 
acting through the Administrator of the Centers for Medicare & 
Medicaid Services, shall issue guidance relating to the implementa-
tion of the amendments made by this section. 
(c) IMPLEMENTATION FUNDING.—For the purposes of carrying 
out the provisions of, and the amendments made by, this section, 
there are appropriated, out of any monies in the Treasury not 
otherwise appropriated, to the Administrator of the Centers for 
Medicare & Medicaid Services, $75,000,000 for fiscal year 2026, 
to remain available until expended. 
SEC. 71108. REVISING HOME EQUITY LIMIT FOR DETERMINING ELIGI-
BILITY FOR LONG-TERM CARE SERVICES UNDER THE 
MEDICAID PROGRAM. 
(a) REVISING HOME EQUITY LIMIT.—Section 1917(f)(1) of the 
Social Security Act (42 U.S.C. 1396p(f)(1)) is amended— 
(1) in subparagraph (B)— 
(A) by striking ‘‘A State’’ and inserting ‘‘(i) A State’’; 
(B) in clause (i), as inserted by subparagraph (A)— 
(i) by striking ‘‘ ‘$500,000’ ’’ and inserting ‘‘the 
amount specified in subparagraph (A)’’; and 
(ii) by inserting ‘‘, in the case of an individual’s 
home that is located on a lot that is zoned for agricul-
tural use,’’ after ‘‘apply subparagraph (A)’’; and 
(C) by adding at the end the following new clause: 
‘‘(ii) A State may elect, without regard to the requirements 
of section 1902(a)(1) (relating to statewideness) and section 
1902(a)(10)(B) (relating to comparability), to apply subpara-
graph (A), in the case of an individual’s home that is not 
described in clause (i), by substituting for the amount specified 
in such subparagraph, an amount that exceeds such amount, 
but does not exceed $1,000,000.’’; and 
(2) in subparagraph (C)— 
(A) by inserting ‘‘(other than the amount specified in 
subparagraph (B)(ii) (relating to certain non-agricultural 
homes))’’ after ‘‘specified in this paragraph’’; and 
(B) by adding at the end the following new sentence: 
‘‘In the case that application of the preceding sentence 
would result in a dollar amount (other than the amount
H. R. 1—226 
specified in subparagraph (B)(i) (relating to certain agricul-
tural homes)) exceeding $1,000,000, such amount shall be 
deemed to be equal to $1,000,000.’’. 
(b) CLARIFICATION.—Section 1902 of the Social Security Act 
(42 U.S.C. 1396a) is amended— 
(1) in subsection (r)(2), by adding at the end the following 
new subparagraph: 
‘‘(C) This paragraph shall not be construed as permitting a 
State to determine the eligibility of an individual for medical assist-
ance with respect to nursing facility services or other long-term 
care services without application of the limit under section 
1917(f)(1).’’; and 
(2) in subsection (e)(14)(D)(iv)— 
(A) by striking ‘‘Subparagraphs’’ and inserting 
‘‘(I) IN GENERAL.—Subparagraphs’’; and 
(B) by adding at the end the following new subclause: 
‘‘(II) APPLICATION OF HOME EQUITY INTEREST 
LIMIT.—Section 1917(f) shall apply for purposes 
of determining the eligibility of an individual for 
medical assistance with respect to nursing facility 
services or other long-term care services.’’. 
(c) EFFECTIVE DATE.—The amendments made by subsection 
(a) shall apply beginning on January 1, 2028. 
SEC. 71109. ALIEN MEDICAID ELIGIBILITY. 
(a) MEDICAID.—Section 1903(v) of the Social Security Act (42 
U.S.C. 1396b(v)) is amended— 
(1) in paragraph (1), by striking ‘‘and (4)’’and inserting 
‘‘, (4), and (5)’’; and 
(2) by adding at the end the following new paragraph: 
‘‘(5) Notwithstanding the preceding paragraphs of this sub-
section, beginning on October 1, 2026, except as provided in para-
graphs (2) and (4), in no event shall payment be made to a State 
under this section for medical assistance furnished to an individual 
unless such individual is— 
‘‘(A) a resident of 1 of the 50 States, the District of 
Columbia, or a territory of the United States; and 
‘‘(B) either— 
‘‘(i) a citizen or national of the United States; 
‘‘(ii) an alien lawfully admitted for permanent residence 
as an immigrant as defined by sections 101(a)(15) and 
101(a)(20) of the Immigration and Nationality Act, 
excluding, among others, alien visitors, tourists, diplomats, 
and students who enter the United States temporarily with 
no intention of abandoning their residence in a foreign 
country; 
‘‘(iii) an alien who has been granted the status of 
Cuban and Haitian entrant, as defined in section 501(e) 
of the Refugee Education Assistance Act of 1980 (Public 
Law 96–422); or 
‘‘(iv) 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 the Personal Responsi-
bility and Work Opportunity Reconciliation Act of 1996.’’. 
(b) CHIP.—Section 2107(e)(1) of the Social Security Act, as 
amended by section 71103(b), is further amended—
H. R. 1—227 
(1) by redesignating subparagraphs (R) through (V) as para-
graphs (S) through (W), respectively; and 
(2) by inserting after paragraph (Q) the following: 
‘‘(R) Section 1903(v)(5) (relating to payments for med-
ical assistance furnished to aliens), except in relation to 
payments 
for 
services 
provided 
under 
section 
2105(a)(1)(D)(ii).’’. 
(c) IMPLEMENTATION FUNDING.—For the purposes of carrying 
out the provisions of, and the amendments made by, this section, 
there are appropriated, out of any monies in the Treasury not 
otherwise appropriated, to the Administrator of the Centers for 
Medicare & Medicaid Services, $15,000,000 for fiscal year 2026, 
to remain available until expended. 
SEC. 71110. EXPANSION FMAP FOR EMERGENCY MEDICAID. 
(a) IN GENERAL.—Section 1905 of the Social Security Act (42 
U.S.C. 1396d) is amended by adding at the end the following 
new subsection: 
‘‘(kk) FMAP FOR TREATMENT
OF
AN EMERGENCY MEDICAL 
CONDITION.—Notwithstanding subsection (y) and (z), beginning on 
October 1, 2026, the Federal medical assistance percentage for 
payments for care and services described in paragraph (2) of sub-
section 1903(v) furnished to an alien described in paragraph (1) 
of such subsection shall not exceed the Federal medical assistance 
percentage determined under subsection (b) for such State.’’. 
(b) IMPLEMENTATION FUNDING.—For the purposes of carrying 
out the provisions of, and the amendments made by this section, 
there are appropriated, out of any monies in the Treasury not 
otherwise appropriated, to the Administrator of the Centers for 
Medicare & Medicaid Services, $1,000,000 for fiscal year 2026, 
to remain available until expended. 
Subchapter B—Preventing Wasteful Spending 
SEC. 71111. MORATORIUM ON IMPLEMENTATION OF RULE RELATING 
TO 
STAFFING 
STANDARDS 
FOR 
LONG-TERM 
CARE 
FACILITIES UNDER THE MEDICARE AND MEDICAID PRO-
GRAMS. 
The Secretary of Health and Human Services shall not, during 
the period beginning on the date of the enactment of this section 
and ending September 30, 2034, implement, administer, or enforce 
the amendments made by the provisions of the final rule published 
by the Centers for Medicare & Medicaid Services on May 10, 2024, 
and titled ‘‘Medicare and Medicaid Programs; Minimum Staffing 
Standards for Long-Term Care Facilities and Medicaid Institutional 
Payment Transparency Reporting’’ (89 Fed. Reg. 40876) to the 
following sections of part 483 of title 42, Code of Federal Regula-
tions: 
(1) Section 483.5. 
(2) Section 483.35. 
SEC. 71112. REDUCING STATE MEDICAID COSTS. 
(a) IN GENERAL.—Section 1902(a)(34) of the Social Security 
Act (42 U.S.C. 1396a(a)(34)) is amended to read as follows: 
‘‘(34) provide that in the case of any individual who has 
been determined to be eligible for medical assistance under 
the plan and—
H. R. 1—228 
‘‘(A) is enrolled under paragraph (10)(A)(i)(VIII), such 
assistance will be made available to the individual for 
care and services included under the plan and furnished 
in or after the month before the month in which the indi-
vidual made application (or application was made on the 
individual’s behalf in the case of a deceased individual) 
for such assistance if such individual was (or upon applica-
tion would have been) eligible for such assistance at the 
time such care and services were furnished; or 
‘‘(B) is not described in subparagraph (A), such assist-
ance will be made available to the individual for care 
and services included under the plan and furnished in 
or after the second month before the month in which the 
individual made application (or application was made on 
the individual’s behalf in the case of a deceased individual) 
for such assistance if such individual was (or upon applica-
tion would have been) eligible for such assistance at the 
time such care and services were furnished;’’. 
(b) DEFINITION OF MEDICAL ASSISTANCE.—Section 1905(a) of 
the Social Security Act (42 U.S.C. 1396d(a)) is amended by striking 
‘‘in or after the third month before the month in which the recipient 
makes application for assistance’’ and inserting ‘‘, with respect 
to an individual described in section 1902(a)(34)(A), in or after 
the month before the month in which the recipient makes applica-
tion for assistance, and with respect to an individual described 
in section 1902(a)(34)(B), in or after the second month before the 
month in which the recipient makes application for assistance’’. 
(c) CHIP.—Section 2102(b)(1)(B) of the Social Security Act (42 
U.S.C. 1397bb(b)(1)(B)) is amended— 
(1) in clause (iv), by striking ‘‘and’’ at the end; 
(2) in clause (v), by striking the period and inserting ‘‘; 
and’’; and 
(3) by adding at the end the following new clause: 
‘‘(vi) shall, in the case that the State elects to 
provide child health or pregnancy-related assistance 
to an individual for any period prior to the month 
in which the individual made application for such 
assistance (or application was made on behalf of the 
individual), provide that such assistance is not made 
available to such individual for items and services 
included under the State child health plan (or waiver 
of such plan) that are furnished before the second 
month preceding the month in which such individual 
made application (or application was made on behalf 
of such individual) for assistance.’’. 
(d) EFFECTIVE DATE.—The amendments made by this section 
shall apply to medical assistance, child health assistance, and preg-
nancy-related assistance with respect to individuals whose eligibility 
for such medical assistance, child health assistance, or pregnancy- 
related assistance is based on an application made on or after 
the first day of the first quarter that begins after December 31, 
2026. 
(e) IMPLEMENTATION FUNDING.—For the purposes of carrying 
out the provisions of, and the amendments made by, this section, 
there are appropriated, out of any monies in the Treasury not 
otherwise appropriated, to the Administrator of the Centers for
H. R. 1—229 
Medicare & Medicaid Services, $10,000,000 for fiscal year 2026, 
to remain available until expended. 
SEC. 71113. FEDERAL PAYMENTS TO PROHIBITED ENTITIES. 
(a) IN GENERAL.—No Federal funds that are considered direct 
spending and provided to carry out a State plan under title XIX 
of the Social Security Act or a waiver of such a plan shall be 
used to make payments to a prohibited entity for items and services 
furnished during the 1-year period beginning on the date of the 
enactment of this Act, including any payments made directly to 
the prohibited entity or under a contract or other arrangement 
between a State and a covered organization. 
(b) DEFINITIONS.—In this section: 
(1) PROHIBITED
ENTITY.—The term ‘‘prohibited entity’’ 
means an entity, including its affiliates, subsidiaries, succes-
sors, and clinics— 
(A) that, as of the first day of the first quarter begin-
ning after the date of enactment of this Act— 
(i) is an organization described in section 501(c)(3) 
of the Internal Revenue Code of 1986 and exempt 
from tax under section 501(a) of such Code; 
(ii) is an essential community provider described 
in section 156.235 of title 45, Code of Federal Regula-
tions (as in effect on the date of enactment of this 
Act), that is primarily engaged in family planning serv-
ices, reproductive health, and related medical care; 
and 
(iii) provides for abortions, other than an abor-
tion— 
(I) if the pregnancy is the result of an act 
of rape or incest; or 
(II) in the case where a woman suffers from 
a physical disorder, physical injury, or physical 
illness, including a life-endangering physical condi-
tion caused by or arising from the pregnancy itself, 
that would, as certified by a physician, place the 
woman in danger of death unless an abortion is 
performed; and 
(B) for which the total amount of Federal and State 
expenditures under the Medicaid program under title XIX 
of the Social Security Act for medical assistance furnished 
in fiscal year 2023 made directly, or by a covered organiza-
tion, to the entity or to any affiliates, subsidiaries, succes-
sors, or clinics of the entity, or made to the entity or 
to any affiliates, subsidiaries, successors, or clinics of the 
entity as part of a nationwide health care provider network, 
exceeded $800,000. 
(2) DIRECT SPENDING.—The term ‘‘direct spending’’ has the 
meaning given that term under section 250(c) of the Balanced 
Budget and Emergency Deficit Control Act of 1985 (2 U.S.C. 
900(c)). 
(3) COVERED ORGANIZATION.—The term ‘‘covered organiza-
tion’’ means a managed care entity (as defined in section 
1932(a)(1)(B) of the Social Security Act (42 U.S.C. 1396u– 
2(a)(1)(B))) or a prepaid inpatient health plan or prepaid 
ambulatory health plan (as such terms are defined in section 
1903(m)(9)(D) of such Act (42 U.S.C. 1396b(m)(9)(D))).
H. R. 1—230 
(4) STATE.—The term ‘‘State’’ has the meaning given such 
term in section 1101 of the Social Security Act (42 U.S.C. 
1301). 
(c) IMPLEMENTATION FUNDING.—For the purposes of carrying 
out this section, there are appropriated, out of any monies in 
the Treasury not otherwise appropriated, to the Administrator of 
the Centers for Medicare & Medicaid Services, $1,000,000 for fiscal 
year 2026, to remain available until expended. 
Subchapter C—Stopping Abusive Financing Practices 
SEC. 71114. SUNSETTING INCREASED FMAP INCENTIVE. 
Section 1905(ii)(3) of the Social Security Act (42 U.S.C. 
1396d(ii)(3)) is amended— 
(1) by striking ‘‘which has not’’ and inserting the following: 
‘‘which— 
‘‘(A) has not’’; 
(2) in subparagraph (A), as so inserted, by striking the 
period at the end and inserting ‘‘; and’’; and 
(3) by adding at the end the following new subparagraph: 
‘‘(B) begins to expend amounts for all such individuals 
prior to January 1, 2026.’’. 
SEC. 71115. PROVIDER TAXES. 
(a) CHANGE IN THRESHOLD FOR HOLD HARMLESS PROVISION 
OF
BROAD-BASED
HEALTH
CARE
RELATED
TAXES.—Section 
1903(w)(4) of the Social Security Act (42 U.S.C. 1396b(w)(4)) is 
amended— 
(1) in subparagraph (C)(ii), by inserting ‘‘, and for fiscal 
years beginning on or after October 1, 2026, the applicable 
percent determined under subparagraph (D) shall be sub-
stituted for ‘6 percent’ each place it appears’’ after ‘‘each place 
it appears’’; and 
(2) by inserting after subparagraph (C)(ii), the following 
new subparagraph: 
‘‘(D)(i) For purposes of subparagraph (C)(ii), the applicable 
percent determined under this subparagraph is— 
‘‘(I) in the case of a non-expansion State or unit of 
local government in such State and a class of health care 
items or services described in section 433.56(a) of title 
42, Code of Federal Regulations (as in effect on May 1, 
2025)— 
‘‘(aa) if, on the date of enactment of this subpara-
graph, the non-expansion State or unit of local govern-
ment in such State has enacted a tax and imposes 
such tax on such class and the Secretary determines 
that the tax is within the hold harmless threshold 
as of that date, the applicable percent of net patient 
revenue attributable to such class that has been so 
determined; and 
‘‘(bb) if, on the date of enactment of this subpara-
graph, the non-expansion State or unit of local govern-
ment in such State has not enacted or does not impose 
a tax with respect to such class, 0 percent; and 
‘‘(II) in the case of an expansion State or unit of local 
government in such State and a class of health care items 
or services described in section 433.56(a) of title 42, Code
H. R. 1—231 
of Federal Regulations (as in effect on May 1, 2025), subject 
to clause (iv)— 
‘‘(aa) if, on the date of enactment of this subpara-
graph, the expansion State or unit of local government 
in such State has enacted a tax and imposes such 
tax on such class and the Secretary determines that 
the tax is within the hold harmless threshold as of 
that date, the lower of— 
‘‘(AA) the applicable percent of net patient 
revenue attributable to such class that has been 
so determined; and 
‘‘(BB) the applicable percent specified in clause 
(ii) for the fiscal year; and 
‘‘(bb) if, on the date of enactment of this subpara-
graph, the expansion State or unit of local government 
in such State has not enacted or does not impose 
a tax with respect to such class, 0 percent. 
‘‘(ii) 
For 
purposes 
of 
clause 
(i)(II)(aa)(BB), 
the 
applicable percent is— 
‘‘(I) for fiscal year 2028, 5.5 percent; 
‘‘(II) for fiscal year 2029, 5 percent; 
‘‘(III) for fiscal year 2030, 4.5 percent; 
‘‘(IV) for fiscal year 2031, 4 percent; and 
‘‘(V) for fiscal year 2032 and each subsequent fiscal 
year, 3.5 percent. 
‘‘(iii) For purposes of clause (i): 
‘‘(I) EXPANSION STATE.—The term ‘expansion State’ 
means a State that, beginning on January 1, 2014, 
or on any date thereafter, elects to provide medical 
assistance to all individuals described in section 
1902(a)(10)(A)(i)(VIII) under the State plan under this 
title or under a waiver of such plan. 
‘‘(II) NON-EXPANSION STATE.—The term ‘non-expan-
sion State’ means a State that is not an expansion 
State. 
‘‘(iv) In the case of a tax of an expansion State or 
unit of local government in such State in effect on the 
date of enactment of this clause, that applies to a class 
of health care items or services that is described in para-
graph (3) or (4) of section 433.56(a) of title 42, Code of 
Federal Regulations (as in effect on May 1, 2025), and 
for which, on such date of enactment, is within the hold 
harmless threshold (as determined by the Secretary), the 
applicable percent of net patient revenue attributable to 
such class that has been so determined shall apply for 
a fiscal year instead of the applicable percent specified 
in clause (ii) for the fiscal year.’’. 
(b) NON-APPLICATION TO TERRITORIES.—The amendments made 
by this section shall only apply with respect to a State that is 
1 of the 50 States or the District of Columbia. 
(c) IMPLEMENTATION FUNDING.—For the purposes of carrying 
out the provisions of, and the amendments made by, this section, 
there are appropriated, out of any monies in the Treasury not 
otherwise appropriated, to the Administrator of the Centers for 
Medicare & Medicaid Services, $20,000,000 for fiscal year 2026, 
to remain available until expended.
H. R. 1—232 
SEC. 71116. STATE DIRECTED PAYMENTS. 
(a) IN GENERAL.—Subject to subsection (b), the Secretary of 
Health and Human Services (in this section referred to as the 
Secretary) shall revise section 438.6(c)(2)(iii) of title 42, Code of 
Federal Regulations (or a successor regulation) such that, with 
respect to a payment described in such section made for a service 
furnished during a rating period beginning on or after the date 
of the enactment of this Act, the total payment rate for such 
service is limited to— 
(1) in the case of a State that provides coverage to all 
individuals described in section 1902(a)(10)(A)(i)(VIII) of the 
Social Security Act (42 U.S.C. 1396a(a)(10)(A)(i)(VIII)) that is 
equivalent to minimum essential coverage (as described in sec-
tion 5000A(f)(1)(A) of the Internal Revenue Code of 1986 and 
determined in accordance with standards prescribed by the 
Secretary in regulations) under the State plan (or waiver of 
such plan) of such State under title XIX of such Act, 100 
percent of the specified total published Medicare payment rate 
(or, in the absence of a specified total published Medicare 
payment rate, the payment rate under a Medicaid State plan 
(or under a waiver of such plan)); or 
(2) in the case of a State other than a State described 
in paragraph (1), 110 percent of the specified total published 
Medicare payment rate (or, in the absence of a specified total 
published Medicare payment rate, the payment rate under 
a Medicaid State plan (or under a waiver of such plan)). 
(b) GRANDFATHERING CERTAIN PAYMENTS.—In the case of a 
payment described in section 438.6(c)(2)(iii) of title 42, Code of 
Federal Regulations (or a successor regulation) for which written 
prior approval (or a good faith effort to receive such approval, 
as determined by the Secretary) was made before May 1, 2025, 
or a payment described in such section for a rural hospital (as 
defined in subsection (d)(2)) for which written prior approval (or 
a good faith effort to receive such approval, as determined by 
the Secretary) was made by the date of enactment of this Act, 
for the rating period occurring within 180 days of the date of 
the enactment of this Act, or a payment so described for such 
rating period for which a completed preprint was submitted to 
the Secretary prior to the date of enactment of this Act, beginning 
with the rating period on or after January 1, 2028, the total amount 
of such payment shall be reduced by 10 percentage points each 
year until the total payment rate for such service is equal to 
the rate for such service specified in subsection (a). 
(c) TREATMENT OF EXPANSION STATES.—The revisions described 
in subsection (a) shall provide that, with respect to a State that 
begins providing the coverage described in paragraph (1) of such 
subsection on or after the date of the enactment of this Act, the 
limitation described in such paragraph shall apply to such State 
with respect to a payment described in section 438.6(c)(2)(iii) of 
title 42, Code of Federal Regulations (or a successor regulation) 
for a service furnished during a rating period beginning on or 
after the date of enactment of this Act. 
(d) DEFINITIONS.—In this section: 
(1) RATING
PERIOD.—The term ‘‘rating period’’ has the 
meaning given such term in section 438.2 of title 42, Code 
of Federal Regulations (or a successor regulation).
H. R. 1—233 
(2) RURAL HOSPITAL.—The term ‘‘rural hospital’’ means the 
following: 
(A) A subsection (d) hospital (as defined in paragraph 
(1)(B) of section 1886(d) of the Social Security Act (42 
U.S.C. 1395ww(d))) that— 
(i) is located in a rural area (as defined in para-
graph (2)(D) of such section); 
(ii) is treated as being located in a rural area 
pursuant to paragraph (8)(E) of such section; or 
(iii) is located in a rural census tract of a metropoli-
tan statistical area (as determined under the most 
recent modification of the Goldsmith Modification, 
originally published in the Federal Register on Feb-
ruary 27, 1992 (57 Fed. Reg. 6725)). 
(B) A critical access hospital (as defined in section 
1861(mm)(1) of such Act (42 U.S.C. 1395x(mm)(1))). 
(C) A sole community hospital (as defined in section 
1886(d)(5)(D)(iii) 
of 
such 
Act 
(42 
U.S.C. 
1395ww(d)(5)(D)(iii))). 
(D) A Medicare-dependent, small rural hospital (as 
defined in section 1886(d)(5)(G)(iv) of such Act (42 U.S.C. 
1395ww(d)(5)(G)(iv))). 
(E) A low-volume hospital (as defined in section 
1886(d)(12)(C) of such Act (42 U.S.C. 1395ww(d)(12)(C))). 
(F) A rural emergency hospital (as defined in section 
1861(kkk)(2) of such Act (42 U.S.C. 1395x(kkk)(2))). 
(3) STATE.—The term ‘‘State’’ means 1 of the 50 States 
or the District of Columbia. 
(4) TOTAL PUBLISHED MEDICARE PAYMENT RATE.—The term 
‘‘total published Medicare payment rate’’ has the meaning given 
to such term in section 438.6(a) of title 42, Code of Federal 
Regulations (or a successor regulation). 
(5) WRITTEN
PRIOR
APPROVAL.—The term ‘‘written prior 
approval’’ has the meaning given to such term in section 
438.6(c)(2)(i) of title 42, Code of Federal Regulations (or a 
successor regulation). 
(e) FUNDING.—There are appropriated out of any monies in 
the Treasury not otherwise appropriated $7,000,000 for each of 
fiscal years 2026 through 2033 for purposes of carrying out this 
section, to remain available until expended. 
SEC. 71117. REQUIREMENTS REGARDING WAIVER OF UNIFORM TAX 
REQUIREMENT FOR MEDICAID PROVIDER TAX. 
(a) IN GENERAL.—Section 1903(w) of the Social Security Act 
(42 U.S.C. 1396b(w)) is amended— 
(1) in paragraph (3)(E), by inserting after clause (ii)(II) 
the following new clause: 
‘‘(iii) For purposes of clause (ii)(I), a tax is not considered 
to be generally redistributive if any of the following conditions 
apply: 
‘‘(I) Within a permissible class, the tax rate imposed on 
any taxpayer or tax rate group (as defined in paragraph (7)(J)) 
explicitly defined by its relatively lower volume or percentage 
of Medicaid taxable units (as defined in paragraph (7)(H)) is 
lower than the tax rate imposed on any other taxpayer or 
tax rate group explicitly defined by its relatively higher volume 
or percentage of Medicaid taxable units.
H. R. 1—234 
‘‘(II) Within a permissible class, the tax rate imposed on 
any taxpayer or tax rate group (as so defined) based upon 
its Medicaid taxable units (as so defined) is higher than the 
tax rate imposed on any taxpayer or tax rate group based 
upon its non-Medicaid taxable unit (as defined in paragraph 
(7)(I)). 
‘‘(III) The tax excludes or imposes a lower tax rate on 
a taxpayer or tax rate group (as so defined) based on or defined 
by any description that results in the same effect as described 
in subclause (I) or (II) for a taxpayer or tax rate group. 
Characteristics that may indicate such type of exclusion include 
the use of terminology to establish a tax rate group— 
‘‘(aa) based on payments or expenditures made under 
the program under this title without mentioning the term 
‘Medicaid’ (or any similar term) to accomplish the same 
effect as described in subclause (I) or (II); or 
‘‘(bb) that closely approximates a taxpayer or tax rate 
group under the program under this title, to the same 
effect as described in subclause (I) or (II).’’; and 
(2) in paragraph (7), by adding at the end the following 
new subparagraphs: 
‘‘(H) The term ‘Medicaid taxable unit’ means a unit that 
is being taxed within a health care related tax that is applicable 
to the program under this title. Such term includes a unit 
that is used as the basis for— 
‘‘(i) payment under the program under this title (such 
as Medicaid bed days); 
‘‘(ii) Medicaid revenue; 
‘‘(iii) costs associated with the program under this title 
(such as Medicaid charges, claims, or expenditures); and 
‘‘(iv) other units associated with the program under 
this title, as determined by the Secretary. 
‘‘(I) The term ‘non-Medicaid taxable unit’ means a unit 
that is being taxed within a health care related tax that is 
not applicable to the program under this title. Such term 
includes a unit that is used as the basis for— 
‘‘(i) payment by non-Medicaid payers (such as non- 
Medicaid bed days); 
‘‘(ii) non-Medicaid revenue; 
‘‘(iii) costs that are not associated with the program 
under this title (such as non-Medicaid charges, non-Med-
icaid claims, or non-Medicaid expenditures); and 
‘‘(iv) other units not associated with the program under 
this title, as determined by the Secretary. 
‘‘(J) The term ‘tax rate group’ means a group of entities 
contained within a permissible class of a health care related 
tax that are taxed at the same rate.’’. 
(b) NON-APPLICATION TO TERRITORIES.—The amendments made 
by this section shall only apply with respect to a State that is 
1 of the 50 States or the District of Columbia. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall take effect upon the date of enactment of this Act, subject 
to any applicable transition period determined appropriate by the 
Secretary of Health and Human Services, not to exceed 3 fiscal 
years.
H. R. 1—235 
SEC. 71118. REQUIRING BUDGET NEUTRALITY FOR MEDICAID DEM-
ONSTRATION PROJECTS UNDER SECTION 1115. 
(a) IN GENERAL.—Section 1115 of the Social Security Act (42 
U.S.C. 1315) is amended by adding at the end the following new 
subsection: 
‘‘(g) REQUIREMENT OF BUDGET NEUTRALITY FOR MEDICAID DEM-
ONSTRATION PROJECTS.— 
‘‘(1) IN GENERAL.—Beginning January 1 2027, the Secretary 
may not approve an application for (or renewal or amendment 
of) an experimental, pilot, or demonstration project undertaken 
under subsection (a) to promote the objectives of title XIX 
in a State (in this subsection referred to as a ‘Medicaid dem-
onstration project’) unless the Chief Actuary for the Centers 
for Medicare & Medicaid Services certifies that such project, 
or, in the case of a renewal, the duration of the preceding 
waiver, is not expected to result in an increase in the amount 
of Federal expenditures compared to the amount that such 
expenditures would otherwise be in the absence of such project. 
For purposes of this subsection, expenditures for the coverage 
of populations and services that the State could have otherwise 
provided through its Medicaid State plan or other authority 
under title XIX, including expenditures that could be made 
under such authority but for the provision of such services 
at a different site of service than authorized under such State 
plan or other authority, shall be considered expenditures in 
the absence of such a project. 
‘‘(2) TREATMENT OF SAVINGS.—In the event that expendi-
tures with respect to a State under a Medicaid demonstration 
project are, during an approval period for such project, less 
than the amount of such expenditures that would have other-
wise been made in the absence of such project, the Secretary 
shall specify the methodology to be used with respect to the 
subsequent approval period for such project for purposes of 
taking the difference between such expenditures into account.’’. 
(b) IMPLEMENTATION FUNDING.—For the purposes of carrying 
out the provisions of, and the amendments made by, this section, 
there are appropriated, out of any monies in the Treasury not 
otherwise appropriated, to the Administrator of the Centers for 
Medicare & Medicaid Services, $5,000,000 for each of fiscal years 
2026 and 2027, to remain available until expended. 
Subchapter D—Increasing Personal Accountability 
SEC. 71119. REQUIREMENT FOR STATES TO ESTABLISH MEDICAID 
COMMUNITY ENGAGEMENT REQUIREMENTS FOR CER-
TAIN INDIVIDUALS. 
(a) IN GENERAL.—Section 1902 of the Social Security Act (42 
U.S.C. 1396a), as amended by sections 71103 and 71104, is further 
amended by adding at the end the following new subsection: 
‘‘(xx) COMMUNITY ENGAGEMENT REQUIREMENT FOR APPLICABLE 
INDIVIDUALS.— 
‘‘(1) IN GENERAL.—Except as provided in paragraph (11), 
beginning not later than the first day of the first quarter 
that begins after December 31, 2026, or, at the option of the 
State under a waiver or demonstration project under section 
1115 or the State plan, such earlier date as the State may 
specify, subject to the succeeding provisions of this subsection,
H. R. 1—236 
a State shall provide, as a condition of eligibility for medical 
assistance for an applicable individual, that such individual 
is required to demonstrate community engagement under para-
graph (2)— 
‘‘(A) in the case of an applicable individual who has 
filed an application for medical assistance under a State 
plan (or a waiver of such plan) under this title, for 1 
or more but not more than 3 (as specified by the State) 
consecutive months immediately preceding the month 
during which such individual applies for such medical 
assistance; and 
‘‘(B) in the case of an applicable individual enrolled 
and receiving medical assistance under a State plan (or 
under a waiver of such plan) under this title, for 1 or 
more (as specified by the State) months, whether or not 
consecutive— 
‘‘(i) during the period between such individual’s 
most recent determination (or redetermination, as 
applicable) of eligibility and such individual’s next 
regularly scheduled redetermination of eligibility (as 
verified by the State as part of such regularly sched-
uled redetermination of eligibility); or 
‘‘(ii) in the case of a State that has elected under 
paragraph (4) to conduct more frequent verifications 
of compliance with the requirement to demonstrate 
community engagement, during the period between the 
most recent and next such verification with respect 
to such individual. 
‘‘(2) COMMUNITY ENGAGEMENT COMPLIANCE DESCRIBED.— 
Subject to paragraph (3), an applicable individual demonstrates 
community engagement under this paragraph for a month if 
such individual meets 1 or more of the following conditions 
with respect to such month, as determined in accordance with 
criteria established by the Secretary through regulation: 
‘‘(A) The individual works not less than 80 hours. 
‘‘(B) The individual completes not less than 80 hours 
of community service. 
‘‘(C) The individual participates in a work program 
for not less than 80 hours. 
‘‘(D) The individual is enrolled in an educational pro-
gram at least half-time. 
‘‘(E) The individual engages in any combination of the 
activities described in subparagraphs (A) through (D), for 
a total of not less than 80 hours. 
‘‘(F) The individual has a monthly income that is not 
less than the applicable minimum wage requirement under 
section 6 of the Fair Labor Standards Act of 1938, multi-
plied by 80 hours. 
‘‘(G) The individual had an average monthly income 
over the preceding 6 months that is not less than the 
applicable minimum wage requirement under section 6 
of the Fair Labor Standards Act of 1938 multiplied by 
80 hours, and is a seasonal worker, as described in section 
45R(d)(5)(B) of the Internal Revenue Code of 1986 . 
‘‘(3) EXCEPTIONS.— 
‘‘(A) MANDATORY
EXCEPTION
FOR
CERTAIN
INDIVID-
UALS.—The State shall deem an applicable individual to
H. R. 1—237 
have demonstrated community engagement under para-
graph (2) for a month, and may elect to not require an 
individual to verify information resulting in such deeming, 
if— 
‘‘(i) for part or all of such month, the individual— 
‘‘(I) was a specified excluded individual (as 
defined in paragraph (9)(A)(ii)); or 
‘‘(II) was— 
‘‘(aa) under the age of 19; 
‘‘(bb) entitled to, or enrolled for, benefits 
under part A of title XVIII, or enrolled for 
benefits under part B of title XVIII; or 
‘‘(cc) described in any of subclauses (I) 
through (VII) of subsection (a)(10)(A)(i); or 
‘‘(ii) at any point during the 3-month period ending 
on the first day of such month, the individual was 
an inmate of a public institution. 
‘‘(B) OPTIONAL EXCEPTION FOR SHORT-TERM HARDSHIP 
EVENTS.— 
‘‘(i) IN
GENERAL.—The State plan (or waiver of 
such plan) may provide, in the case of an applicable 
individual who experiences a short-term hardship 
event during a month, that the State shall, under 
procedures established by the State (in accordance with 
standards specified by the Secretary), in the case of 
a short-term hardship event described in clause (ii)(II) 
and, upon the request of such individual, a short- 
term hardship event described in subclause (I) or (III) 
of clause (ii), deem such individual to have dem-
onstrated community engagement under paragraph (2) 
for such month. 
‘‘(ii) SHORT-TERM HARDSHIP EVENT DEFINED.—For 
purposes of this subparagraph, an applicable individual 
experiences a short-term hardship event during a 
month if, for part or all of such month— 
‘‘(I) such individual receives inpatient hospital 
services, nursing facility services, services in an 
intermediate care facility for individuals with 
intellectual disabilities, inpatient psychiatric hos-
pital services, or such other services of similar 
acuity (including outpatient care relating to other 
services specified in this subclause) as the Sec-
retary determines appropriate; 
‘‘(II) such individual resides in a county (or 
equivalent unit of local government)— 
‘‘(aa) in which there exists an emergency 
or disaster declared by the President pursuant 
to the National Emergencies Act or the Robert 
T. Stafford Disaster Relief and Emergency 
Assistance Act; or 
‘‘(bb) that, subject to a request from the 
State to the Secretary, made in such form, 
at such time, and containing such information 
as the Secretary may require, has an 
unemployment rate that is at or above the 
lesser of— 
‘‘(AA) 8 percent; or
H. R. 1—238 
‘‘(BB) 
1.5 
times 
the 
national 
unemployment rate; or 
‘‘(III) such individual or their dependent must 
travel outside of their community for an extended 
period of time to receive medical services necessary 
to treat a serious or complex medical condition 
(as described in paragraph (9)(A)(ii)(V)(ee)) that 
are not available within their community of resi-
dence. 
‘‘(4) OPTION
TO
CONDUCT
MORE
FREQUENT
COMPLIANCE 
VERIFICATIONS.—With respect to an applicable individual 
enrolled and receiving medical assistance under a State plan 
(or a waiver of such plan) under this title, the State shall 
verify (in accordance with procedures specified by the Secretary) 
that each such individual has met the requirement to dem-
onstrate community engagement under paragraph (1) during 
each such individual’s regularly scheduled redetermination of 
eligibility, except that a State may provide for such verifications 
more frequently. 
‘‘(5) EX PARTE VERIFICATIONS.—For purposes of verifying 
that an applicable individual has met the requirement to dem-
onstrate community engagement under paragraph (1), or deter-
mining such individual to be deemed to have demonstrated 
community engagement under paragraph (3), or that an indi-
vidual is a specified excluded individual under paragraph 
(9)(A)(ii), the State shall, in accordance with standards estab-
lished by the Secretary, establish processes and use reliable 
information available to the State (such as payroll data or 
payments or encounter data under this title for individuals 
and data on payments to such individuals for the provision 
of services covered under this title) without requiring, where 
possible, the applicable individual to submit additional informa-
tion. 
‘‘(6) PROCEDURE IN THE CASE OF NONCOMPLIANCE.— 
‘‘(A) IN GENERAL.—If a State is unable to verify that 
an applicable individual has met the requirement to dem-
onstrate community engagement under paragraph (1) 
(including, if applicable, by verifying that such individual 
was deemed to have demonstrated community engagement 
under paragraph (3)) the State shall (in accordance with 
standards specified by the Secretary)— 
‘‘(i) provide such individual with the notice of non-
compliance described in subparagraph (B); 
‘‘(ii)(I) provide such individual with a period of 
30 calendar days, beginning on the date on which 
such notice of noncompliance is received by the indi-
vidual, to— 
‘‘(aa) make a satisfactory showing to the State 
of compliance with such requirement (including, 
if applicable, by showing that such individual was 
or should be deemed to have demonstrated commu-
nity engagement under paragraph (3)); or 
‘‘(bb) make a satisfactory showing to the State 
that such requirement does not apply to such indi-
vidual on the basis that such individual does not 
meet the definition of applicable individual under 
paragraph (9)(A); and
H. R. 1—239 
‘‘(II) if such individual is enrolled under the State 
plan (or a waiver of such plan) under this title, continue 
to provide such individual with medical assistance 
during such 30-calendar-day period; and 
‘‘(iii) if no such satisfactory showing is made and 
the individual is not a specified excluded individual 
described in paragraph (9)(A)(ii), deny such individual’s 
application for medical assistance under the State plan 
(or waiver of such plan) or, as applicable, disenroll 
such individual from the plan (or waiver of such plan) 
not later than the end of the month following the 
month in which such 30-calendar-day period ends, pro-
vided that— 
‘‘(I) the State first determines whether, with 
respect to the individual, there is any other basis 
for eligibility for medical assistance under the 
State plan (or waiver of such plan) or for another 
insurance affordability program; and 
‘‘(II) the individual is provided written notice 
and granted an opportunity for a fair hearing in 
accordance with subsection (a)(3). 
‘‘(B) NOTICE.—The notice of noncompliance provided 
to an applicable individual under subparagraph (A)(i) shall 
include information (in accordance with standards specified 
by the Secretary) on— 
‘‘(i) how such individual may make a satisfactory 
showing of compliance with such requirement (as 
described in subparagraph (A)(ii)) or make a satisfac-
tory showing that such requirement does not apply 
to such individual on the basis that such individual 
does not meet the definition of applicable individual 
under paragraph (9)(A); and 
‘‘(ii) how such individual may reapply for medical 
assistance under the State plan (or a waiver of such 
plan) under this title in the case that such individuals’ 
application is denied or, as applicable, in the case 
that such individual is disenrolled from the plan (or 
waiver). 
‘‘(7) TREATMENT OF NONCOMPLIANT INDIVIDUALS IN RELA-
TION TO CERTAIN OTHER PROVISIONS.— 
‘‘(A) CERTAIN FMAP INCREASES.—A State shall not be 
treated as not providing medical assistance to all individ-
uals described in section 1902(a)(10)(A)(i)(VIII), or as not 
expending amounts for all such individuals under the State 
plan (or waiver of such plan), solely because such an indi-
vidual is determined ineligible for medical assistance under 
the State plan (or waiver) on the basis of a failure to 
meet the requirement to demonstrate community engage-
ment under paragraph (1). 
‘‘(B) OTHER
PROVISIONS.—For purposes of section 
36B(c)(2)(B) of the Internal Revenue Code of 1986, an indi-
vidual shall be deemed to be eligible for minimum essential 
coverage described in section 5000A(f)(1)(A)(ii) of such Code 
for a month if such individual would have been eligible 
for medical assistance under a State plan (or a waiver 
of such plan) under this title but for a failure to meet
H. R. 1—240 
the requirement to demonstrate community engagement 
under paragraph (1). 
‘‘(8) OUTREACH.— 
‘‘(A) IN GENERAL.—In accordance with standards speci-
fied by the Secretary, beginning not later than the date 
that precedes December 31, 2026 (or, if the State elects 
under paragraph (1) to specify an earlier date, such earlier 
date) by the number of months specified by the State 
under paragraph (1)(A) plus 3 months, and periodically 
thereafter, the State shall notify applicable individuals 
enrolled under a State plan (or waiver) under this title 
of the requirement to demonstrate community engagement 
under this subsection. Such notice shall include information 
on— 
‘‘(i) how to comply with such requirement, 
including an explanation of the exceptions to such 
requirement under paragraph (3) and the definition 
of the term ‘applicable individual’ under paragraph 
(9)(A); 
‘‘(ii) the consequences of noncompliance with such 
requirement; and 
‘‘(iii) how to report to the State any change in 
the individual’s status that could result in— 
‘‘(I) the applicability of an exception under 
paragraph (3) (or the end of the applicability of 
such an exception); or 
‘‘(II) the individual qualifying as a specified 
excluded individual under paragraph (9)(A)(ii). 
‘‘(B) FORM OF OUTREACH NOTICE.—A notice required 
under subparagraph (A) shall be delivered— 
‘‘(i) by regular mail (or, if elected by the individual, 
in an electronic format); and 
‘‘(ii) in 1 or more additional forms, which may 
include telephone, text message, an internet website, 
other commonly available electronic means, and such 
other forms as the Secretary determines appropriate. 
‘‘(9) DEFINITIONS.—In this subsection: 
‘‘(A) APPLICABLE INDIVIDUAL.— 
‘‘(i) IN GENERAL.—The term ‘applicable individual’ 
means an individual (other than a specified excluded 
individual (as defined in clause (ii)))— 
‘‘(I) who is eligible to enroll (or is enrolled) 
under 
the 
State 
plan 
under 
subsection 
(a)(10)(A)(i)(VIII); or 
‘‘(II) who— 
‘‘(aa) is otherwise eligible to enroll (or is 
enrolled) under a waiver of such plan that 
provides coverage that is equivalent to min-
imum essential coverage (as described in sec-
tion 5000A(f)(1)(A) of the Internal Revenue 
Code of 1986 and as determined in accordance 
with standards prescribed by the Secretary 
in regulations); and 
‘‘(bb) has attained the age of 19 and is 
under 65 years of age, is not pregnant, is 
not entitled to, or enrolled for, benefits under 
part A of title XVIII, or enrolled for benefits
H. R. 1—241 
under part B of title XVIII, and is not other-
wise eligible to enroll under such plan. 
‘‘(ii) SPECIFIED
EXCLUDED
INDIVIDUAL.—For pur-
poses of clause (i), the term ‘specified excluded indi-
vidual’ means an individual, as determined by the 
State (in accordance with standards specified by the 
Secretary)— 
‘‘(I) 
who 
is 
described 
in 
subsection 
(a)(10)(A)(i)(IX); 
‘‘(II) who— 
‘‘(aa) is an Indian or an Urban Indian 
(as such terms are defined in paragraphs (13) 
and (28) of section 4 of the Indian Health 
Care Improvement Act); 
‘‘(bb) is a California Indian described in 
section 809(a) of such Act; or 
‘‘(cc) has otherwise been determined 
eligible as an Indian for the Indian Health 
Service under regulations promulgated by the 
Secretary; 
‘‘(III) who is the parent, guardian, caretaker 
relative, or family caregiver (as defined in section 
2 of the RAISE Family Caregivers Act) of a 
dependent child 13 years of age and under or 
a disabled individual; 
‘‘(IV) who is a veteran with a disability rated 
as total under section 1155 of title 38, United 
States Code; 
‘‘(V) who is medically frail or otherwise has 
special medical needs (as defined by the Secretary), 
including an individual— 
‘‘(aa) who is blind or disabled (as defined 
in section 1614); 
‘‘(bb) with a substance use disorder; 
‘‘(cc) with a disabling mental disorder; 
‘‘(dd) with a physical, intellectual or 
developmental disability that significantly 
impairs their ability to perform 1 or more 
activities of daily living; or 
‘‘(ee) with a serious or complex medical 
condition; 
‘‘(VI) who— 
‘‘(aa) is in compliance with any require-
ments imposed by the State pursuant to sec-
tion 407; or 
‘‘(bb) is a member of a household that 
receives supplemental nutrition assistance 
program benefits under the Food and Nutri-
tion Act of 2008 and is not exempt from a 
work requirement under such Act; 
‘‘(VII) who is participating in a drug addiction 
or alcoholic treatment and rehabilitation program 
(as defined in section 3(h) of the Food and Nutri-
tion Act of 2008); 
‘‘(VIII) who is an inmate of a public institution; 
or
H. R. 1—242 
‘‘(IX) 
who 
is 
pregnant 
or 
entitled 
to 
postpartum medical assistance under paragraph 
(5) or (16) of subsection (e). 
‘‘(B) EDUCATIONAL PROGRAM.—The term ‘educational 
program’ includes— 
‘‘(i) an institution of higher education (as defined 
in section 101 of the Higher Education Act of 1965); 
and 
‘‘(ii) a program of career and technical education 
(as defined in section 3 of the Carl D. Perkins Career 
and Technical Education Act of 2006). 
‘‘(C) STATE.—The term ‘State’ means 1 of the 50 States 
or the District of Columbia. 
‘‘(D) WORK PROGRAM.—The term ‘work program’ has 
the meaning given such term in section 6(o)(1) of the Food 
and Nutrition Act of 2008. 
‘‘(10) PROHIBITING
WAIVER
OF
COMMUNITY
ENGAGEMENT 
REQUIREMENTS.—Notwithstanding section 1115(a), the provi-
sions of this subsection may not be waived. 
‘‘(11) SPECIAL IMPLEMENTATION RULE.— 
‘‘(A) IN GENERAL.—Subject to subparagraph (C), the 
Secretary may exempt a State from compliance with the 
requirements of this subsection if— 
‘‘(i) the State submits to the Secretary a request 
for such exemption, made in such form and at such 
time as the Secretary may require, and including the 
information specified in subparagraph (B); and 
‘‘(ii) the Secretary determines that based on such 
request, the State is demonstrating a good faith effort 
to comply with the requirements of this subsection. 
‘‘(B) GOOD FAITH EFFORT DETERMINATION.—In deter-
mining whether a State is demonstrating a good faith 
effort for purposes of subparagraph (A)(ii), the Secretary 
shall consider— 
‘‘(i) any actions taken by the State toward compli-
ance with the requirements of this subsection; 
‘‘(ii) any significant barriers to or challenges in 
meeting such requirements, including related to 
funding, design, development, procurement, or installa-
tion of necessary systems or resources; 
‘‘(iii) the State’s detailed plan and timeline for 
achieving full compliance with such requirements, 
including any milestones of such plan (as defined by 
the Secretary); and 
‘‘(iv) any other criteria determined appropriate by 
the Secretary. 
‘‘(C) DURATION OF EXEMPTION.— 
‘‘(i) IN
GENERAL.—An exemption granted under 
subparagraph (A) shall expire not later than December 
31, 2028, and may not be renewed beyond such date. 
‘‘(ii) EARLY
TERMINATION.—The Secretary may 
terminate an exemption granted under subparagraph 
(A) prior to the expiration date of such exemption 
if the Secretary determined that the State has— 
‘‘(I) failed to comply with the reporting require-
ments described in subparagraph (D); or
H. R. 1—243 
‘‘(II) based on the information provided pursu-
ant to subparagraph (D), failed to make continued 
good faith efforts toward compliance with the 
requirements of this subsection. 
‘‘(D) REPORTING REQUIREMENTS.—A State granted an 
exemption under subparagraph (A) shall submit to the 
Secretary— 
‘‘(i) quarterly progress reports on the State’s status 
in achieving the milestones toward full compliance 
described in subparagraph (B)(iii); and 
‘‘(ii) information on specific risks or newly identi-
fied barriers or challenges to full compliance, including 
the State’s plan to mitigate such risks, barriers, or 
challenges.’’. 
(b) CONFORMING AMENDMENT.—Section 1902(a)(10)(A)(i)(VIII) 
of the Social Security Act (42 U.S.C. 1396a(a)(10)(A)(i)(VIII)) is 
amended by striking ‘‘subject to subsection (k)’’ and inserting ‘‘sub-
ject to subsections (k) and (xx)’’. 
(c) PROHIBITING CONFLICTS OF INTEREST.—A State shall not 
use a Medicaid managed care entity or other specified entity (as 
such terms are defined in section 1903(m)(9)(D)), or other contractor 
to determine beneficiary compliance under such section unless the 
contractor has no direct or indirect financial relationship with any 
Medicaid managed care entity or other specified entity that is 
responsible for providing or arranging for coverage of medical assist-
ance for individuals enrolled with the entity pursuant to a contract 
with such State. 
(d) INTERIM FINAL RULEMAKING.—Not later than June 1, 2026, 
the Secretary of Health and Human Services shall promulgate 
an interim final rule for purposes of implementing the provisions 
of, and the amendments made by, this section. Any action taken 
to implement the provisions of, and the amendments made by, 
this section shall not be subject to the provisions of section 553 
of title 5, United States Code. 
(e) DEVELOPMENT
OF GOVERNMENT EFFICIENCY GRANTS
TO 
STATES.— 
(1) IN GENERAL.—In order for States to establish systems 
necessary to carry out the provisions of, and amendments made 
by, this section or other sections of this chapter that pertain 
to conducting eligibility determinations or redeterminations, 
the Secretary of Health and Human Services shall— 
(A) out of amounts appropriated under paragraph 
(3)(A), award to each State a grant equal to the amount 
specified in paragraph (2) for such State; and 
(B) out of amounts appropriated under paragraph 
(3)(B), distribute an equal amount among such States. 
(2) AMOUNT SPECIFIED.—For purposes of paragraph (1)(A), 
the amount specified in this paragraph is an amount that 
bears the same ratio to the amount appropriated under para-
graph (3)(A) as the number of applicable individuals (as defined 
in section 1902(xx) of the Social Security Act, as added by 
subsection (a)) residing in such State bears to the total number 
of such individuals residing in all States, as of March 31, 
2025. 
(3) FUNDING.—There are appropriated, out of any monies 
in the Treasury not otherwise appropriated—
H. R. 1—244 
(A) $100,000,000 for fiscal year 2026 for purposes of 
awarding grants under paragraph (1)(A), to remain avail-
able until expended; and 
(B) $100,000,000 for fiscal year 2026 for purposes of 
award grants under paragraph (1)(B), to remain available 
until expended. 
(4) DEFINITION.—In this subsection, the term ‘‘State’’ means 
1 of the 50 States and the District of Columbia. 
(f) IMPLEMENTATION FUNDING.—For the purposes of carrying 
out the provisions of, and the amendments made by, this section, 
there are appropriated, out of any monies in the Treasury not 
otherwise appropriated, to the Administrator of the Centers for 
Medicare & Medicaid Services, $200,000,000 for fiscal year 2026, 
to remain available until expended. 
SEC. 71120. MODIFYING COST SHARING REQUIREMENTS FOR CERTAIN 
EXPANSION INDIVIDUALS UNDER THE MEDICAID PRO-
GRAM. 
(a) IN GENERAL.—Section 1916 of the Social Security Act (42 
U.S.C. 1396o) is amended— 
(1) in subsection (a), in the matter preceding paragraph 
(1), by inserting ‘‘(other than, beginning October 1, 2028, speci-
fied individuals (as defined in subsection (k)(3)))’’ after ‘‘individ-
uals’’; and 
(2) by adding at the end the following new subsection: 
‘‘(k) SPECIAL RULES FOR CERTAIN EXPANSION INDIVIDUALS.— 
‘‘(1) PREMIUMS.—Beginning October 1, 2028, the State plan 
shall provide that in the case of a specified individual (as 
defined in paragraph (3)) who is eligible under the plan, no 
enrollment fee, premium, or similar charge will be imposed 
under the plan. 
‘‘(2) REQUIRED IMPOSITION OF COST SHARING.— 
‘‘(A) IN GENERAL.—Subject to subparagraph (B) and 
subsection (j), in the case of a specified individual, the 
State plan shall, beginning October 1, 2028, provide for 
the imposition of such deductions, cost sharing, or similar 
charges determined appropriate by the State (in an amount 
greater than $0) with respect to certain care, items, or 
services furnished to such an individual, as determined 
by the State. 
‘‘(B) LIMITATIONS.— 
‘‘(i) EXCLUSION OF CERTAIN SERVICES.—In no case 
may a deduction, cost sharing, or similar charge be 
imposed under the State plan with respect to care, 
items, or services described in any of subparagraphs 
(B) through (J) of subsection (a)(2), or any primary 
care services, mental health care services, substance 
use disorder services, or services provided by a Feder-
ally qualified health center (as defined in 1905(l)(2)), 
certified community behavioral health clinic (as defined 
in section 1905(jj)(2)), or rural health clinic (as defined 
in 1905(l)(1)), furnished to a specified individual. 
‘‘(ii) ITEM AND SERVICE LIMITATION.— 
‘‘(I) IN GENERAL.—Except as provided in sub-
clause (II), in no case may a deduction, cost 
sharing, or similar charge imposed under the State
H. R. 1—245 
plan with respect to care or an item or service 
furnished to a specified individual exceed $35. 
‘‘(II) 
SPECIAL
RULES
FOR
PRESCRIPTION 
DRUGS.—In no case may a deduction, cost sharing, 
or similar charge imposed under the State plan 
with respect to a prescription drug furnished to 
a specified individual exceed the limit that would 
be applicable under paragraph (2)(A)(i) or (2)(B) 
of section 1916A(c) with respect to such drug and 
individual if such drug so furnished were subject 
to cost sharing under such section. 
‘‘(iii) MAXIMUM LIMIT ON COST SHARING.—The total 
aggregate amount of deductions, cost sharing, or 
similar charges imposed under the State plan for all 
individuals in the family may not exceed 5 percent 
of the family income of the family involved, as applied 
on a quarterly or monthly basis (as specified by the 
State). 
‘‘(C) CASES
OF
NONPAYMENT.—Notwithstanding sub-
section (e), a State may permit a provider participating 
under the State plan to require, as a condition for the 
provision of care, items, or services to a specified individual 
entitled to medical assistance under this title for such 
care, items, or services, the payment of any deductions, 
cost sharing, or similar charges authorized to be imposed 
with respect to such care, items, or services. Nothing in 
this subparagraph shall be construed as preventing a pro-
vider from reducing or waiving the application of such 
deductions, cost sharing, or similar charges on a case- 
by-case basis. 
‘‘(3) SPECIFIED INDIVIDUAL DEFINED.—For purposes of this 
subsection, the term ‘specified individual’ means an individual 
who has a family income (as determined in accordance with 
section 1902(e)(14)) that exceeds the poverty line (as defined 
in section 2110(c)(5)) applicable to a family of the size involved 
and— 
‘‘(A) is enrolled under section 1902(a)(10)(A)(i)(VIII); 
or 
‘‘(B) is described in such subsection and otherwise 
enrolled under a waiver of the State plan that provides 
coverage that is equivalent to minimum essential coverage 
(as described in section 5000A(f)(1)(A) of the Internal Rev-
enue Code of 1986 and determined in accordance with 
standards prescribed by the Secretary in regulations) to 
all individuals described in section 1902(a)(10)(A)(i)(VIII). 
‘‘(4) STATE DEFINED.—For purposes of this subsection, the 
term ‘State’ means 1 of the 50 States or the District of 
Columbia.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) REQUIRED
APPLICATION.—Section 1902(a)(14) of the 
Social Security Act (42 U.S.C. 1396a(a)(14)) is amended by 
inserting ‘‘and provide for imposition of such deductions, cost 
sharing, or similar charges for care, items, or services furnished 
to specified individuals (as defined in paragraph (3) of section 
1916(k)) in accordance with paragraph (2) of such section’’ 
after ‘‘section 1916’’.
H. R. 1—246 
(2) NONAPPLICABILITY OF ALTERNATIVE COST SHARING.—Sec-
tion 1916A(a)(1) of the Social Security Act (42 U.S.C. 1396o– 
1(a)(1)) is amended, in the second sentence, by striking ‘‘or 
(j)’’ and inserting ‘‘(j), or (k)’’. 
(c) IMPLEMENTATION FUNDING.—For the purposes of carrying 
out the provisions of, and the amendments made by, this section, 
there are appropriated, out of any monies in the Treasury not 
otherwise appropriated, to the Administrator of the Centers for 
Medicare & Medicaid Services, $15,000,000 for fiscal year 2026, 
to remain available until expended. 
Subchapter E—Expanding Access to Care 
SEC. 71121. MAKING CERTAIN ADJUSTMENTS TO COVERAGE OF HOME 
OR COMMUNITY-BASED SERVICES UNDER MEDICAID. 
(a) EXPANDING
HCBS COVERAGE
UNDER
SECTION
1915(C) 
WAIVERS.—Section 1915(c) of the Social Security Act (42 U.S.C. 
1396n(c)) is amended— 
(1) in paragraph (3), by inserting ‘‘paragraph (11) or’’ before 
‘‘subsection (h)(2)’’; and 
(2) by adding at the end the following new paragraph: 
‘‘(11) EXPANDING COVERAGE FOR HOME OR COMMUNITY-BASED 
SERVICES.— 
‘‘(A) IN GENERAL.—Beginning July 1, 2028, notwithstanding 
paragraph (1), the Secretary may approve a waiver that is 
standalone from any other waiver approved under this sub-
section to include as medical assistance under the State plan 
of such State payment for part or all of the cost of home 
or community-based services (other than room and board (as 
described in paragraph (1))) approved by the Secretary which 
are provided pursuant to a written plan of care to individuals 
described in subparagraph (B)(iii). A waiver approved under 
this paragraph shall be for an initial term of 3 years and, 
upon the request of the State, shall be extended for additional 
5-year periods unless the Secretary determines that for the 
previous waiver period the requirements specified under this 
subsection (excluding those excepted under subparagraph (B)) 
have not been met. 
‘‘(B) STATE
REQUIREMENTS.—In addition to the require-
ments specified under this subsection (except for the require-
ments described in subparagraphs (C) and (D) of paragraph 
(2) and any other requirement specified under this subsection 
that the Secretary determines to be inapplicable in the context 
of a waiver that does not require individuals to have a deter-
mination described in paragraph (1)), a State shall meet the 
following requirements as a condition of waiver approval: 
‘‘(i) As of the date that such State requests a waiver 
under this subsection to provide home or community-based 
services to individuals described in clause (iii), all other 
waivers (if any) granted under this subsection to such 
State meet the requirements of this subsection. 
‘‘(ii) The State demonstrates to the Secretary that 
approval of a waiver under this subsection with respect 
to individuals described in clause (iii) will not result in 
a material increase of the average amount of time that 
individuals with respect to whom a determination described 
in paragraph (1) has been made will need to wait to receive
H. R. 1—247 
home or community-based services under any other waiver 
granted under this subsection, as determined by the Sec-
retary. 
‘‘(iii) The State establishes needs-based criteria, subject 
to the approval of the Secretary, regarding who will be 
eligible for home or community-based services under a 
waiver approved under this paragraph without requiring 
such individuals to have a determination described in para-
graph (1), and specifies the home or community-based serv-
ices such individuals so eligible will receive. 
‘‘(iv) The State establishes needs-based criteria for 
determining whether an individual described in clause (iii) 
requires the level of care provided in a hospital, nursing 
facility, or an intermediate care facility for individuals 
with developmental disabilities under the State plan or 
under any waiver of such plan that are more stringent 
than the needs-based criteria established under clause (iii) 
for determining eligibility for home or community-based 
services. 
‘‘(v) The State attests that the State’s average per 
capita expenditure for medical assistance under the State 
plan (or waiver of such plan) provided with respect to 
such individuals enrolled in a waiver under this paragraph 
will not exceed the State’s average per capita expenditure 
for medical assistance for individuals receiving institutional 
care under the State plan (or waiver of such plan) for 
the duration that the waiver under this paragraph is in 
effect. 
‘‘(vi) The State provides to the Secretary data (in such 
form and manner as the Secretary may specify) regarding 
the number of individuals described in clause (iii) with 
respect to a State seeking approval of a waiver under 
this subsection, to whom the State will make such services 
available under such waiver. 
‘‘(vii) The State agrees to provide to the Secretary, 
not less frequently than annually, data for purposes of 
paragraph (2)(E) (in such form and manner as the Secretary 
may specify) regarding, with respect to each preceding year 
in which a waiver under this subsection to provide home 
or community-based services to individuals described in 
clause (iii) was in effect— 
‘‘(I) the cost (as such term is defined by the Sec-
retary) of such services furnished to individuals 
described in clause (iii), broken down by type of service; 
‘‘(II) with respect to each type of home or commu-
nity-based service provided under the waiver, the 
length of time that such individuals have received such 
service; 
‘‘(III) a comparison between the data described 
in subclause (I) and any comparable data available 
with respect to individuals with respect to whom a 
determination described in paragraph (1) has been 
made and with respect to individuals receiving institu-
tional care under this title; and 
‘‘(IV) the number of individuals who have received 
home or community-based services under the waiver 
during the preceding year.
H. R. 1—248 
‘‘(C) LIMITATION
ON
PAYMENTS.—No payments made to 
carry out this paragraph shall be used by a State to make 
payments to a third party on behalf of an individual practitioner 
for benefits such as health insurance, skills training, and other 
benefits customary for employees, in the case of a class of 
practitioners for which the program established under this 
title is the primary source of revenue.’’. 
(b) IMPLEMENTATION FUNDING.— 
(1) IN GENERAL.—There are appropriated, out of any monies 
in the Treasury not otherwise appropriated, to the Adminis-
trator of the Centers for Medicare & Medicaid Services— 
(A) for fiscal year 2026, $50,000,000 for purposes of 
carrying out the provisions of, and the amendments made 
by, this section, to remain available until expended; and 
(B) for fiscal year 2027, $100,000,000 for purposes of 
making payments to States, subject to paragraph (2), to 
support State systems to deliver home or community-based 
services under section 1915(c) of the Social Security Act 
(42 U.S.C. 1396n(c)) (as amended by this section) or under 
section 1115 of such Act (42 U.S.C. 1315), to remain avail-
able until expended. 
(2) PAYMENTS
BASED
ON
STATE
HCBS
ELIGIBLE
POPU-
LATION.—Payments to States from amounts made available 
by paragraph (1)(B) shall be made, with respect to a State, 
on the basis of the proportion of the population of the State 
that is receiving home or community-based services under 
section1915(c) of the Social Security Act (42 U.S.C. 1396n(c)) 
(as amended by this section) or under section 1115 of such 
Act (42 U.S.C. 1315), as compared to all States. 
CHAPTER 2—MEDICARE 
Subchapter A—Strengthening Eligibility Requirements 
SEC. 71201. LIMITING MEDICARE COVERAGE OF CERTAIN INDIVID-
UALS. 
Title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) 
is amended by adding at the end the following new section: 
‘‘SEC. 1899C. LIMITING MEDICARE COVERAGE OF CERTAIN INDIVID-
UALS. 
‘‘(a) IN GENERAL.—Subject to subsection (b), an individual 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 permanent resi-
dence under the Immigration and Nationality Act; 
‘‘(3) an alien who has been granted the status of Cuban 
and Haitian entrant, as defined in section 501(e) of the Refugee 
Education Assistance Act of 1980 (Public Law 96–422); 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 the Personal Responsibility and 
Work Opportunity Reconciliation Act of 1996. 
‘‘(b) APPLICATION TO INDIVIDUALS CURRENTLY ENTITLED TO OR 
ENROLLED FOR BENEFITS.—
H. R. 1—249 
‘‘(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 18 months after such date of 
enactment. 
‘‘(2) REVIEW BY COMMISSIONER OF SOCIAL SECURITY.— 
‘‘(A) IN
GENERAL.—Not later than 1 year 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 identifying 
individuals not described in any of paragraphs (1) through 
(4) of subsection (a). 
‘‘(B) NOTICE.—The Commissioner of Social Security 
shall notify each individual identified under the review 
conducted under subparagraph (A) that such individual’s 
entitlement to, or enrollment for, benefits under this title 
will be terminated as of the date that is 18 months after 
the date of the enactment of this section. Such notification 
shall be made as soon as practicable after such identifica-
tion and in a manner designed to ensure such individual’s 
comprehension of such notification.’’. 
Subchapter B—Improving Services for Seniors 
SEC. 71202. TEMPORARY PAYMENT INCREASE UNDER THE MEDICARE 
PHYSICIAN FEE SCHEDULE TO ACCOUNT FOR EXCEP-
TIONAL CIRCUMSTANCES. 
(a) IN GENERAL.—Section 1848(t) of the Social Security Act 
(42 U.S.C. 1395w–4(t)) is amended— 
(1) in the subsection heading, by striking ‘‘DURING 2021 
THROUGH 2024’’; 
(2) in paragraph (1)— 
(A) in the matter preceding subparagraph (A), by 
striking ‘‘and 2024’’ and inserting ‘‘2024, and 2026’’; 
(B) in subparagraph (D), by striking ‘‘and’’ at the end; 
(C) in subparagraph (E), by striking the period at 
the end and inserting ‘‘; and’’; and 
(D) by adding at the end the following new subpara-
graph: 
‘‘(F) such services furnished on or after January 1, 
2026, and before January 1, 2027, by 2.5 percent.’’; and 
(3) in paragraph (2)(C)— 
(A) in the subparagraph heading, by inserting ‘‘AND 
2026’’ after ‘‘2024’’; and 
(B) by striking ‘‘or 2024’’ each place it appears and 
inserting ‘‘2024, or 2026’’. 
(b) CONFORMING AMENDMENT.—Section 1848(c)(2)(B)(iv)(V) of 
the Social Security Act (42 U.S.C. 1395w–4(c)(2)(B)(iv)(V)) is 
amended by striking ‘‘or 2024’’ and inserting ‘‘2024, or 2026’’. 
SEC. 71203. EXPANDING AND CLARIFYING THE EXCLUSION FOR 
ORPHAN DRUGS UNDER THE DRUG PRICE NEGOTIATION 
PROGRAM. 
(a) IN GENERAL.—Section 1192(e) of the Social Security Act 
(42 U.S.C. 1320f–1(e)) is amended—
H. R. 1—250 
(1) in paragraph (1), in the matter preceding subparagraph 
(A), by striking ‘‘and (3)’’ and inserting ‘‘through (4)’’; 
(2) in paragraph (3)(A)— 
(A) by striking ‘‘only one rare disease or condition’’ 
and inserting ‘‘one or more rare diseases or conditions’’; 
and 
(B) by striking ‘‘such disease or condition’’ and inserting 
‘‘one or more such rare diseases or conditions (as such 
term is defined in section 526(a)(2) of the Federal Food, 
Drug, and Cosmetic Act)’’; and 
(3) by adding at the end the following new paragraph: 
‘‘(4) TREATMENT OF FORMER ORPHAN DRUGS.—In the case 
of a drug or biological product that, as of the date of the 
approval or licensure of such drug or biological product, is 
a drug or biological product described in paragraph (3)(A), 
paragraph (1)(A)(ii) or (1)(B)(ii) (as applicable) shall apply as 
if the reference to ‘the date of such approval’ or ‘the date 
of such licensure’, respectively, were instead a reference to 
‘the first day after the date of such approval for which such 
drug is not a drug described in paragraph (3)(A)’ or ‘the first 
day after the date of such licensure for which such biological 
product is not a biological product described in paragraph 
(3)(A)’, respectively.’’. 
(b) APPLICATION.—The amendments made by subsection (a) 
shall apply with respect to initial price applicability years (as 
defined in section 1191(b) of the Social Security Act (42 U.S.C. 
1320f(b))) beginning on or after January 1, 2028. 
CHAPTER 3—HEALTH TAX 
Subchapter A—Improving Eligibility Criteria 
SEC. 71301. 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 present, are not eligible 
aliens’’ after ‘‘individuals who are not lawfully present’’. 
(b) ELIGIBLE ALIENS.—Section 36B(e)(2) is amended— 
(1) by striking ‘‘For purposes of this section, an individual’’ 
and inserting ‘‘For purposes of this section— 
‘‘(A) IN GENERAL.—An individual’’, and 
(2) by adding at the end the following new subparagraph: 
‘‘(B) ELIGIBLE ALIENS.—An individual who is an alien 
and lawfully present shall be treated as an eligible alien 
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 perma-
nent residence under the Immigration and Nationality 
Act (8 U.S.C. 1101 et seq.), 
‘‘(ii) an alien who has been granted the status 
of Cuban and Haitian entrant, as defined in section 
501(e) of the Refugee Education Assistance Act of 1980 
(Public Law 96–422); or 
‘‘(iii) 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 the
H. R. 1—251 
Personal Responsibility and Work Opportunity Rec-
onciliation 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 striking ‘‘and’’ at 
the end; 
(II) in subparagraph (B), by adding ‘‘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);’’; 
(B) in subsection (b)(3), by adding at the end the fol-
lowing new subparagraph: 
‘‘(D) IMMIGRATION STATUS.—In the case the individual’s 
eligibility is based on an attestation 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 individual described 
in clause (i)(I) with respect to whom a premium 
tax credit under section 36B of the Internal Rev-
enue Code of 1986 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 inserting before the period at the end the fol-
lowing: ‘‘, or credits under section 36B of the Internal Revenue 
Code of 1986 for aliens who are not eligible aliens (within 
the meaning of section 36B(e)(2) of such Code)’’. 
(3) EFFECTIVE DATE.—The amendments made by this sub-
section shall apply with respect to plan years beginning on 
or after January 1, 2027. 
(d) REQUIREMENT
TO MAINTAIN MINIMUM ESSENTIAL COV-
ERAGE.—Section 5000A(d)(3) is amended by striking ‘‘an alien law-
fully present in the United States’’ and inserting ‘‘an eligible alien 
(within the meaning of section 36B(e)(2))’’. 
(e) EFFECTIVE DATE.—The amendments made by this section 
(other than the amendments made by subsection (c)) shall apply 
to taxable years beginning after December 31, 2026. 
SEC. 71302. 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).
H. R. 1—252 
(b) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 2025. 
Subchapter B—Preventing Waste, Fraud, and Abuse 
SEC. 71303. REQUIRING VERIFICATION OF ELIGIBILITY FOR PREMIUM 
TAX CREDIT. 
(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 individual covered by a 
qualified health plan enrolled in through an Exchange, 
any month beginning before the Exchange verifies, using 
applicable enrollment information that shall be provided 
or verified by the applicant, such individual’s eligibility— 
‘‘(i) to enroll in the plan through the Exchange, 
and 
‘‘(ii) for any advance payment under section 1412 
of the Patient Protection and Affordable Care Act of 
the credit allowed under this section. 
‘‘(B) APPLICABLE ENROLLMENT INFORMATION.—For pur-
poses of subparagraph (A), applicable enrollment informa-
tion shall include affirmation of at least the following 
information (to the extent relevant in determining eligi-
bility described in subparagraph (A)): 
‘‘(i) Household income and family size. 
‘‘(ii) Whether the individual is an eligible alien. 
‘‘(iii) Any health coverage status or eligibility for 
coverage. 
‘‘(iv) Place of residence. 
‘‘(v) Such other information as may be determined 
by the Secretary (in consultation 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 cov-
erage month if the Exchange verifies for such month (using 
applicable enrollment information that shall be provided 
or verified by the applicant) such individual’s eligibility 
to have so enrolled and for any such advance payment. 
‘‘(D) EXCHANGE
PARTICIPATION; COORDINATION
WITH 
OTHER
PROCEDURES
FOR
DETERMINING
ELIGIBILITY.—An 
individual shall not, solely by reason of failing to meet 
the requirements of this paragraph with respect to a month, 
be treated for such month as ineligible to enroll in a quali-
fied health plan through an Exchange. 
‘‘(E) WAIVER
FOR
CERTAIN
SPECIAL
ENROLLMENT 
PERIODS.—The Secretary may waive the application of 
subparagraph (A) in the case of an individual who enrolls 
in a qualified health plan through an Exchange for 1 or 
more months of the taxable year during a special enroll-
ment period provided by the Exchange on the basis of 
a change in the family size of the individual. 
‘‘(F) INFORMATION
AND
RELIANCE
ON
THIRD-PARTY 
SOURCES.—An Exchange shall be permitted to use any
H. R. 1—253 
data available to the Exchange and any reliable third- 
party sources in collecting information for verification by 
the applicant. 
‘‘(6) EXCHANGE COMPLIANCE WITH FILING REQUIREMENTS.— 
The term ‘coverage month’ shall not include, with respect to 
any individual covered by a qualified health plan enrolled in 
through an Exchange, any month for which the Exchange does 
not meet the requirements of section 155.305(f)(4)(iii) of title 
45, Code of Federal Regulations (as published in the Federal 
Register on June 25, 2025 (90 Fed. Reg. 27074), applied as 
though it applied to all plan years after 2025), with respect 
to the individual.’’. 
(b) PRE-ENROLLMENT VERIFICATION PROCESS REQUIRED.—Sec-
tion 36B(c)(3)(A) is amended— 
(1) by striking ‘‘HEALTH PLAN.—The term’’ and inserting 
‘‘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 household income and eligibility for 
enrollment in such plan for plan years beginning in 
the subsequent year.’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 2027. 
SEC. 71304. DISALLOWING PREMIUM TAX CREDIT IN CASE OF CERTAIN 
COVERAGE ENROLLED IN DURING SPECIAL ENROLL-
MENT PERIOD. 
(a) IN GENERAL.—Section 36B(c)(3)(A), as amended by the pre-
ceding provisions of this Act, is amended by adding at the end 
the following new clause: 
‘‘(iii) EXCEPTION
IN
CASE
OF
CERTAIN
SPECIAL 
ENROLLMENT PERIODS.—Such term shall not include 
any plan enrolled in during a special enrollment period 
provided for by an Exchange— 
‘‘(I) on the basis of the relationship of the 
individual’s expected household income to such a 
percentage of the poverty line (or such other 
amount) as is prescribed by the Secretary 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 Secretary of Health and Human Services for 
such purposes.’’. 
(b) EFFECTIVE DATE.—The amendments made by this section 
shall apply with respect to plan years beginning after December 
31, 2025. 
SEC. 71305. ELIMINATING LIMITATION ON RECAPTURE OF ADVANCE 
PAYMENT OF PREMIUM TAX CREDIT. 
(a) IN GENERAL.—Section 36B(f)(2) is amended by striking 
subparagraph (B).
H. R. 1—254 
(b) CONFORMING AMENDMENTS.— 
(1) Section 36B(f)(2) is amended by striking ‘‘ADVANCE PAY-
MENTS.—’’ and all that follows through ‘‘If the advance pay-
ments’’ and inserting the following: ‘‘ADVANCE PAYMENTS.—If 
the advance 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 determined 
under clause (i) shall be substituted for the amount determined 
under section 36B(f)(2)’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 2025. 
Subchapter C—Enhancing Choice for Patients 
SEC. 71306. PERMANENT EXTENSION OF SAFE HARBOR FOR ABSENCE 
OF DEDUCTIBLE FOR TELEHEALTH SERVICES. 
(a) IN GENERAL.—Subparagraph (E) of section 223(c)(2) is 
amended to read as follows: 
‘‘(E) SAFE HARBOR FOR ABSENCE OF DEDUCTIBLE FOR 
TELEHEALTH.—A plan shall not fail to be treated as a 
high deductible health plan by reason of failing to have 
a deductible for telehealth and other remote care services.’’. 
(b) CERTAIN COVERAGE DISREGARDED.—Clause (ii) of section 
223(c)(1)(B) is amended by striking ‘‘(in the case of months or 
plan years to which paragraph (2)(E) applies)’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to plan years beginning after December 31, 2024. 
SEC. 71307. ALLOWANCE OF BRONZE AND CATASTROPHIC PLANS IN 
CONNECTION WITH HEALTH SAVINGS ACCOUNTS. 
(a) IN GENERAL.—Section 223(c)(2) is amended by adding at 
the end the following new subparagraph: 
‘‘(H) BRONZE
AND
CATASTROPHIC
PLANS
TREATED
AS 
HIGH DEDUCTIBLE HEALTH PLANS.—The term ‘high deduct-
ible health plan’ shall include any plan which is— 
‘‘(i) available as individual coverage through an 
Exchange established under section 1311 or 1321 of 
the Patient Protection and Affordable Care Act, and 
‘‘(ii) described in subsection (d)(1)(A) or (e) of sec-
tion 1302 of such Act.’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to months beginning after December 31, 2025. 
SEC. 
71308. 
TREATMENT 
OF 
DIRECT 
PRIMARY 
CARE 
SERVICE 
ARRANGEMENTS. 
(a) IN GENERAL.—Section 223(c)(1) is amended by adding at 
the end the following new subparagraph: 
‘‘(E) TREATMENT
OF
DIRECT
PRIMARY
CARE
SERVICE 
ARRANGEMENTS.— 
‘‘(i) IN GENERAL.—A direct primary care service 
arrangement shall not be treated as a health plan 
for purposes of subparagraph (A)(ii). 
‘‘(ii) DIRECT
PRIMARY
CARE
SERVICE
ARRANGE-
MENT.—For purposes of this subparagraph— 
‘‘(I) IN
GENERAL.—The term ‘direct primary 
care service arrangement’ means, with respect to
H. R. 1—255 
any individual, an arrangement under which such 
individual is provided medical care (as defined in 
section 213(d)) consisting solely of primary care 
services provided by primary care practitioners (as 
defined in section 1833(x)(2)(A) of the Social Secu-
rity Act, determined without regard to clause (ii) 
thereof), if the sole compensation for such care 
is a fixed periodic fee. 
‘‘(II) LIMITATION.—With respect to any indi-
vidual for any month, such term shall not include 
any arrangement if the aggregate fees for all direct 
primary care service arrangements (determined 
without regard to this subclause) with respect to 
such individual for such month exceed $150 (twice 
such dollar amount in the case of an individual 
with any direct primary care service arrangement 
(as so determined) that covers more than one indi-
vidual). 
‘‘(iii) CERTAIN
SERVICES
SPECIFICALLY
EXCLUDED 
FROM
TREATMENT
AS
PRIMARY
CARE
SERVICES.—For 
purposes of this subparagraph, the term ‘primary care 
services’ shall not include— 
‘‘(I) procedures that require the use of general 
anesthesia, 
‘‘(II) prescription drugs (other than vaccines), 
and 
‘‘(III) laboratory services not typically adminis-
tered in an ambulatory primary care setting. 
The Secretary, after consultation with the Secretary 
of Health and Human Services, shall issue regulations 
or other guidance regarding the application of this 
clause.’’. 
(b) DIRECT
PRIMARY
CARE
SERVICE
ARRANGEMENT
FEES 
TREATED AS MEDICAL EXPENSES.—Section 223(d)(2)(C) is amended 
by striking ‘‘or’’ at the end of clause (iii), by striking the period 
at the end of clause (iv) and inserting ‘‘, or’’, and by adding at 
the end the following new clause: 
‘‘(v) any direct primary care service arrangement.’’. 
(c) INFLATION ADJUSTMENT.—Section 223(g)(1) is amended— 
(1) by striking ‘‘in subsections (b)(2) and (c)(2)(A)’’ and 
inserting ‘‘in subsections (b)(2), (c)(2)(A), and in the case of 
taxable years beginning after 2026, (c)(1)(E)(ii)(II)’’, 
(2) in subparagraph (B), by striking ‘‘clause (ii)’’ in clause 
(i) and inserting ‘‘clauses (ii) and (iii)’’, by striking ‘‘and’’ at 
the end of clause (i), by striking the period at the end of 
clause (ii) and inserting ‘‘, and’’, and by inserting after clause 
(ii) the following new clause: 
‘‘(iii) in the case of the dollar amount in subsection 
(c)(1)(E)(ii)(II), ‘calendar year 2025’.’’, and 
(3) by inserting ‘‘, (c)(1)(E)(ii)(II),’’ after ‘‘(b)(2)’’ in the last 
sentence. 
(d) EFFECTIVE DATE.—The amendments made by this section 
shall apply to months beginning after December 31, 2025.
H. R. 1—256 
CHAPTER 4—PROTECTING RURAL HOSPITALS AND 
PROVIDERS 
SEC. 71401. RURAL HEALTH TRANSFORMATION PROGRAM. 
(a) IN GENERAL.—Section 2105 of the Social Security Act (42 
U.S.C. 1397ee) is amended by adding at the end the following 
new subsection: 
‘‘(h) RURAL HEALTH TRANSFORMATION PROGRAM.— 
‘‘(1) APPROPRIATION.— 
‘‘(A) IN GENERAL.—There are appropriated, out of any 
money in the Treasury not otherwise appropriated, to the 
Administrator of the Centers for Medicare & Medicaid Serv-
ices (in this subsection referred to as the ‘Administrator’), 
to provide allotments to States for purposes of carrying 
out the activities described in paragraph (6)— 
‘‘(i) $10,000,000,000 for fiscal year 2026; 
‘‘(ii) $10,000,000,000 for fiscal year 2027; 
‘‘(iii) $10,000,000,000 for fiscal year 2028; 
‘‘(iv) $10,000,000,000 for fiscal year 2029; and 
‘‘(v) $10,000,000,000 for fiscal year 2030. 
‘‘(B) UNEXPENDED OR UNOBLIGATED FUNDS.— 
‘‘(i) IN
GENERAL.—Any amounts appropriated 
under subparagraph (A) that are unexpended or unobli-
gated as of October 1, 2032, shall be returned to the 
Treasury of the United States. 
‘‘(ii) REDISTRIBUTION OF UNEXPENDED OR UNOBLI-
GATED FUNDS.—In carrying out subparagraph (A), the 
Administrator shall, not later than March 31, 2028, 
and annually thereafter through March 31, 2032, deter-
mine the amount of funds, if any, that are available 
under such subparagraph for a previous fiscal year, 
are unexpended or unobligated with respect to such 
fiscal year, and will not be available to a State in 
the current fiscal year, pursuant to clause (iii). 
‘‘(iii) AVAILABILITY OF FUNDS.— 
‘‘(I) IN GENERAL.—Amounts allotted to a State 
under this subsection for a year shall be available 
for expenditure by the State through the end of 
the fiscal year following the fiscal year in which 
such amounts are allotted. 
‘‘(II) AVAILABILITY
OF
AMOUNTS
REDISTRIB-
UTED.—Amounts redistributed to a State under 
clause (ii) with respect to a fiscal year shall be 
available for expenditure by the State through the 
end of the fiscal year following the fiscal year 
in which such amounts are redistributed (except 
in the case of amounts redistributed in fiscal year 
2032 which shall only be available for expenditure 
through September 30, 2032). 
‘‘(iv) MISUSE
OF
FUNDS.—If the Administrator 
determines that a State is not using amounts allotted 
or redistributed to the State under this subsection 
in a manner consistent with the description provided 
by the State in its application approved under para-
graph (2), the Administrator may withhold payments 
to, or reduce payments to, or recover previous pay-
ments from, the State under this subsection as the
H. R. 1—257 
Administrator deems appropriate, and any amounts 
so withheld, or that remain after any such reduction, 
or so recovered, shall be returned to the Treasury 
of the United States. 
‘‘(2) APPLICATION.— 
‘‘(A) IN GENERAL.—To be eligible for an allotment under 
this subsection, a State shall submit to the Administrator 
during an application submission period to be specified 
by the Administrator (but that ends not later than 
December 31, 2025) an application in such form and 
manner as the Administrator may specify, that includes— 
‘‘(i) a detailed rural health transformation plan— 
‘‘(I) to improve access to hospitals, other health 
care providers, and health care items and services 
furnished to rural residents of the State; 
‘‘(II) to improve health care outcomes of rural 
residents of the State; 
‘‘(III) to prioritize the use of new and emerging 
technologies 
that 
emphasize 
prevention 
and 
chronic disease management; 
‘‘(IV) to initiate, foster, and strengthen local 
and regional strategic partnerships between rural 
hospitals and other health care providers in order 
to promote measurable quality improvement, 
increase financial stability, maximize economies 
of scale, and share best practices in care delivery; 
‘‘(V) to enhance economic opportunity for, and 
the supply of, health care clinicians through 
enhanced recruitment and training; 
‘‘(VI) to prioritize data and technology driven 
solutions that help rural hospitals and other rural 
health care providers furnish high-quality health 
care services as close to a patient’s home as is 
possible; 
‘‘(VII) that outlines strategies to manage long- 
term financial solvency and operating models of 
rural hospitals in the State; and 
‘‘(VIII) that identifies specific causes driving 
the accelerating rate of stand-alone rural hospitals 
becoming at risk of closure, conversion, or service 
reduction; 
‘‘(ii) a certification that none of the amounts pro-
vided under this subsection shall be used by the State 
for an expenditure that is attributable to an intergov-
ernmental transfer, certified public expenditure, or any 
other expenditure to finance the non-Federal share 
of expenditures required under any provision of law, 
including under the State plan established under this 
title, the State plan established under title XIX, or 
under a waiver of such plans; and 
‘‘(iii) such other information as the Administrator 
may require. 
‘‘(B) 
DEADLINE
FOR
APPROVAL.—Not 
later 
than 
December 31, 2025, the Administrator shall approve or 
deny all applications submitted for an allotment under 
this subsection.
H. R. 1—258 
‘‘(C) ONE-TIME
APPLICATION.—If an application of a 
State for an allotment under this subsection is approved 
by the Administrator, the State shall be eligible for an 
allotment under this subsection for each of fiscal years 
2026 through 2030, except as provided in paragraph 
(1)(B)(iv). 
‘‘(D) ELIGIBILITY.—Only the 50 States shall be eligible 
for an allotment under this subsection and all references 
in this subsection to a State shall be treated as only refer-
ring to the 50 States. 
‘‘(3) ALLOTMENTS.— 
‘‘(A) IN
GENERAL.—For each of fiscal years 2026 
through 2030, the Administrator shall determine under 
subparagraph (B) the amount of the allotment for such 
fiscal year for each State with an approved application 
under this subsection. 
‘‘(B) AMOUNT DETERMINED.—Subject to subparagraph 
(C), from the amounts appropriated under paragraph (1)(A) 
for each of fiscal years 2026 through 2030, the Adminis-
trator shall allot— 
‘‘(i) 50 percent of the amounts appropriated for 
each such fiscal year equally among all States with 
an approved application under this subsection; and 
‘‘(ii) 50 percent of the amounts appropriated for 
each such fiscal year among all such States in an 
amount to be determined by the Administrator in 
accordance with subparagraph (C). 
‘‘(C) REQUIREMENTS.—In determining the amount to 
be allotted to a State under clause (ii) of subparagraph 
(B) for a fiscal year, the Administrator shall— 
‘‘(i) ensure that not less than 1⁄4 of the States 
with an approved application under this subsection 
for a fiscal year are allotted funds from amounts that 
are to be allotted under clause (ii) of such subpara-
graph; and 
‘‘(ii) consider— 
‘‘(I) the percentage of the State population that 
is located in a rural census tract of a metropolitan 
statistical area (as determined under the most 
recent modification of the Goldsmith Modification, 
originally published in the Federal Register on 
February 27, 1992 (57 Fed. Reg. 6725)); 
‘‘(II) the proportion of rural health facilities 
(as defined in subparagraph (D)) in the State rel-
ative to the number of rural health facilities 
nationwide; 
‘‘(III) the situation of hospitals in the State, 
as described in section 1902(a)(13)(A)(iv); and 
‘‘(IV) any other factors that the Administrator 
determines appropriate. 
‘‘(D) RURAL HEALTH FACILITY DEFINED.—For the pur-
poses of subparagraph (C)(ii), the term ‘rural health facility’ 
means the following: 
‘‘(i) A subsection (d) hospital (as defined in para-
graph (1)(B) of section 1886(d)) that— 
‘‘(I) is located in a rural area (as defined in 
paragraph (2)(D) of such section);
H. R. 1—259 
‘‘(II) is treated as being located in a rural 
area pursuant to paragraph (8)(E) of such section; 
or 
‘‘(III) is located in a rural census tract of a 
metropolitan statistical area (as determined under 
the most recent modification of the Goldsmith 
Modification, originally published in the Federal 
Register on February 27, 1992 (57 Fed. Reg. 6725)). 
‘‘(ii) A critical access hospital (as defined in section 
1861(mm)(1)). 
‘‘(iii) A sole community hospital (as defined in sec-
tion 1886(d)(5)(D)(iii)). 
‘‘(iv) A Medicare-dependent, small rural hospital 
(as defined in section 1886(d)(5)(G)(iv)). 
‘‘(v) A low-volume hospital (as defined in section 
1886(d)(12)(C)). 
‘‘(vi) A rural emergency hospital (as defined in 
section 1861(kkk)(2)). 
‘‘(vii) A rural health clinic (as defined in section 
1861(aa)(2)). 
‘‘(viii) A Federally qualified health center (as 
defined in section 1861(aa)(4)). 
‘‘(ix) A community mental health center (as defined 
in section 1861(ff)(3)(B)). 
‘‘(x) A health center that is receiving a grant under 
section 330 of the Public Health Service Act. 
‘‘(xi) An opioid treatment program (as defined in 
section 1861(jjj)(2)) that is located in a rural census 
tract of a metropolitan statistical area (as determined 
under the most recent modification of the Goldsmith 
Modification, originally published in the Federal Reg-
ister on February 27, 1992 (57 Fed. Reg. 6725)). 
‘‘(xii) A certified community behavioral health 
clinic (as defined in section 1905(jj)(2)) that is located 
in a rural census tract of a metropolitan statistical 
area (as determined under the most recent modification 
of the Goldsmith Modification, originally published in 
the Federal Register on February 27, 1992 (57 Fed. 
Reg. 6725)). 
‘‘(4) NO MATCHING PAYMENT.—A State approved for an allot-
ment under this subsection for a fiscal year shall not be 
required to provide any matching funds as a condition for 
receiving payments from the allotment. 
‘‘(5) TERMS
AND
CONDITIONS.—The Administrator shall 
specify such terms and conditions for allotments to States pro-
vided under this subsection as the Administrator deems appro-
priate, including the following: 
‘‘(A) Each State shall submit to the Administrator (at 
a time, and in a form and manner, specified by the Adminis-
trator)— 
‘‘(i) a plan for the State to use its allotment to 
carry out 3 or more of the activities described in para-
graph (6); and 
‘‘(ii) annual reports on the use of allotments, 
including such additional information as the Adminis-
trator determines appropriate.
H. R. 1—260 
‘‘(B) Not more than 10 percent of the amount allotted 
to a State for a fiscal year may be used by the State 
for administrative expenses. 
‘‘(6) USE OF FUNDS.—Amounts allotted to a State under 
this subsection shall be used for 3 or more of the following 
health-related activities: 
‘‘(A) Promoting evidence-based, measurable interven-
tions to improve prevention and chronic disease manage-
ment. 
‘‘(B) Providing payments to health care providers for 
the provision of health care items or services, as specified 
by the Administrator. 
‘‘(C) Promoting consumer-facing, technology-driven 
solutions for the prevention and management of chronic 
diseases. 
‘‘(D) Providing training and technical assistance for 
the development and adoption of technology-enabled solu-
tions that improve care delivery in rural hospitals, 
including remote monitoring, robotics, artificial intel-
ligence, and other advanced technologies. 
‘‘(E) Recruiting and retaining clinical workforce talent 
to rural areas, with commitments to serve rural commu-
nities for a minimum of 5 years. 
‘‘(F) Providing technical assistance, software, and hard-
ware for significant information technology advances 
designed to improve efficiency, enhance cybersecurity capa-
bility development, and improve patient health outcomes. 
‘‘(G) Assisting rural communities to right size their 
health care delivery systems by identifying needed 
preventative, ambulatory, pre-hospital, emergency, acute 
inpatient care, outpatient care, and post-acute care service 
lines. 
‘‘(H) Supporting access to opioid use disorder treatment 
services (as defined in section 1861(jjj)(1)), other substance 
use disorder treatment services, and mental health serv-
ices. 
‘‘(I) Developing projects that support innovative models 
of care that include value-based care arrangements and 
alternative payment models, as appropriate. 
‘‘(J) Additional uses designed to promote sustainable 
access to high quality rural health care services, as deter-
mined by the Administrator. 
‘‘(7) EXEMPTIONS.—Paragraphs (2), (3), (5), (6), (8), (10), 
(11), and (12) of subsection (c) do not apply to payments under 
this subsection. 
‘‘(8) REVIEW.—There shall be no administrative or judicial 
review under section 1116 or otherwise of amounts allotted 
or redistributed to States under this subsection, payments to 
States withheld or reduced under this subsection, or previous 
payments recovered from States under this subsection. 
‘‘(9) HEALTH
CARE
PROVIDER
DEFINED.—For purposes of 
this subsection, the term ‘health care provider’ means a provider 
of services or supplier who is enrolled under this title, title 
XVIII, or title XIX.’’. 
(b) CONFORMING AMENDMENTS.—Title XXI of the Social Secu-
rity Act (42 U.S.C. 1397aa) is amended— 
(1) in section 2101—
H. R. 1—261 
(A) in subsection (a), in the matter preceding paragraph 
(1), by striking ‘‘The purpose’’ and inserting ‘‘Except with 
respect to the rural health transformation program estab-
lished in section 2105(h), the purpose’’; and 
(B) in subsection (b), in the matter preceding paragraph 
(1), by inserting ‘‘subsection (a) or (g) of’’ before ‘‘section 
2105’’; 
(2) in section 2105(c)(1), by striking ‘‘and may not include’’ 
and inserting ‘‘or to carry out the rural health transformation 
program established in subsection (h) and, except in the case 
of amounts made available under subsection (h), may not 
include’’; and 
(3) in section 2106(a)(1), by inserting ‘‘subsection (a) or 
(g) of’’ before ‘‘section 2105’’. 
(c) IMPLEMENTATION.—The Administrator of the Centers for 
Medicare & Medicaid Services shall implement this section, 
including the amendments made by this section, by program 
instruction or other forms of program guidance. 
(d) IMPLEMENTATION FUNDING.—For the purposes of carrying 
out the provisions of, and the amendments made by, this section, 
there are appropriated, out of any monies in the Treasury not 
otherwise appropriated, to the Administrator of the Centers for 
Medicare & Medicaid Services, $200,000,000 for fiscal year 2025, 
to remain available until expended. 
Subtitle C—Increase in Debt Limit 
SEC. 72001. MODIFICATION OF LIMITATION ON THE PUBLIC DEBT. 
The limitation under section 3101(b) of title 31, United States 
Code, as most recently increased by section 401(b) of Public Law 
118–5 (31 U.S.C. 3101 note), is increased by $5,000,000,000,000. 
Subtitle D—Unemployment 
SEC. 
73001. 
ENDING 
UNEMPLOYMENT 
PAYMENTS 
TO 
JOBLESS 
MILLIONAIRES. 
(a) PROHIBITION ON USE OF FEDERAL FUNDS.— 
(1) IN GENERAL.—No Federal funds may be used— 
(A) to make payments of unemployment compensation 
benefits under an unemployment compensation program 
of the United States in a year to an individual whose 
wages during the individual’s base period are equal to 
or exceed $1,000,000; or 
(B) for any administrative costs associated with making 
payments described in subparagraph (A). 
(2) COMPLIANCE.— 
(A) 
SELF-CERTIFICATION.—Any 
application 
for 
unemployment compensation under an unemployment com-
pensation program of the United States shall include a 
form or procedure for an individual applicant to certify 
that such individual’s wages during the individual’s base 
period do not equal or exceed $1,000,000. 
(B) VERIFICATION.—Each State agency that is respon-
sible for administering any unemployment compensation 
program of the United States shall utilize available systems
H. R. 1—262 
to verify wage eligibility by assessing claimant income to 
the degree possible. 
(3) RECOVERY OF OVERPAYMENTS.—Each State agency that 
is responsible for administering any unemployment compensa-
tion program of the United States shall require individuals 
who have received amounts of unemployment compensation 
under such a program to which they were not entitled to 
repay such amounts. 
(4) EFFECTIVE DATE.—The prohibition under paragraph (1) 
shall apply to weeks of unemployment beginning on or after 
the date of the enactment of this Act. 
(b) UNEMPLOYMENT COMPENSATION PROGRAM OF THE UNITED 
STATES DEFINED.—In this section, the term ‘‘unemployment com-
pensation program of the United States’’ means— 
(1) unemployment compensation for Federal civilian 
employees under subchapter I of chapter 85 of title 5, United 
States Code; 
(2) unemployment compensation for ex-servicemembers 
under subchapter II of chapter 85 of title 5, United States 
Code; 
(3) extended benefits under the Federal-State Extended 
Unemployment Compensation Act of 1970 (26 U.S.C. 3304 
note); 
(4) any Federal temporary extension of unemployment com-
pensation; 
(5) any Federal program that increases the weekly amount 
of unemployment compensation payable to individuals; and 
(6) any other Federal program providing for the payment 
of unemployment compensation, as determined by the Secretary 
of Labor. 
TITLE VIII—COMMITTEE ON HEALTH, 
EDUCATION, LABOR, AND PENSIONS 
Subtitle A—Exemption of Certain Assets 
SEC. 80001. EXEMPTION OF CERTAIN ASSETS. 
(a) EXEMPTION OF CERTAIN ASSETS.—Section 480(f)(2) of the 
Higher Education Act of 1965 (20 U.S.C. 1087vv(f)(2)) is amended— 
(1) by striking ‘‘net value of the’’ and inserting the following: 
‘‘net value of— 
‘‘(A) the’’; 
(2) by striking the period at the end and inserting a semi-
colon; and 
(3) by adding at the end the following: 
‘‘(B) a family farm on which the family resides; 
‘‘(C) a small business with not more than 100 full- 
time or full-time equivalent employees (or any part of such 
a small business) that is owned and controlled by the 
family; or 
‘‘(D) a commercial fishing business and related 
expenses, including fishing vessels and permits owned and 
controlled by the family.’’. 
(b) EFFECTIVE DATE AND APPLICATION.—The amendments made 
by subsection (a) shall take effect on July 1, 2026, and shall apply
H. R. 1—263 
with respect to award year 2026–2027 and each subsequent award 
year, as determined under the Higher Education Act of 1965 (20 
U.S.C. 1001 et seq.). 
Subtitle B—Loan Limits 
SEC. 81001. ESTABLISHMENT OF LOAN LIMITS FOR GRADUATE AND 
PROFESSIONAL STUDENTS AND PARENT BORROWERS; 
TERMINATION OF GRADUATE AND PROFESSIONAL PLUS 
LOANS. 
Section 455(a) of the Higher Education Act of 1965 (20 U.S.C. 
1087e(a)) is amended— 
(1) in paragraph (3)— 
(A) in the paragraph heading, by inserting ‘‘AND FED-
ERAL DIRECT PLUS LOANS’’ after ‘‘LOANS’’; 
(B) by striking subparagraph (A) and inserting the 
following: 
‘‘(A) TERMINATION OF AUTHORITY TO MAKE INTEREST 
SUBSIDIZED LOANS TO GRADUATE AND PROFESSIONAL STU-
DENTS.—Subject to subparagraph (B), and notwithstanding 
any provision of this part or part B— 
‘‘(i) for any period of instruction beginning on or 
after July 1, 2012, a graduate or professional student 
shall not be eligible to receive a Federal Direct Stafford 
loan under this part; and 
‘‘(ii) for any period of instruction beginning on 
July 1, 2012, and ending on June 30, 2026, the max-
imum annual amount of Federal Direct Unsubsidized 
Stafford loans such a student may borrow in any aca-
demic year (as defined in section 481(a)(2)) or its 
equivalent shall be the maximum annual amount for 
such student determined under section 428H, plus an 
amount equal to the amount of Federal Direct Stafford 
loans the student would have received in the absence 
of this subparagraph.’’; and 
(C) by adding at the end the following: 
‘‘(C) TERMINATION
OF
AUTHORITY
TO
MAKE
FEDERAL 
DIRECT PLUS LOANS TO GRADUATE AND PROFESSIONAL STU-
DENTS.—Subject to paragraph (8) and notwithstanding any 
provision of this part or part B, for any period of instruction 
beginning on or after July 1, 2026, a graduate or profes-
sional student shall not be eligible to receive a Federal 
Direct PLUS Loan under this part.’’; and 
(2) by adding at the end the following: 
‘‘(4) GRADUATE AND PROFESSIONAL ANNUAL AND AGGREGATE 
LIMITS
FOR
FEDERAL
DIRECT
UNSUBSIDIZED
STAFFORD
LOANS 
BEGINNING JULY 1, 2026.— 
‘‘(A) ANNUAL LIMITS BEGINNING JULY 1, 2026.—Subject 
to paragraphs (7)(A) and (8), beginning on July 1, 2026, 
the maximum annual amount of Federal Direct Unsub-
sidized Stafford loans— 
‘‘(i) a graduate student, who is not a professional 
student, may borrow in any academic year or its 
equivalent shall be $20,500; and 
‘‘(ii) a professional student may borrow in any 
academic year or its equivalent shall be $50,000.