Dependent Income Exclusion Act of 2021
Bill: S.148 | Sponsor: Sen. Cortez Masto, Catherine (D-NV)
Policy area: Taxation

Summary:
Dependent Income Exclusion Act of 2021
This bill excludes certain wages or self-employment earnings of a dependent of a taxpayer for purposes of determining the taxpayer's eligibility for premium tax credits used to purchase insurance on Patient Protection and Affordable Care Act exchanges. To qualify for the exclusion, the dependent must be under 18 years of age or have not attained age 24 during a specified five-year period, and be a full- or part-time student or apprentice or participant in a job training program.

To amend the Internal Revenue Code of 1986 to exclude certain dependent 
income when calculating modified adjusted gross income for the purposes 
                of eligibility for premium tax credits.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Dependent Income Exclusion Act of 
2021''.

SEC. 2. EXCLUSION OF CERTAIN DEPENDENT INCOME FOR PURPOSES OF PREMIUM 
              TAX CREDIT.

    (a) In General.--Paragraph (2) of section 36B(d) of the Internal 
Revenue Code of 1986 is amended by adding at the end the following new 
subparagraph:
                    ``(C) Exception for certain dependent income.--
                            ``(i) In general.--There shall not be taken 
                        into account under subparagraph (A)(ii) any 
                        wages (determined under section 3401(a)) or net 
                        earnings from self-employment (as defined in 
                        section 1402(a)) of any dependent of the 
                        taxpayer who--
                                    ``(I) has not attained age 18 as of 
                                the last day of the calendar year in 
                                which the taxable year of the taxpayer 
                                begins, or
                                    ``(II) has not attained age 24 as 
                                of the last day of such calendar year 
                                and, during each of 5 calendar months 
                                during such calendar year, is described 
                                in subparagraph (A) or (B) of section 
                                152(f)(2) (applied by substituting 
                                `part-time or full-time' for `full-
                                time' each place it appears, and by 
                                deeming any for-profit educational 
                                institution not to be an educational 
                                organization described in section 
                                170(b)(1)(A)(ii)), is participating in 
                                a qualified job-training program, or is 
                                participating in an apprenticeship 
                                program registered under the Act of 
                                August 16, 1937 (commonly known as the 
                                `National Apprenticeship Act'; 50 Stat. 
                                664, chapter 663; 29 U.S.C. 50 et 
                                seq.).
                            ``(ii) Qualified job-training program.--For 
                        purposes of this subparagraph, the term 
                        `qualified job-training program' means any 
                        program of training services described in 
                        section 134(c)(3) of the Workforce Innovation 
                        and Opportunity Act (29 U.S.C. 3174(c)(3)).
                            ``(iii) Limitation.--Clause (i) shall not 
                        apply to so much of the aggregate income of all 
                        dependents of the taxpayer as exceeds an amount 
                        equal to 15 percent of the modified adjusted 
                        gross income of the taxpayer.
                            ``(iv) Taxpayers residing in medicaid non-
                        expansion states.--In the case of a taxpayer 
                        residing in a State which (as of the first day 
                        of the taxable year) does not provide for 
                        eligibility under clause (i)(VIII) or (ii)(XX) 
                        of section 1902(a)(10)(A) of the Social 
                        Security Act for medical assistance under title 
                        XIX of such Act (or a waiver of the State plan 
                        approved under section 1115 of the Social 
                        Security Act), clause (i) shall apply to any 
                        dependent of such taxpayer only to the extent 
                        that the application of such clause would not 
                        reduce the household income below 100 percent 
                        of the amount equal to the poverty line for a 
                        family of the size involved.''.
    (b) Conforming Amendments.--
            (1) Clause (ii) of section 36B(d)(2)(A) of the Internal 
        Revenue Code of 1986 is amended by inserting ``, except as 
        provided in subparagraph (C),'' after ``individuals''.
            (2) Paragraph (3) of section 1411(b) of the Patient 
        Protection and Affordable Care Act (42 U.S.C. 18081) is amended 
        by adding at the end the following new subparagraph:
                    ``(D) Information regarding certain dependents.--
                Information regarding whether section 36B(d)(2)(C) will 
                apply to any individuals taken into account as members 
                of the household of the enrollee, and the amount of 
                income from employment of each such individual for the 
                taxable year described in subparagraph (A).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to credits allowed under section 36B of the Internal Revenue Code 
of 1986 for, and advance payments of credits under section 1412 of the 
Patient Protection and Affordable Care Act with respect to, taxable 
years beginning after the date of the enactment of this Act.
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