What does Preamble of Working Americans’ Tax Cut Act do?

This bill, formally titled 'To amend the Internal Revenue Code of 1986 to make certain modifications in relation to the taxation of income required to fund basic living expenses, and for other purposes,' proposes modifications to the Internal Revenue Code of 1986. The bill aims to address the taxation of income used for basic living expenses.

What does SHORT TITLE. of Working Americans’ Tax Cut Act do?

This bill is formally titled the Working Americans' Tax Cut Act.

What does ALTERNATIVE MAXIMUM TAX FOR LOW-INCOME INDIVIDUALS. of Working Americans’ Tax Cut Act do?

This section amends the Internal Revenue Code of 1986 to establish an alternative maximum tax for low- and middle-income individuals. A 'qualified individual' is defined as someone whose modified adjusted gross income is less than 175 percent of the 'cost-of-living exemption'. The alternative maximum tax is calculated as 25.5 percent of the excess of the taxpayer's modified adjusted gross income over the cost-of-living exemption. The 'cost-of-living exemption' varies based on filing status (single, joint, or head of household). The 'annualized cost-of-living wage' is calculated using the Consumer Price Index for all urban consumers (CPI-U). Modified adjusted gross income includes adjustments like exclusions under sections 911, 931, or 933, and certain social security benefits. The amendments apply to taxable years beginning after December 31, 2025.

What does SURCHARGE ON HIGH INCOME INDIVIDUALS. of Working Americans’ Tax Cut Act do?

This section establishes a new surcharge on high-income individuals, added as Part VIII to Subchapter A of Chapter 1 of the Internal Revenue Code of 1986. The surcharge applies to taxpayers other than corporations and is calculated based on modified adjusted gross income exceeding certain thresholds. A 5% tax is imposed on income between $1,000,000 and $2,000,000, a 10% tax on income between $2,000,000 and $5,000,000, and a 12% tax on income exceeding $5,000,000. Dollar amounts are adjusted for inflation using the Consumer Price Index for All Urban Consumers (CPI-U), starting with the taxable year beginning after 2026. For taxpayers filing joint returns, the dollar amounts are increased by 50%. Modified adjusted gross income is defined as adjusted gross income reduced by investment interest deductions. Special rules apply to citizens and residents living abroad and to charitable trusts. The surcharge is not treated as a tax imposed by this chapter for purposes of determining certain credits. The amendments apply to taxable years beginning after December 31, 2025.

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Working Americans’ Tax Cut Act

Last updated: 3/12/2026 · Introduced: 3/12/2026

Author: Chris Van Hollen (D-MD)

TL;DR (AI)

The bill establishes an alternative maximum tax rate of 25.5% for low- and middle-income individuals whose modified adjusted gross income exceeds a cost-of-living exemption, calculated using the Consumer Price Index.
A new surcharge tax is imposed on high-income individuals, ranging from 5% to 12% on modified adjusted gross income exceeding $1,000,000, with thresholds adjusted for inflation.
The bill modifies the Internal Revenue Code of 1986 to apply these changes to taxable years beginning after December 31, 2025.

119th Congressin committeeHR. 7937(In Committee)Official page

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Other Sections

Includes provisions on preamble, short title., and 2 more.

4 sections

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