HR 2927119th CongressIn Committee

All-Americans Tax Relief Act of 2025

Introduced: Apr 17, 2025

Standard Summary

Comprehensive overview in 1-2 paragraphs

The All-Americans Tax Relief Act of 2025 would make sweeping changes to individual income taxes, aiming to significantly expand refundable credits and add a broad set of new above-the-line deductions. Key elements include a major expansion of the earned income tax credit (EITC) with higher percentages and maximum earned income amounts, and a substantially enhanced Child Tax Credit (CTC) that would be fully refundable. In addition, the bill creates several new above-the-line deductions (medical expenses for non-itemizers; daycare, commuting, tutoring, credit card interest, and rent), expands the medical deduction rules, and adds other provisions such as discharging indebtedness exclusions and an increased capital gains rate. Most of these changes are prospective, applying to tax years beginning after 2026 (with the EITC indexing provisions applying in later years). Overall, the bill shifts more tax relief toward low- and moderate-income households, while broadening eligibility for refundable benefits and adding numerous new deductions, potentially reducing federal revenue and increasing complexity.

Key Points

1Expansion of earned income tax credit (EITC)
2- Higher credit percentages based on number of qualifying children (approximately 38% with 1 child, 43% with 2, 45% with 3+; 30% with no qualifying children, higher for joint filers).
3- Increased maximum EITC amounts: up to $15,000 of earned income for those with 1 child, up to $20,000 for those with 2+ children; specific earned income and phaseout thresholds specified (e.g., $47,120 for joint filers, $40,000 otherwise).
4- Conforming, annual cost-of-living adjustments starting after 2026.
5- Applies to tax years beginning after 2026 (with indexing provisions phased in later).
6Child Tax Credit (CTC) made fully refundable
7- New Sec. 36D: credit equals $2,000 for each qualifying child (up to 3 qualifying children) plus $500 for each additional qualifying child.
8- Eligibility tied to the child’s Social Security number; under-17 requirement; new income-based phaseouts (start phasing out at MAGI thresholds of $110,000 joint, $75,000 other, $55,000 MFS) and a gradual reduction (sliding scale) of the credit as modified AGI rises.
9- Refundability meant to produce a refund even when tax liability is zero.
10- Other cross-references to the credit (e.g., possessions, anti-fraud provisions) remain aligned with full refundable treatment.
11Expanded above-the-line deductions (effective after 2026)
12- Medical expenses deduction expanded: no floor on medical deductions and allowed even if the taxpayer does not itemize.
13- Daycare expenses: new deduction for qualified daycare costs for dependents under age 7.
14- Commuting expenses: deduction for qualified commuting costs (public transit) with income phaseouts.
15- Tutoring expenses: deduction for tutoring services for dependents meeting certain public school criteria.
16- Credit card interest payments: deduction for interest on open-end credit plans (credit cards) up to a specified limit.
17- Rent deduction for primary residence: deduction for qualifying rent payments with an income-based phaseout.
18- All of these are designed to be available to non-itemizers as well, creating “above-the-line” relief.
19Other related provisions
20- Exclusion of discharge of indebtedness enhanced and reorganized (including coordination with insolvency-related exclusions).
21- Increase in capital gains tax rate to 25% (applies to years beginning after December 31, 2026).
22- Numerous conforming amendments to the Internal Revenue Code to accommodate the new credits and deductions, including cross-references with state possessions (Puerto Rico, American Samoa, etc.) and administrative provisions.
23Effective dates
24- Most provisions apply to taxable years beginning after December 31, 2026.
25- EITC provisions include indexing and phaseout mechanics that take effect in subsequent years as described in the bill.

Impact Areas

Primary group/area affected- Low- and moderate-income families, especially those with children, who would see larger refundable credits (EITC and CTC) and new above-the-line deductions.- Renters and households in transit-heavy areas due to rent and commuting deductions.- Families with dependents eligible for daycare, tutoring, and medical-expense considerations.Secondary group/area affected- Taxpayers who do not itemize deductions, who would now receive several additional above-the-line deductions (medical, daycare, commuting, tutoring, credit card interest, rent).- Employers and service sectors tied to daycare, tutoring, and commuting (public transit) services due to potential demand for deductions and credits.- State and local governments, and tax administration bodies, due to increased complexity, interactions with possessions, and new reporting requirements (SSN verification for qualifying children, coordination with mirror-code jurisdictions).Additional impacts- Revenue and fiscal effects: Expanding refundable credits and adding deductions would likely reduce federal revenue and could affect the deficit unless offset by other provisions.- Administrative complexity: The bill introduces multiple new sections and cross-references, creating complexity for taxpayers and IRS administration, including verification requirements for commuting expenses and child eligibility.- Behavior and eligibility considerations: Higher credits and new deductions could influence work incentives, housing choices, retirement planning, and family formation decisions; there are also anti-fraud and prior-claim restrictions for the child tax credit that some taxpayers must navigate.

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