HR 2802119th CongressIn Committee

Tax Relief from Tariffs and High Costs Act

Introduced: Apr 9, 2025

Standard Summary

Comprehensive overview in 1-2 paragraphs

The Tax Relief from Tariffs and High Costs Act would create a temporary, refundable individual income tax credit for the 2025 tax year. The credit would equal 10% of a taxpayer’s federal income tax liability for that year, but only for taxpayers with modified adjusted gross income (MAGI) at or below specified thresholds ($100,000 for single filers and $200,000 for joint filers). The bill defines “federal income tax liability” in a way that references the standard tax calculation and credits already allowed under the Internal Revenue Code. The credit would apply to taxable years beginning after December 31, 2024 and before January 1, 2026 (i.e., calendar year 2025) and would require conforming updates to the tax code and related statutes. In short, it offers a one-year, targeted tax cut intended to provide relief to lower- and middle-income individuals facing higher costs or tariffs, while limiting eligibility to higher-income households.

Key Points

1What it does: Establishes a new Section 36C in the Internal Revenue Code to provide a refundable credit equal to 10% of a taxpayer’s federal income tax liability for the 2025 tax year.
2Eligibility threshold: The credit is not available if a taxpayer’s modified adjusted gross income exceeds $100,000 for single filers or $200,000 for joint filers (no phase-out; a hard cutoff).
3Calculation & definitions: The credit is based on the taxpayer’s “federal income tax liability” as defined in the bill (the tax amount described in current tax sections minus other credits allowed under subpart A). The exact interaction with other credits is defined in the bill, but the intent is to credit a portion of the year’s tax liability.
4Effective period: Applies to taxable years beginning after December 31, 2024 and before January 1, 2026 (i.e., the 2025 tax year).
5Conforming changes: The bill adds 36C to cross-references in related statutes (e.g., sections 6211, 1324) and updates the table of sections to include the new credit.
6Policy framing: The bill is titled to reflect tariff-related cost relief but focuses on providing a one-year personal tax credit to eligible individuals.

Impact Areas

Primary group/area affected- Individual taxpayers with MAGI at or below the $100k (single) / $200k (joint) thresholds in 2025. They would receive a refundable credit equal to 10% of their federal income tax liability for 2025, potentially reducing their net tax burden for that year.Secondary group/area affected- Households with incomes above the thresholds would not receive the credit, so the relief would be limited to lower- and some middle-income filers. Taxpayers’ withholding and estimated tax payments could be influenced by the availability of an additional credit, though the exact effect would depend on individual withholding and liability patterns.Additional impacts- Revenue and budget: Introduces a temporary reduction in federal revenue for 2025 due to the refundable credit.- Administration: Requires IRS code updates and administrative guidance to implement Section 36C, including how the credit interacts with other credits and the precise calculation of “federal income tax liability” as defined in the bill.- Tax policy context: Creates a targeted, year-specific relief measure intended to offset higher costs or tariffs for lower- and middle-income earners, with a clear sunset after 2025 unless further legislation is enacted.

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