The Home Run for Kids Act would create a new nonrefundable tax credit (Sec. 25F) to help families pay for organized youth sports equipment. The credit equals the qualified organized sport equipment expenses paid or incurred for a dependent child (under 19) who participates in an organized sport program run primarily for unrelated individuals. The credit is capped at $200 per tax year and is phased out as modified adjusted gross income (MAGI) rises above $150,000, with the credit fully phased out at higher MAGI levels. The MAGI used for the phaseout includes certain foreign income exclusions. The program applies to tax years beginning after December 31, 2023. The credit is nonrefundable, meaning it can reduce tax liability to zero but cannot generate a refund or be carried forward.
Key Points
- 1New credit: Introduces a nonrefundable 25F credit for organized sport equipment expenses paid or incurred for a dependent child’s participation in an organized sport program.
- 2Credit amount and cap: The credit is limited to $200 per taxable year.
- 3Income-based phaseout: The credit is gradually reduced for MAGI above $150,000, using a proportional reduction tied to how far MAGI exceeds $150,000, and fully phased out as MAGI approaches $215,000 (approximate; exact math in the bill).
- 4Qualified expenses: Applies to equipment purchases or related equipment expenses for a dependent child (for whom the taxpayer can claim a dependent deduction under section 151(c)) participating in an organized sport, game, or hobby program conducted primarily for unrelated individuals under age 19.
- 5Program scope: The activity must be an organized program run by an entity other than a family member, intended for youth participation.
- 6Dependents and deduction: Requires the dependent to be someone for whom the taxpayer is allowed a deduction under section 151(c).
- 7Effective date: Applies to taxable years beginning after December 31, 2023.