End Double Taxation of Successful Consumer Claims Act
End Double Taxation of Successful Consumer Claims Act would expand the tax code’s “above-the-line” deduction for attorney fees and costs to include fees associated with consumer protection claims. Specifically, it amends the Internal Revenue Code so that attorney fees and court costs paid in connection with judgments or settlements stemming from consumer protection violations can be deducted “above the line” (i.e., subtracted from gross income to determine adjusted gross income, regardless of whether the taxpayer itemizes deductions). The bill also provides a broad, enumerated definition of what counts as a “consumer protection violation,” covering many federal consumer protection statutes, as well as certain common-law claims permitted under federal, state, or local law. The changes would apply to fees and costs paid in taxable years ending after enactment for judgments or settlements occurring in those years. The sponsors, led by Senator Cortez Masto, introduced the bill in February 2025.
Key Points
- 1Adds consumer protection claims to the above-the-line deduction: The first sentence of IRC Section 62(a)(20) would be amended to include “a claim of a consumer protection violation” as a basis for the deduction of attorney fees and costs.
- 2Broad definition of “consumer protection violation”: Section 62(f) defines the term to include violations of: various federal statutes (e.g., Truth in Lending Act, Fair Credit Reporting Act, Fair Debt Collection Practices Act, Real Estate Settlement Procedures Act, Magnuson-Moss Warranty Act, Servicemembers Civil Relief Act, EFTA, RESPA, etc.), plus any provision of federal, state, or local law (or common law claims) that enforces consumer protection or regulates consumer transactions, including unfair or deceptive practices.
- 3Effective date and scope: The tax benefit applies to attorney fees and court costs paid during taxable years ending after enactment for judgments or settlements occurring in those years.
- 4Purpose and rationale: The bill addresses what its sponsors describe as “double taxation” on successful consumer claims by ensuring qualified legal fees tied to consumer protection wins are deductible above the line, improving after-tax recovery for plaintiffs and potentially changing incentives for pursuing consumer claims.