Lower Your Taxes Act

Lower Your Taxes Act This bill increases the earned income tax credit (EITC), replaces the child tax credit with an allowance, establishes a new dependent tax credit, limits the capital gains tax rates, and increases taxes on corporations. The bill increases the EITC amount, lowers the EITC eligibility age to 18 years (from 25 years) and eliminates the maximum age limit, increases the EITC phaseout amount for joint filers to twice that of single filers, and requires the Internal Revenue Service (IRS) to notify individuals of their EITC eligibility. The bill requires the IRS to create a program for paying individuals certain amounts related to the nonrefundable portion of state EITC amounts. The bill replaces the child tax credit with a monthly allowance of up to $350 per child depending on the child’s age (subject to income limitations and adjustments for inflation) and requires the IRS to send the allowance to individuals monthly. The bill establishes a tax credit of $500 for each qualified dependent (subject to income limitations). Further, the bill increases the corporate income tax rate to 28% (from 21%), increases the excise tax on corporate stock buybacks to 4% (from 1%), and creates a new 25% corporate alternative minimum tax bracket applicable to adjusted financial statement income exceeding $5 billion. Finally, the bill precludes individuals with taxable income exceeding $1 million ($500,000 for married individuals filing separately) from applying the capital gains tax rates to net capital gains and requires the limits to be adjusted for inflation.

Source: Congressional Research Service (CRS).