H.R. 1833: Working Families Tax Cut Act

This bill, titled the Working Families Tax Cut Act, proposes amendments to the Internal Revenue Code regarding tax deductions. Here’s a breakdown of what the bill would do:

1. Renaming the Standard Deduction

The bill seeks to rename the "standard deduction" to the "guaranteed deduction." This change will be reflected throughout the Internal Revenue Code, ensuring consistency in the use of the new terminology.

2. Bonus Guaranteed Deduction for 2026 and 2027

For the taxable years starting after December 31, 2025, and before January 1, 2028, the bill introduces a bonus amount added to the guaranteed deduction. This bonus amount will vary based on the type of tax filing:

• $4,000 for joint returns or surviving spouses.
• $3,000 for heads of household.
• $2,000 for all other cases.

3. Adjustment for Inflation

The bill allows for these bonus amounts to be adjusted each year to account for inflation. This adjustment would ensure that the bonus amounts increase in line with the cost of living, calculated using an established formula.

4. Limitations Based on Income

The bonus guaranteed deduction will have income-based limitations. Specifically, the bonus amount will be reduced by 5% for every dollar of a taxpayer's modified adjusted gross income that exceeds certain thresholds:

• $400,000 for joint returns or surviving spouses.
• $300,000 for heads of household.
• $200,000 for all other cases.

5. Effective Date

The changes proposed in this bill, including the renaming of deductions and the introduction of the bonus deduction, are intended to take effect for taxable years beginning after December 31, 2025.

Relevant Companies

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