H.R. 3769: Dependent Income Exclusion Act of 2025

This bill, known as the Dependent Income Exclusion Act of 2025, proposes changes to the Internal Revenue Code that would affect how certain dependent income is treated when determining eligibility for premium tax credits under the Affordable Care Act (ACA).

Key Provisions

• Dependent Income Exclusion: The bill introduces an exclusion for certain types of income earned by dependents when calculating modified adjusted gross income (MAGI) for premium tax credits.
• Age Thresholds: The exclusion applies to dependent income from individuals who:
  • Are under the age of 18 at the end of the tax year, or
  • Are under the age of 24 at the end of the tax year and have been participating in a qualified job-training or apprenticeship program for at least five months of that year.
• Job-Training Programs: The bill defines a "qualified job-training program" based on the programs described in the Workforce Innovation and Opportunity Act.
• Income Limitation: The exclusion applies only up to 15% of the taxpayer's modified adjusted gross income. Income earned by dependents exceeding this limit would still be counted in the taxpayer's MAGI.
• Consideration for Certain States: Taxpayers residing in states that do not expand Medicaid must ensure that applying this exclusion does not reduce the family's income below 100% of the federal poverty line.

Conforming Amendments

In addition to the new provisions, the bill includes conforming amendments to ensure that the existing tax laws properly reference the new exclusion for dependent income.

Effective Date

If passed, the amendments will apply to premium tax credits for taxable years beginning after the enactment of the bill.

Relevant Companies