HR463-119

What This Bill Does

The Lower Your Taxes Act restructures several major federal tax provisions. It dramatically expands the Earned Income Tax Credit (EITC) by roughly doubling credit percentages, tripling earned income thresholds, and slowing the phaseout rate, meaning low- and moderate-income workers keep more of the credit as their income rises. It also creates a new refundable monthly child tax credit of $300 per child aged 6 and older and $350 per child under 6, delivered through monthly advance payments from the Treasury. A separate $500 credit is established for other dependents. To offset these costs, the bill raises the corporate income tax rate from 21% to 28%, quadruples the stock buyback excise tax from 1% to 4%, creates a tiered corporate alternative minimum tax (15% up to $5 billion, 25% above), and eliminates preferential capital gains tax rates for individuals with taxable income exceeding $1 million.

Who Benefits and How

Low- and moderate-income working families receive substantially larger EITC refunds and new monthly child tax credit payments. Families with children under 6 receive $350 per month per child ($4,200/year), while families with children 6-17 receive $300/month ($3,600/year). Workers in states with non-refundable earned income tax credits effectively get those credits made refundable through federal payments. The expanded EITC raises the earned income ceiling from roughly $6,330-$8,890 to $15,000-$27,000 depending on family size, and doubles credit percentages.

Who Bears the Burden and How

Corporations face a 33% increase in the base income tax rate (from 21% to 28%). Companies that buy back stock face a quadrupled excise tax (1% to 4%). Very large corporations with over $5 billion in adjusted financial statement income face a higher 25% alternative minimum tax rate. Individual taxpayers with taxable income over $1 million lose access to preferential capital gains tax rates and must pay ordinary income rates on capital gains. The Treasury Department bears significant administrative burden establishing the monthly child tax credit payment system and the state EITC equivalency payment program.

Key Provisions

• Doubles EITC credit percentages (e.g., 34% to 68% for one child) and roughly triples earned income thresholds
• Creates monthly child tax credit: $300/child (6+), $350/child (under 6), fully refundable
• Establishes monthly advance payment system administered by the Treasury
• Creates $500 credit for non-child dependents
• Federal program to make state non-refundable EITCs effectively refundable
• Eliminates preferential capital gains rates for income over $1 million
• Raises corporate tax rate from 21% to 28%
• Quadruples stock buyback excise tax from 1% to 4%
• Tiered corporate AMT: 15% up to $5B, 25% above $5B
• GDP-indexed inflation adjustments for EITC thresholds
• Sense of Congress that net revenue should reduce deficit and debt