Keep Your Pay Act
Sponsored By: Senator Cory Booker
Introduced
Summary
Creates a refundable monthly Child Tax Credit paid as monthly advance payments. It also expands the Earned Income Tax Credit for workers without children and temporarily raises the standard deduction and top tax rates for high earners.
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- Families with children: New monthly payments send about $300 per child each month for older kids and larger monthly amounts for younger children and infants. Payments are reduced based on modified adjusted gross income using initial and secondary thresholds and are indexed for inflation.
- Workers without children and U.S. possessions: The earned income tax credit for people without qualifying children is permanently broadened. The bill allows a prior-year earned income election for the credit and extends EITC access to U.S. possessions, with special rules for mirror-code jurisdictions and American Samoa.
- High-income taxpayers and deductions: The law temporarily increases standard deduction parameters used in various computations and raises top individual tax rates to 41% and 43% for certain brackets for tax years beginning in 2026 through 2035.
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Bill Overview
Analyzed Economic Effects
5 provisions identified: 3 benefits, 1 costs, 1 mixed.
Changes to Earned Income Tax Credit
If enacted, the bill would let taxpayers use last year’s earned income to compute the EITC when this year’s earned income is lower, and it would raise several numeric EITC parameters and the credit rate for certain items. The bill would change minimum-age rules (generally age 19, generally 24 for students, age 18 for certain former foster or homeless youth) and remove the old upper-age exclusion. It would also remove the calendar-year limit so EITC rules continue to apply in Puerto Rico and certain possessions after 2025, and it would add inflation-indexing rules for some EITC dollar amounts.
Larger standard deduction for 2026–2035
If enacted, the bill would raise certain standard-deduction numbers for tax years 2026 through 2035 by substituting larger dollar amounts in the law. These higher standard-deduction parameters would lower taxable income for many taxpayers during that period.
New $500 credit for adult dependents
If enacted, the bill would create a nonrefundable $500 tax credit for each "specified dependent" who is not a qualifying child. The credit would be reduced by $50 for each $1,000 (or fraction) your MAGI is over a threshold: $400,000 for joint filers, $200,000 for married filing separately, and $300,000 for other filers. MAGI is defined as AGI plus certain excluded foreign-income amounts, and the IRS would issue rules on who counts as a specified dependent.
Higher top income tax rates temporarily
If enacted, the bill would raise top individual income tax rates for tax years 2026 through 2035 by replacing some 35% rates with 41% and some 37% rates with 43%. These higher statutory percentages would apply to the top brackets during that period.
Monthly child payments and rules
If enacted, the bill would create a refundable monthly child tax payment. The base monthly amounts would be $300 for each child age 6+ and $360 for each child under 6, with a $2,400 amount for a child under one month. The IRS would run a monthly advance payment program with presumptive eligibility, grace payments (up to three months once per 36 months), and hardship payments (up to six months) and would pay by electronic transfer with special protections from some federal offsets and levies. At the same time, the bill would end the current annual Child Tax Credit for tax years beginning after December 31, 2025, and add many procedural rules so the monthly payments follow current withholding, reporting, and penalty rules.
Sponsors & CoSponsors
Sponsor
Cory Booker
NJ • D
Cosponsors
There are no cosponsors for this bill.
Roll Call Votes
No roll call votes available for this bill.
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