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119-hr-10367119th CongressWALLET

Working Americans Affordability Tax Credit Act

Sponsored By: Representative Landsman, Greg [D-OH-1]

Introduced

Summary

Ends broad deferral for very wealthy taxpayers and forces near‑immediate tax on many asset transfers. This bill would also create a new Affordability Tax Credit to help lower the after‑tax cost for eligible individuals.

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Bill Overview

Analyzed Economic Effects

7 provisions identified: 1 benefits, 5 costs, 1 mixed.

New Affordability Tax Credit for Workers

If enacted, the bill would create an Affordability Tax Credit worth $4,200 per eligible individual and $8,400 for a joint return where both spouses qualify. The credit would be reduced in proportion to your modified adjusted gross income (MAGI) relative to $100,000 for single filers and $200,000 for joint filers. MAGI here means AGI plus certain excluded foreign amounts. The credit would apply for tax years beginning after December 31, 2026.

Faster tax on prior deferrals and pay

If enacted, applicable taxpayers would often be treated as having sold nontradable assets immediately before certain transfers, so gains that had been deferred would be recognized. The bill would add a deferral recapture charge based on interest (using the section 6621(b) rate plus 1 percentage point) and cap the charge by a statutory formula. For applicable deferred compensation, the bill would add a deferral recapture amount (capped at 10% of the deferred pay) and a separate 10% tax on severance amounts included in income. The bill allows a five-year installment payment election in the first year you become an applicable taxpayer, with acceleration on disposition, death, or bankruptcy.

Higher investment tax and trust rules

If enacted, the bill would make applicable taxpayers pay the Net Investment Income Tax without using the AGI threshold, increasing NIIT exposure. It would add new tax and reporting rules for applicable foreign trusts that can raise beneficiary tax unless the trust pays a related tax. The bill would also limit certain expatriation elections for covered expatriates who are applicable taxpayers and treat some property as sold over a 10-year window.

Private placement life insurance changes

If enacted, certain private placement life insurance and annuity contracts held by applicable taxpayers would lose tax-preferred treatment. Distributions would face rules like annuity distributions and a 10% additional tax, and death benefits would not get the usual tax exclusion. Issuers and reinsurers of these contracts would have to file annual information returns and give recipients statements by January 31. The Secretary could treat other contracts as applicable to prevent avoidance.

Who counts as an applicable taxpayer

If enacted, the bill would make someone an "applicable taxpayer" if they meet income or asset tests for each of the three prior years (for individuals: AGI over $100 million or covered assets over $1 billion, with lower figures for married separate filers). The bill would define covered assets and when an asset is tradable or nontradable and set valuation methods for nontradable assets. It would require tradable covered assets to be treated like they are sold at fair market value for certain events and would generally stop common nonrecognition deferral rules for applicable taxpayers. The bill would also let applicable taxpayers elect limited carrybacks for net marked-to-market losses to the three prior years, subject to limits.

Limits on investor tax preferences

If enacted, the bill would stop certain tax breaks for applicable taxpayers and applicable entities. It would disallow like-kind (1031) and some section 351 nonrecognition rules when an applicable notice is in effect. It would deny the qualified small business stock exclusion for stock acquired on or after November 30, 2025 for applicable taxpayers. It would also narrow Opportunity Zone benefits and change the 10-year basis step-up when a taxpayer becomes an applicable taxpayer or an applicable entity has a notice.

New reporting for big pay and owners

If enacted, payors who make over $5,000,000 in applicable deferred compensation or severance to one person would have to file an annual return and give the recipient a statement by January 31 of the year after the payment is includible. The $5,000,000 threshold would be inflation-adjusted after 2026 and rounded to the next lowest $250,000. The bill would also require significant owners (a 5% owner or holder of over $50,000,000 in nontradable interests) to notify applicable entities and follow new reporting rules.

Sponsors & CoSponsors

Sponsor

Landsman, Greg [D-OH-1]

OH • D

Cosponsors

There are no cosponsors for this bill.

Roll Call Votes

No roll call votes available for this bill.

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