Cost of Living Tax Cut Act
Sponsored By: Representative Gillen, Laura [D-NY-4]
Introduced
Summary
Applies a regional cost-of-living adjustment to federal individual income tax bracket thresholds. For tax years beginning after December 31, 2026, this bill shifts the dollar minima and maxima of each bracket up or down using area multipliers tied to local cost-of-living indexes.
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- Families and households in very high-cost areas may pay less federal tax on the same income because bracket thresholds are raised when an area’s cost-of-living exceeds the national average. Areas with a cost differential above 125% get multipliers equal to 90% of that differential.
- Residents in mid-cost areas get a modest boost while low-cost areas see no change. Areas between 97% and 125% of the national cost level use a 1.05 multiplier. Areas at or below 97% use a 1.00 multiplier.
- The Secretary must publish each area’s multiplier by December 15 for the next tax year. The Commerce Department will supply the area cost-of-living index using average market prices for the 12 months ending August 31 and the Regional Price Parities method.
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Bill Overview
Analyzed Economic Effects
1 provisions identified: 1 benefits, 0 costs, 0 mixed.
Lower income taxes in high-cost areas
If enacted, this bill would change federal income tax bracket dollar amounts based on where you live. This would start for tax years beginning after December 31, 2026. The Commerce Department would publish a cost-of-living index for each metropolitan area and each non-metro part of a state beginning for calendar year 2026. Each December 15, Treasury would set an area multiplier for the following tax year. Areas over 125% of the U.S. average would get a multiplier equal to 90% of that differential. Areas between 97% and 125% would get a 1.05 multiplier. Areas at or below 97% (and areas outside the U.S.) would get 1.00. The minimum and maximum dollar amounts for each tax bracket would be multiplied by your area's multiplier, rounded to the nearest $50, and the bracket tax rates would stay the same. Many households in higher-cost areas would see lower federal income tax because bracket thresholds would be larger.
Sponsors & CoSponsors
Sponsor
Gillen, Laura [D-NY-4]
NY • D
Cosponsors
Rep. Lawler, Michael [R-NY-17]
NY • R
Sponsored 6/8/2026
Roll Call Votes
No roll call votes available for this bill.
View on Congress.gov