Working Americans’ Tax Cut Act
- Bill Number
- H.R. 7937
- Origin Chamber
- House
- Congress
- 119th Congress, Session 2
- Policy Area
- Taxation
- Status
- Introduced
- Latest Action
- 2026-03-16: Referred to the House Committee on Ways and Means.
- Last Updated
- 2026-06-11T08:06:52Z
AI-Generated Summary
Purpose
The "Working Americans' Tax Cut Act" (H.R. 7937) aims to reduce taxes on income needed for basic living expenses for low- and middle-income individuals while imposing an additional tax on high-income individuals. It adjusts tax calculations based on cost-of-living changes measured by the Consumer Price Index for all urban consumers (CPI-U, a government measure of inflation).
Key Provisions
- Alternative Maximum Tax for Low- and Middle-Income Individuals (New Section 1A):
- Applies to "qualified individuals" whose modified adjusted gross income (MAGI, roughly total income after certain deductions, plus some excluded foreign income and untaxed Social Security benefits) is below 175% of the cost-of-living exemption.
- Caps their regular income tax at 25.5% of MAGI exceeding the cost-of-living exemption.
- Cost-of-living exemption (base year ~$46,000 annualized wage, adjusted annually by CPI-U):
| Filing Status | Percentage of Base Wage | |---------------------|-------------------------| | Single | 100% | | Joint Return | 200% | | Head of Household | 140% |
- Excludes certain non-qualifying taxpayers (e.g., some under dependency rules).
- Surcharge on High-Income Individuals (New Section 59B):
- Adds a separate tax on non-corporate taxpayers' MAGI (AGI minus investment interest deductions):
| MAGI Range | Surcharge Rate | |---------------------|----------------| | $1M–$2M | 5% | | $2M–$5M | 10% | | Over $5M | 12% |
- Thresholds increase by 50% for joint filers and adjust annually for inflation via CPI-U.
- Special rules: Reduces thresholds for U.S. citizens/residents abroad based on foreign income exclusions; exempts certain charitable trusts; surcharge doesn't affect tax credits or alternative minimum tax.
- Effective Date: Both provisions apply to tax years starting after December 31, 2025.
Significant Changes to Existing Law
- Introduces a new tax cap (Section 1A) that limits effective rates for qualifying lower earners, overriding standard progressive brackets above the exemption.
- Adds a standalone high-income surcharge (new Part VIII) as an extra layer on top of regular taxes, separate from existing rates or alternative minimum tax.
- Both use CPI-U indexing for inflation, unlike some current thresholds.
- Not treated as a "rate change" under tax code rules (Section 15), avoiding certain transition issues.
Potential Impacts
- Low- and middle-income taxpayers: Reduced tax bills, potentially increasing disposable income for essentials (e.g., a single filer near the exemption might see taxes limited to 25.5% on income above ~$46,000, adjusted for inflation).
- High-income taxpayers: Higher overall taxes (e.g., someone with $6M MAGI pays up to ~12% extra on the top portion), possibly affecting savings or investments.
- Government agencies (IRS): Increased complexity in calculations, forms, and enforcement; potential revenue shift (cuts for lower earners offset by high-income surcharges).
- Citizens/economy: More progressive tax system; minimal direct international effects, though expats get adjustments.
- Overall revenue: Likely neutral or slight increase, funding relief for working Americans via wealthy payers.
Main Stakeholders Affected
- Primary beneficiaries: Low- and middle-income workers/families (MAGI under ~175% of ~$46,000 base, or ~$80,500 single filer initially).
- Primary payers: High-income individuals (MAGI over $1M), joint filers over ~$1.5M.
- Government: IRS (administration); Treasury (revenue).
- Others: Estates/trusts, expatriates, charitable trusts (special rules).
Notable Legal, Constitutional, or Political Implications
- Legal: Amends tax code precisely; CPI-U ensures automatic inflation adjustments, reducing need for frequent legislation. Surcharge's separation from credits/AMT simplifies interactions.
- Constitutional: Aligns with Congress's power to levy progressive income taxes (16th Amendment); no novel challenges apparent.
- Political: Frames as "tax cut for workers" funded by "high earners," potentially divisive along income lines; introduced by Democrats, referred to Ways and Means Committee.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Rep. Beyer, Donald S. [D-VA-8]
Cosponsors (12)
Rep. Davis, Danny K. [D-IL-7], Rep. Larson, John B. [D-CT-1], Rep. McBride, Sarah [D-DE-At Large], Rep. Thanedar, Shri [D-MI-13], Rep. Randall, Emily [D-WA-6], Rep. Deluzio, Christopher R. [D-PA-17], Rep. Mannion, John W. [D-NY-22], Rep. Dexter, Maxine [D-OR-3], Rep. Foster, Bill [D-IL-11], Rep. Vasquez, Gabe [D-NM-2], Rep. Latimer, George [D-NY-16], Rep. Craig, Angie [D-MN-2]
Recent Actions
- 2026-03-16: Referred to the House Committee on Ways and Means.
- 2026-03-16: Introduced in House
- 2026-03-16: Introduced in House
Bill Versions
- Working Americans’ Tax Cut Act — issued 2026-03-16 — PDF (8 pages)