Cost of Living Tax Cut Act
- Bill Number
- H.R. 9179
- Origin Chamber
- House
- Congress
- 119th Congress, Session 2
- Policy Area
- Taxation
- Status
- Introduced
- Latest Action
- 2026-06-08: Referred to the House Committee on Ways and Means.
- Last Updated
- 2026-06-22T20:25:36Z
AI-Generated Summary
Purpose This legislation amends the Internal Revenue Code of 1986 to adjust individual income tax rate brackets to account for regional differences in the cost of living, with the goal of reducing tax burdens in higher-cost areas.
Key Provisions
- The bill adds new paragraphs to section 1(f) of the Internal Revenue Code.
- Beginning with taxable years after 2026, the income thresholds for each tax rate bracket are multiplied by an "applicable multiplier" specific to the statistical area where the taxpayer's primary residence is located.
- The applicable multiplier is determined annually by the Secretary of the Treasury based on a cost-of-living differential calculated by the Secretary of Commerce:
- Areas with a differential above 125 percent receive a multiplier equal to 90 percent of that differential.
- Areas with a differential between 97 percent and 125 percent receive a multiplier of 1.05.
- Areas at or below 97 percent, or located outside the United States, receive a multiplier of 1.
- The tax rates themselves remain unchanged; only the dollar amounts defining the brackets are adjusted (rounded to the nearest $50).
- The cost-of-living index uses market price data and follows the same methodology as the Department of Commerce’s Regional Price Parities.
- Statistical areas include metropolitan statistical areas and the non-metropolitan portions of each state.
Significant Changes to Existing Law The bill introduces the first regional cost-of-living adjustment to federal individual income tax brackets. Current law applies uniform nationwide brackets (after inflation adjustments); this measure adds a geographic layer that expands bracket thresholds in higher-cost regions while leaving rates untouched.
Potential Impacts
- Citizens: Taxpayers in high-cost statistical areas would face lower effective tax liabilities for the same nominal income, as higher earnings would be needed to reach upper brackets.
- Government agencies: The IRS would apply new location-based adjustments when computing tax liability; the Department of Commerce would annually calculate and publish regional cost-of-living indexes.
- International relations: No direct effects; taxpayers outside the United States receive the default multiplier of 1.
- No significant changes to revenue collection timing or withholding are specified.
Main Stakeholders Affected
- Individual taxpayers residing in different statistical areas.
- The Internal Revenue Service (administration and enforcement).
- The Department of Commerce (calculation of cost-of-living indexes).
- State and local governments indirectly, through effects on residents’ after-tax income.
Notable Legal, Constitutional, or Political Implications The adjustment is framed as an administrative modification to existing tax brackets rather than a new tax. It raises potential questions about geographic uniformity in federal taxation, though Congress has broad authority under the Taxing and Spending Clause to create location-based rules. Politically, the measure targets relief for residents of high-cost regions without altering statutory tax rates.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (1)
Rep. Lawler, Michael [R-NY-17]
Recent Actions
- 2026-06-08: Referred to the House Committee on Ways and Means.
- 2026-06-08: Introduced in House
- 2026-06-08: Introduced in House
Bill Versions
- Cost of Living Tax Cut Act — issued 2026-06-08 — PDF (5 pages)