Working Americans’ Tax Cut Act

Tax Cap for Low- and Middle-Income Individuals: Under Section 2, a "qualified individual" (someone with modified adjusted gross income less than 175 percent of the cost-of-living exemption) will have their tax capped at 25.5 percent of their income above the cost-of-living exemption. This provides a specific tax limit for these individuals (Section 2(a)).

Adjustable Cost-of-Living Standards: The bill uses an "annualized cost of living wage" which is tied to the Consumer Price Index (CPI-U) to determine exemptions (Section 2(c)). This ensures the cost-of-living exemption can be adjusted based on economic changes reported by the Bureau of Labor Statistics.

Increased Thresholds for Joint Filers: For those subject to the high-income surcharge, the dollar amounts used to calculate the tax are increased by 50 percent for taxpayers making a joint return (Section 3(c)).

New Surcharge for High-Income Earners: High-income individuals will face an additional tax. This includes a 5 percent tax on income between $1,000,000 and $2,000,000, a 10 percent tax on income between $2,000,000 and $5,000,000, and a 12 percent tax on income exceeding $5,000,000 (Section 3(a)).

Income Threshold Limitations for Qualified Individuals: An individual only qualifies for the alternative maximum tax if their modified adjusted gross income remains below 175 percent of the cost-of-living exemption (Section 2(b)).