Working Americans’ Tax Cut Act

Tax Limit for Low- and Middle-Income Individuals: For those who qualify, the tax imposed will not exceed 25.5 percent of the excess of their modified adjusted gross income over the cost-of-living exemption. This is found in Sec. 2 (a).

Cost-of-Living Adjustments: The bill provides exemptions based on the annualized cost-of-living wage, which is adjusted using the CPI-U to account for inflation. This is found in Sec. 2 (c)(2).

Specific Exemptions for Household Types: The cost-of-living exemption is increased for joint returns (200 percent) and heads of household (140 percent), providing more protection for these groups. This is found in Sec. 2 (c)(1).

New Surcharge for High Earners: Individuals with a modified adjusted gross income exceeding $1,000,000 will be subject to an additional tax. The rates range from 5 percent for income between $1,000,000 and $2,000,000, up to 12 percent for income exceeding $5,000,000. This is found in Sec. 3 (a).

Modified Income Calculations: For those seeking the low-income tax limit, their modified adjusted gross income is increased by certain excluded amounts and a portion of social security benefits, which could potentially disqualify them from being a "qualified individual." This is found in Sec. 2 (d).