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Dependent Income Exclusion Act of 2025
To amend the Internal Revenue Code of 1986 to exclude certain dependent income when calculating modified adjusted gross income for the purposes of eligibility for premium tax credits.
Summary
This bill amends the tax code to exclude income earned by certain dependents when calculating eligibility for health insurance premium tax credits. The exclusion applies to dependents under age 18, or dependents ages 18-23 who are students, participating in job-training programs, or enrolled in registered apprenticeships. The excluded dependent income is limited to no more than 15 percent of the parent's modified adjusted gross income, and the exclusion cannot be applied in a way that reduces household income below the poverty line in states that do not expand Medicaid. The change applies to tax years beginning after the bill's enactment.
AI-generated plain-language summary of the bill text — neutral, and may be imperfect. See the full text below for the exact wording.
Sponsor (1)
1 cosponsor
- Rep. Moore, Gwen [D-WI-4] (D-WI)
Actions (2)
- Jun 5, 2025 Referred to the House Committee on Ways and Means. · house
- Jun 5, 2025 Introduced in House
Similar bills (6)
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Text versions (1)
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Full text
IN THE HOUSE OF REPRESENTATIVES
June 5, 2025
Mr. Horsford (for himself and Ms. Moore of Wisconsin) introduced the following bill; which was referred to the Committee on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to exclude certain dependent income when calculating modified adjusted gross income for the purposes of eligibility for premium tax credits.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the “Dependent Income Exclusion Act of 2025”.
SEC. 2. EXCLUSION OF CERTAIN DEPENDENT INCOME FOR PURPOSES OF PREMIUM TAX CREDIT.
(a) In General.—Paragraph (2) of section 36B(d) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph:
“(C) Exception for certain dependent income.—
“(i) In general.—There shall not be taken into account under subparagraph (A)(ii) any wages (determined under section 3401(a)) or net earnings from self-employment (as defined in section 1402(a)) of any dependent of the taxpayer who—
“(I) has not attained age 18 as of the last day of the calendar year in which the taxable year of the taxpayer begins, or
“(II) has not attained age 24 as of the last day of such calendar year and, during each of 5 calendar months during such calendar year, is described in subparagraph (A) or (B) of section 152(f)(2) (applied by substituting ‘part-time or full-time’ for ‘full- time’ each place it appears, and by deeming any for-profit educational institution not to be an educational organization described in section 170(b)(1)(A)(ii)), is participating in a qualified job-training program, or is participating in an apprenticeship program registered under the Act of August 16, 1937 (commonly known as the ‘National Apprenticeship Act’; 50 Stat. 664, chapter 663; 29 U.S.C. 50 et seq.).
“(ii) Qualified job-training program.—For purposes of this subparagraph, the term ‘qualified job-training program’ means any program of training services described in section 134(c)(3) of the Workforce Innovation and Opportunity Act (29 U.S.C. 3174(c)(3)).
“(iii) Limitation.—Clause (i) shall not apply to so much of the aggregate income of all dependents of the taxpayer as exceeds an amount equal to 15 percent of the modified adjusted gross income of the taxpayer.
“(iv) Taxpayers residing in medicaid non- expansion states.—In the case of a taxpayer residing in a State which (as of the first day of the taxable year) does not provide for eligibility under clause (i)(VIII) or (ii)(XX) of section 1902(a)(10)(A) of the Social Security Act for medical assistance under title XIX of such Act (or a waiver of the State plan approved under section 1115 of the Social Security Act), clause (i) shall apply to any dependent of such taxpayer only to the extent that the application of such clause would not reduce the household income below 100 percent of the amount equal to the poverty line for a family of the size involved.”.
(b) Conforming Amendments.—
(1) Clause (ii) of section 36B(d)(2)(A) of the Internal Revenue Code of 1986 is amended by inserting “, except as provided in subparagraph (C),” after “individuals”.
(2) Paragraph (3) of section 1411(b) of the Patient Protection and Affordable Care Act (42 U.S.C. 18081) is amended by adding at the end the following new subparagraph:
“(D) Information regarding certain dependents.— Information regarding whether section 36B(d)(2)(C) will apply to any individuals taken into account as members of the household of the enrollee, and the amount of income from employment of each such individual for the taxable year described in subparagraph (A).”.
(c) Effective Date.—The amendments made by this section shall apply to credits allowed under section 36B of the Internal Revenue Code of 1986 for, and advance payments of credits under section 1412 of the Patient Protection and Affordable Care Act with respect to, taxable years beginning after the date of the enactment of this Act. <all>
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