HR 5334 — Lindsey O. Graham Sanctioning Russia and Iran Act of 2026

CHANGES IN EXISTING LAW MADE BY THE BILL, 
 AS REPORTED

 In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows.

 Changes in Existing Law Made by the Bill, as Reported

 In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, and existing law in which no 
change is proposed is shown in roman):

 INTERNAL REVENUE CODE OF 1986

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Subtitle A--Income Taxes

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CHAPTER 1--NORMAL TAXES AND SURTAXES

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Subchapter B--COMPUTATION OF TAXABLE INCOME

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 PART I--DEFINITION OF GROSS INCOME, ADJUSTED GROSS INCOME, TAXABLE 
INCOME, ETC.

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SEC. 62. ADJUSTED GROSS INCOME DEFINED.

 (a) General rule.--For purposes of this subtitle, the term 
``adjusted gross income'' means, in the case of an individual, 
gross income minus the following deductions:
 (1) Trade and business deductions.--The deductions 
 allowed by this chapter (other than by part VII of this 
 subchapter) which are attributable to a trade or 
 business carried on by the taxpayer, if such trade or 
 business does not consist of the performance of 
 services by the taxpayer as an employee.
 (2) Certain trade and business deductions of 
 employees.--
 (A) Reimbursed expenses of employees.--The 
 deductions allowed by part VI (section 161 and 
 following) which consist of expenses paid or 
 incurred by the taxpayer, in connection with 
 the performance by him of services as an 
 employee, under a reimbursement or other 
 expense allowance arrangement with his 
 employer. The fact that the reimbursement may 
 be provided by a third party shall not be 
 determinative of whether or not the preceding 
 sentence applies.
 (B) Certain expenses of performing artists.--
 The deductions allowed by section 162 which 
 consist of expenses paid or incurred by a 
 qualified performing artist in connection with 
 the performances by him of services in the 
 performing arts as an employee.
 (C) Certain expenses of officials.--The 
 deductions allowed by section 162 which consist 
 of expenses paid or incurred with respect to 
 services performed by an official as an 
 employee of a State or a political subdivision 
 thereof in a position compensated in whole or 
 in part on a fee basis.
 (D) [Certain expenses of elementary and 
 secondary school teachers] Certain expenses of 
 early childhood, elementary, and secondary 
 school teachers.--The deductions allowed by 
 section 162 which consist of expenses, not in 
 excess of $250, paid or incurred by an eligible 
 educator--
 (i) by reason of the participation of 
 the educator in professional 
 development courses related to the 
 curriculum in which the educator 
 provides instruction or to the students 
 for which the educator provides 
 instruction, and
 (ii) in connection with books, 
 supplies (other than nonathletic 
 supplies for courses of instruction in 
 health or physical education), computer 
 equipment (including related software 
 and services) and other equipment, and 
 supplementary materials used by the 
 eligible educator in the classroom.
 (E) Certain expenses of members of reserve 
 components of the Armed Forces of the United 
 States.--The deductions allowed by section 162 
 which consist of expenses, determined at a rate 
 not in excess of the rates for travel expenses 
 (including per diem in lieu of subsistence) 
 authorized for employees of agencies under 
 subchapter I of chapter 57 of title 5, United 
 States Code, paid or incurred by the taxpayer 
 in connection with the performance of services 
 by such taxpayer as a member of a reserve 
 component of the Armed Forces of the United 
 States for any period during which such 
 individual is more than 100 miles away from 
 home in connection with such services.
 (3) Losses from sale or exchange of property.--The 
 deductions allowed by part VI (sec. 161 and following) 
 as losses from the sale or exchange of property.
 (4) Deductions attributable to rents and royalties.--
 The deductions allowed by part VI (sec. 161 and 
 following), by section 212 (relating to expenses for 
 production of income), and by section 611 (relating to 
 depletion) which are attributable to property held for 
 the production of rents or royalties.
 (5) Certain deductions of life tenants and income 
 beneficiaries of property.--In the case of a life 
 tenant of property, or an income beneficiary of 
 property held in trust, or an heir, legatee, or devisee 
 of an estate, the deduction for depreciation allowed by 
 section 167 and the deduction allowed by section 611.
 (6) Pension, profit-sharing, and annuity plans of 
 self-employed individuals.--In the case of an 
 individual who is an employee within the meaning of 
 section 401(c)(1), the deduction allowed by section 
 404.
 (7) Retirement savings.--The deduction allowed by 
 section 219 (relating to deduction of certain 
 retirement savings).
 (9) Penalties forfeited because of premature 
 withdrawal of funds from time savings accounts or 
 deposits.--The deductions allowed by section 165 for 
 losses incurred in any transaction entered into for 
 profit, though not connected with a trade or business, 
 to the extent that such losses include amounts 
 forfeited to a bank, mutual savings bank, savings and 
 loan association, building and loan association, 
 cooperative bank or homestead association as a penalty 
 for premature withdrawal of funds from a time savings 
 account, certificate of deposit, or similar class of 
 deposit.
 (11) Reforestation expenses.--The deduction allowed 
 by section 194.
 (12) Certain required repayments of supplemental 
 unemployment compensation benefits.--The deduction 
 allowed by section 165 for the repayment to a trust 
 described in paragraph (9) or (17) of section 501(c) of 
 supplemental unemployment compensation benefits 
 received from such trust if such repayment is required 
 because of the receipt of trade readjustment allowances 
 under section 231 or 232 of the Trade Act of 1974 (19 
 U.S.C. 2291 and 2292).
 (13) Jury duty pay remitted to employer.--Any 
 deduction allowable under this chapter by reason of an 
 individual remitting any portion of any jury pay to 
 such individual's employer in exchange for payment by 
 the employer of compensation for the period such 
 individual was performing jury duty. For purposes of 
 the preceding sentence, the term ``jury pay'' means any 
 payment received by the individual for the discharge of 
 jury duty.
 (15) Moving expenses.--The deduction allowed by 
 section 217.
 (16) Archer MSAs.--The deduction allowed by section 
 220.
 (17) Interest on education loans.--The deduction 
 allowed by section 221.
 (19) Health savings accounts.--The deduction allowed 
 by section 223.
 (20) Costs involving discrimination suits, etc..--Any 
 deduction allowable under this chapter for attorney 
 fees and court costs paid by, or on behalf of, the 
 taxpayer in connection with any action involving a 
 claim of unlawful discrimination (as defined in 
 subsection (e)) or a claim of a violation of subchapter 
 III of chapter 37 of title 31, United States Code, or a 
 claim made under section 1862(b)(3)(A) of the Social 
 Security Act (42 U.S.C. 1395y(b)(3)(A)). The preceding 
 sentence shall not apply to any deduction in excess of 
 the amount includible in the taxpayer's gross income 
 for the taxable year on account of a judgment or 
 settlement (whether by suit or agreement and whether as 
 lump sum or periodic payments) resulting from such 
 claim.
 (21) Attorneys' fees relating to awards to 
 whistleblowers.--
 (A) In general.--Any deduction allowable 
 under this chapter for attorney fees and court 
 costs paid by, or on behalf of, the taxpayer in 
 connection with any award under--
 (i) section 7623(b), or
 (ii) in the case of taxable years 
 beginning after December 31, 2017, any 
 action brought under--
 (I) section 21F of the 
 Securities Exchange Act of 1934 
 (15 U.S.C. 78u-6),
 (II) a State false claims 
 act, including a State false 
 claims act with qui tam 
 provisions, or
 (III) section 23 of the 
 Commodity Exchange Act (7 
 U.S.C. 26).
 (B) May not exceed award.--Subparagraph (A) 
 shall not apply to any deduction in excess of 
 the amount includible in the taxpayer's gross 
 income for the taxable year on account of such 
 award.
Nothing in this section shall permit the same item to be 
deducted more than once. Any deduction allowed by section 199A 
shall not be treated as a deduction described in any of the 
preceding paragraphs of this subsection.
 (b) Qualified performing artist.--
 (1) In general.--For purposes of subsection 
 (a)(2)(B), the term ``qualified performing artist'' 
 means, with respect to any taxable year, any individual 
 if--
 (A) such individual performed services in the 
 performing arts as an employee during the 
 taxable year for at least 2 employers,
 (B) the aggregate amount allowable as a 
 deduction under section 162 in connection with 
 the performance of such services exceeds 10 
 percent of such individual's gross income 
 attributable to the performance of such 
 services, and
 (C) the adjusted gross income of such 
 individual for the taxable year (determined 
 without regard to subsection (a)(2)(B)) does 
 not exceed $16,000.
 (2) Nominal employer not taken into account.--An 
 individual shall not be treated as performing services 
 in the performing arts as an employee for any employer 
 during any taxable year unless the amount received by 
 such individual from such employer for the performance 
 of such services during the taxable year equals or 
 exceeds $200.
 (3) Special rules for married couples.--
 (A) In general.--Except in the case of a 
 husband and wife who lived apart at all times 
 during the taxable year, if the taxpayer is 
 married at the close of the taxable year, 
 subsection (a)(2)(B) shall apply only if the 
 taxpayer and his spouse file a joint return for 
 the taxable year.
 (B) Application of paragraph (1).--In the 
 case of a joint return--
 (i) paragraph (1) (other than 
 subparagraph (C) thereof) shall be 
 applied separately with respect to each 
 spouse, but
 (ii) paragraph (1)(C) shall be 
 applied with respect to their combined 
 adjusted gross income.
 (C) Determination of marital status.--For 
 purposes of this subsection, marital status 
 shall be determined under section 7703(a).
 (D) Joint return.--For purposes of this 
 subsection, the term ``joint return'' means the 
 joint return of a husband and wife made under 
 section 6013.
 (c) Certain arrangements not treated as reimbursement 
arrangements.--For purposes of subsection (a)(2)(A), an 
arrangement shall in no event be treated as a reimbursement or 
other expense allowance arrangement if--
 (1) such arrangement does not require the employee to 
 substantiate the expenses covered by the arrangement to 
 the person providing the reimbursement, or
 (2) such arrangement provides the employee the right 
 to retain any amount in excess of the substantiated 
 expenses covered under the arrangement.
The substantiation requirements of the preceding sentence shall 
not apply to any expense to the extent that substantiation is 
not required under section 274(d) for such expense by reason of 
the regulations prescribed under the 2nd sentence thereof.
 (d) Definition; Special Rules.--
 (1) Eligible educator.--
 (A) In general.--For purposes of subsection 
 (a)(2)(D), the term ``eligible educator'' 
 means, with respect to any taxable year, an 
 individual who is [a kindergarten through grade 
 12 teacher] an early childhood or kindergarten 
 through grade 12 teacher, instructor, 
 counselor, principal, or aide in a school for 
 at least 900 hours during a school year.
 [(B) School.--The term ``school'' means any 
 school which provides elementary education or 
 secondary education (kindergarten through grade 
 12), as determined under State law.]
 (B) School.--The term ``school'' means--
 (i) in the case of early childhood 
 education, any school or childcare 
 facility which--
 (I) provides educational or 
 childcare services for more 
 than 2 individuals (other than 
 individuals who reside at the 
 school or facility) who have 
 not attained age 6, and
 (II) operates at the public 
 expense or receives a fee, 
 payment, or grant for providing 
 such services for any of the 
 individuals (regardless of 
 whether such school or facility 
 is operated for profit), and
 (ii) in the case of elementary 
 education or secondary education 
 (kindergarten through grade 12), any 
 school which provides such education, 
 as determined under State law.
 (2) Coordination with exclusions.--A deduction shall 
 be allowed under subsection (a)(2)(D) for expenses only 
 to the extent the amount of such expenses exceeds the 
 amount excludable under section 135, 529(c)(1), or 
 530(d)(2) for the taxable year.
 (3) Inflation adjustment.--In the case of any taxable 
 year beginning after 2015, the $250 amount in 
 subsection (a)(2)(D) shall be increased by an amount 
 equal to--
 (A) such dollar amount, multiplied by
 (B) the cost-of-living adjustment determined 
 under section 1(f)(3) for the calendar year in 
 which the taxable year begins, determined by 
 substituting ``calendar year 2014'' for 
 ``calendar year 2016'' in subparagraph (A)(ii) 
 thereof.
 Any increase determined under the preceding sentence 
 shall be rounded to the nearest multiple of $50.
 (e) Unlawful discrimination defined.--For purposes of 
subsection (a)(20), the term ``unlawful discrimination'' means 
an act that is unlawful under any of the following:
 (1) Section 302 of the Civil Rights Act of 1991 (42 
 U.S.C. 2000e-16b).
 (2) Section 201, 202, 203, 204, 205, 206, 207, or 208 
 of the Congressional Accountability Act of 1995 (2 
 U.S.C. 1311, 1312, 1313, 1314, 1315, 1316, or 1317).
 (3) The National Labor Relations Act (29 U.S.C. 151 
 et seq.).
 (4) The Fair Labor Standards Act of 1938 (29 U.S.C. 
 201 et seq.).
 (5) Section 4 or 15 of the Age Discrimination in 
 Employment Act of 1967 (29 U.S.C. 623 or 633a).
 (6) Section 501 or 504 of the Rehabilitation Act of 
 1973 (29 U.S.C. 791 or 794).
 (7) Section 510 of the Employee Retirement Income 
 Security Act of 1974 (29 U.S.C. 1140).
 (8) Title IX of the Education Amendments of 1972 (20 
 U.S.C. 1681 et seq.).
 (9) The Employee Polygraph Protection Act of 1988 (29 
 U.S.C. 2001 et seq.).
 (10) The Worker Adjustment and Retraining 
 Notification Act (29 U.S.C. 2102 et seq.).
 (11) Section 105 of the Family and Medical Leave Act 
 of 1993 (29 U.S.C. 2615).
 (12) Chapter 43 of title 38, United States Code 
 (relating to employment and reemployment rights of 
 members of the uniformed services).
 (13) Section 1977, 1979, or 1980 of the Revised 
 Statutes (42 U.S.C. 1981, 1983, or 1985).
 (14) Section 703, 704, or 717 of the Civil Rights Act 
 of 1964 (42 U.S.C. 2000e-2, 2000e-3, or 2000e-16).
 (15) Section 804, 805, 806, 808, or 818 of the Fair 
 Housing Act (42 U.S.C. 3604, 3605, 3606, 3608, or 
 3617).
 (16) Section 102, 202, 302, or 503 of the Americans 
 with Disabilities Act of 1990 (42 U.S.C. 12112, 12132, 
 12182, or 12203).
 (17) Any provision of Federal law (popularly known as 
 whistleblower protection provisions) prohibiting the 
 discharge of an employee, the discrimination against an 
 employee, or any other form of retaliation or reprisal 
 against an employee for asserting rights or taking 
 other actions permitted under Federal law.
 (18) Any provision of Federal, State, or local law, 
 or common law claims permitted under Federal, State, or 
 local law--
 
 (i) providing for the enforcement of civil 
 rights, or
 
 (ii) regulating any aspect of the employment 
 relationship, including claims for wages, 
 compensation, or benefits, or prohibiting the 
 discharge of an employee, the discrimination 
 against an employee, or any other form of 
 retaliation or reprisal against an employee for 
 asserting rights or taking other actions 
 permitted by law.

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