How HR 2111 changes current law

AI-generated reading aid from the bill's amendatory text — verify against the official bill.

This bill introduces regional cost-of-living adjustments to individual income tax rates in the Internal Revenue Code.

• Section 1 of the Internal Revenue Code of 1986

  (9) Regional cost-of-living adjustments.-- (A) In general.--In the case of an individual, for taxable years beginning after 2017 the rate table otherwise in effect under this section for any taxable year (determined after the application of paragraph (1)) shall be further adjusted as provided in subparagraph (B). (B) Method of making regional adjustment.--The rate table otherwise in effect under this section with respect to any individual for any taxable year shall be adjusted as follows: (i) The minimum and maximum dollar amounts otherwise in effect for each rate bracket shall be multiplied by the applicable multiplier (for the calendar year in which the taxable year begins) which applies to the statistical area in which the individual's primary place of abode during the taxable year is located. (ii) The rate applicable to any rate bracket (as adjusted by clause (i)) shall not be changed. (iii) The amount setting forth the tax shall be adjusted to the extent necessary to reflect the adjustments in the rate brackets. If any amount determined under clause (i) is not a multiple of $50, such amount shall be rounded to the nearest multiple of $50.

  This inserts provisions for adjusting tax rates based on regional cost-of-living differences.

• Section 1 of the Internal Revenue Code of 1986

  (10) Determination of multipliers.-- (A) In general.--Not later than December 15 of each calendar year, the Secretary shall prescribe an applicable multiplier for each statistical area of the United States which shall apply to taxable years beginning during the succeeding calendar year. (B) Determination of multipliers.-- (i) For each statistical area where the cost-of-living differential for any calendar year is greater than 125 percent, the applicable multiplier for such calendar year is 90 percent of such differential. (ii) For each statistical area where the cost-of-living differential for any calendar year exceeds 97 percent but does not exceed 125 percent, the applicable multiplier for such calendar year is 1.05. (iii) For each statistical area not described in clause (i) or (ii), the applicable multiplier is the cost-of-living differential for the calendar year.

  This provides a methodology for determining the multipliers based on cost-of-living differentials.

• Section 1 of the Internal Revenue Code of 1986

  (11) Areas outside the united states.--The area applicable multiplier for any area outside the United States shall be 1.

  This establishes a default multiplier for areas outside the U.S.

• Section 1 of the Internal Revenue Code of 1986

  (C) Cost-of-living differential.--The cost-of-living differential for any statistical area for any calendar year is the percentage determined by dividing-- (i) the cost-of-living for such area for the preceding calendar year; by (ii) the average cost-of-living for the United States for the preceding calendar year.

  This defines how to calculate the cost-of-living differential for tax adjustments.

• Section 1 of the Internal Revenue Code of 1986

  (D) Cost-of-living for area.-- (i) In general.--For calendar year 2017 and each calendar year thereafter, the Secretary of Labor shall determine and publish a cost-of-living index for each statistical area.

  This mandates the Secretary of Labor to create a cost-of-living index for statistical areas.

• Section 1 of the Internal Revenue Code of 1986

  (E) Statistical area.--For purposes of this subsection the term 'statistical area' means-- (i) any metropolitan statistical area as defined by the Secretary of Commerce, and (ii) the portion of any State not within a metropolitan statistical area as so defined.

  This defines what constitutes a statistical area for tax purposes.

• Section 1 of the Internal Revenue Code of 1986

  (b) Effective Date.--The amendment made by this section shall apply to taxable years beginning after December 31, 2017.

  This specifies when the new provisions will take effect.