H.R. 3590, Halt Tax Increases on the Middle Class and Seniors Act

H.R. 3590

Halt Tax Increases on the Middle Class and Seniors Act

Committee
Ways and Means

Date
September 13, 2016 (114th Congress, 2nd Session)

Staff Contact
John Huston

Floor Situation

On­­­­ Tuesday, September 13, 2016, the House will begin consideration of H.R. 3590, the Halt Tax Increases on the Middle Class and Seniors Act, as amended, under a closed rule. H.R. 3590 was introduced on September 22, 2015, by Rep. Martha McSally (R-AZ) and was referred to the Committee on Ways and Means, which ordered the bill reported, as amended, by a vote of 24 to 11 on June 15, 2016.

Bill Summary

H.R. 3590 would provide relief for Americans with expensive medical bills by repealing an Obamacare tax hike and reinstating the previous allowable deduction level. Specifically, the bill amends the Internal Revenue Code to permanently lower the threshold individuals may generally claim an itemized deduction from 10 percent of their Adjusted Gross Income[1] (AGI) to 7.5 percent of their AGI.[2] The bill shall be effective beginning after taxable year December 31, 2015.

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[1] Adjusted Gross Income is defined as gross income minus adjustments allowed under law to income.
[2] See House Report 114-657

Background

Under current law, individuals may claim an itemized deduction for unreimbursed medical expenses, but only to the extent that such expenses exceed 10 percent of adjusted gross income. Individuals 65 and older are eligible to claim this deduction for expenses over 7.5 percent of their AGI, until January 1, 2017, at which point the threshold will be increased to 10 percent. H.R. 3590 will permanently reduce the threshold to 7.5 percent, which was the threshold before the Affordable Care Act was enacted.

In 2012, 87% of households that claimed this deduction earned less than $100,000 (IRS Statistics of Income, table 2.1). Repealing the provision would help roughly 10 million people who claim this deduction.[1]

According to the bill sponsor, “Contained in the Administration’s health care law is a little known tax hike that hits millions of middle class families and seniors struggling with sickness or high medical costs – at a time when they are at their most vulnerable. [The] bill repeals this debilitating tax hike on families and stops it from hitting seniors.[2]

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[1] See Rep. Martha McSally Press Release, “U.S. Rep. McSally Introduces Bill To Stop Tax Hike on Seniors, Middle Class Families,” September 22, 2015.
[2] ID.

Cost

The Congressional Budget Office (CBO) estimates that enacting the bill will cost $32.7 billion over the 2016-2026 period.

Additional Information

For questions or further information please contact John Huston with the House Republican Policy Committee by email or at 6-5539.