[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 3178 Introduced in Senate (IS)]

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116th CONGRESS
  2d Session
                                S. 3178

To amend the Internal Revenue Code of 1986 to modify the limitation on 
      deduction of State and local taxes, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            January 9, 2020

 Mr. Schumer (for himself, Mr. Wyden, and Mr. Menendez) introduced the 
 following bill; which was read twice and referred to the Committee on 
                                Finance

_______________________________________________________________________

                                 A BILL


 
To amend the Internal Revenue Code of 1986 to modify the limitation on 
      deduction of State and local taxes, and for other purposes.

    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 ``Restoring Tax Fairness for States 
and Localities Act''.

SEC. 2. ELIMINATION FOR 2019 OF MARRIAGE PENALTY IN LIMITATION ON 
              DEDUCTION OF STATE AND LOCAL TAXES.

    (a) In General.--Section 164(b) of the Internal Revenue Code of 
1986 is amended by adding at the end the following new paragraph:
            ``(7) Special rule for limitation on individual deductions 
        for 2019.--In the case of a taxable year beginning after 
        December 31, 2018, and before January 1, 2020, if the adjusted 
        gross income of the taxpayer for such taxable year does not 
        exceed $100,000,000, paragraph (6) shall be applied by 
        substituting `($20,000 in the case of a joint return)' for 
        `($5,000 in the case of a married individual filing a separate 
        return)'.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2018.

SEC. 3. ELIMINATION FOR 2020 AND 2021 OF LIMITATION ON DEDUCTION OF 
              STATE AND LOCAL TAXES.

    (a) In General.--Section 164(b) of the Internal Revenue Code of 
1986, as amended by section 2, is further amended by adding at the end 
the following new paragraph:
            ``(8) Suspension of dollar limitation on state and local 
        taxes for 2020 and 2021.--
                    ``(A) In general.--In the case of any taxable year 
                beginning in 2020 or 2021, subparagraph (B) of 
                paragraph (6) shall not apply.
                    ``(B) Exception for certain high-income 
                taxpayers.--Subparagraph (A) shall not apply to any 
                taxpayer for any taxable year if the adjusted gross 
                income of such taxpayer for such taxable year exceeds 
                $100,000,000.''.
    (b) Conforming Amendments.--Section 164(b)(6) of the Internal 
Revenue Code of 1986 is amended--
            (1) by striking ``For purposes of subparagraph (B)'' and 
        inserting ``For purposes of this section'';
            (2) by striking ``January 1, 2018'' and inserting ``January 
        1, 2022'';
            (3) by striking ``December 31, 2017, shall'' and inserting 
        ``December 31, 2021, shall''; and
            (4) by adding at the end the following: ``For purposes of 
        this section, in the case of State or local taxes with respect 
        to any real or personal property paid during a taxable year 
        beginning in 2020 or 2021, the Secretary shall prescribe rules 
        which treat all or a portion of such taxes as paid in a taxable 
        year or years other than the taxable year in which actually 
        paid as necessary or appropriate to prevent the avoidance of 
        the limitations of this subsection.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxes paid or accrued in taxable years beginning after 
December 31, 2019.

SEC. 4. INCREASE IN DEDUCTION FOR CERTAIN EXPENSES OF ELEMENTARY AND 
              SECONDARY SCHOOL TEACHERS.

    (a) Increase.--Section 62(a)(2)(D) of the Internal Revenue Code of 
1986 is amended by striking ``$250'' and inserting ``$1,000''.
    (b) Conforming Amendments.--Section 62(d)(3) of the Internal 
Revenue Code of 1986 is amended--
            (1) by striking ``2015'' and inserting ``2019'';
            (2) by striking ``$250'' and inserting ``$1,000''; and
            (3) in subparagraph (B), by striking ``2014'' and inserting 
        ``2018''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2018.

SEC. 5. ABOVE-THE-LINE DEDUCTION ALLOWED FOR CERTAIN EXPENSES OF FIRST 
              RESPONDERS.

    (a) In General.--Section 62(a)(2) of the Internal Revenue Code of 
1986 is amended by adding at the end the following new subparagraph:
                    ``(F) Certain expenses of first responders.--The 
                deductions allowed by section 162 which consist of 
                expenses, not in excess of $1,000, paid or incurred by 
                a first responder--
                            ``(i) as tuition or fees for the 
                        participation of the first responder in 
                        professional development courses related to 
                        service as a first responder; or
                            ``(ii) for uniforms used by the first 
                        responder in service as a first responder.''.
    (b) First Responder Defined.--Section 62(d) of the Internal Revenue 
Code of 1986 is amended by adding at the end the following new 
paragraph:
            ``(4) First responder.--For purposes of subsection 
        (a)(2)(F), the term `first responder' means, with respect to 
        any taxable year, any individual who is employed as a law 
        enforcement officer, firefighter, paramedic, or emergency 
        medical technician for at least 1,000 hours during such taxable 
        year.''.
    (c) Inflation Adjustment.--Section 62(d)(3) of the Internal Revenue 
Code of 1986, as amended by section 4, is further amended by striking 
``the $1,000 amount in subsection (a)(2)(D)'' and inserting ``the 
$1,000 amount in each of subparagraphs (D) and (F) of subsection 
(a)(2)''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2019.

SEC. 6. INCREASE OF TOP MARGINAL INDIVIDUAL INCOME TAX RATE UNDER 
              TEMPORARY RULES.

    (a) In General.--The tables contained in subparagraphs (A), (B), 
(C), (D), and (E) of section 1(j)(2) of the Internal Revenue Code of 
1986 are each amended by striking ``37%'' and inserting ``39.6%'' and--
            (1) in subparagraph (A)--
                    (A) by striking ``$600,000'' each place such term 
                appears and inserting ``$479,000''; and
                    (B) by striking ``$161,379'' and inserting 
                ``$119,029'';
            (2) in subparagraph (B)--
                    (A) by striking ``$500,000'' each place such term 
                appears and inserting ``$452,400''; and
                    (B) by striking ``$149,298'' and inserting 
                ``$132,638'';
            (3) in subparagraph (C)--
                    (A) by striking ``$500,000'' each place such term 
                appears and inserting ``$425,800''; and
                    (B) by striking ``$150,689.50'' and inserting 
                ``$124,719.50''; and
            (4) in subparagraph (D)--
                    (A) by striking ``$300,000'' each place such term 
                appears and inserting ``$239,500''; and
                    (B) by striking ``$80,689.50'' and inserting 
                ``$59,514.50''.
    (b) Conforming Amendments.--
            (1) Section 1(j)(4)(B)(iii) of the Internal Revenue Code of 
        1986 is amended--
                    (A) in the matter preceding subclause (I), by 
                striking ``37 percent'' and inserting ``39.6 percent'';
                    (B) in subclause (II), by striking ``37-percent 
                bracket'' and inserting ``39.6-percent bracket''; and
                    (C) in the heading, by striking ``37-percent 
                bracket'' and inserting ``39.6-percent bracket''.
            (2) Section 1(j)(4)(C) of such Code is amended--
                    (A) in clause (i)(II), by striking ``paragraph 
                (5)(B)(i)(IV)'' and inserting ``paragraph (5)(B)(iv)''; 
                and
                    (B) by amending clause (ii) to read as follows:
                            ``(ii) the amount which would (without 
                        regard to this paragraph) be taxed at a rate 
                        below 39.6 percent shall not be more than the 
                        sum of--
                                    ``(I) the earned taxable income of 
                                such child, plus
                                    ``(II) the maximum dollar amount 
                                for the 35-percent rate bracket for 
                                estates and trusts.''.
            (3) The heading of section 1(j)(5) of such Code is amended 
        to read as follows: ``Application of zero percent capital gain 
        rate brackets''.
            (4) Subparagraphs (A) and (B) of section 1(j)(5) of such 
        Code are amended to read as follows:
                    ``(A) In general.--Subsection (h)(1)(B)(i) shall be 
                applied by substituting `below the maximum zero rate 
                amount' for `which would (without regard to this 
                paragraph) be taxed at a rate below 25 percent'.
                    ``(B) Maximum zero rate amount defined.--For 
                purposes of subparagraph (A), the term `maximum zero 
                rate amount' means--
                            ``(i) in the case of a joint return or 
                        surviving spouse, $77,200;
                            ``(ii) in the case of an individual who is 
                        a head of household (as defined in section 
                        2(b)), $51,700;
                            ``(iii) in the case of any other individual 
                        (other than an estate or trust), an amount 
                        equal to \1/2\ of the amount in effect for the 
                        taxable year under clause (i); and
                            ``(iv) in the case of an estate or trust, 
                        $2,600.''.
            (5) Section 1(j)(5)(C) of such Code is amended by striking 
        ``clauses (i) and (ii) of''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2019.
    (d) Section 15 Not To Apply.--Section 15 of the Internal Revenue 
Code of 1986 shall not apply to any change in a rate of tax by reason 
of any amendment made by this section.
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