Dems Revised Ev Tax Credit

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COMMITTEE PRINT CONSISTING OF

SUBTITLES F, G, H, AND J
Budget Reconciliation Legislative Recommendations Relating
to Infrastructure Financing, Green Energy, Social Safety
Net, and Prescription Drug Pricing
1 Subtitle F—Infrastructure Financ-

2 ing and Community Develop-
3 ment
4 SEC. 135001. AMENDMENT OF 1986 CODE.
5 Except as otherwise expressly provided, whenever in

6 this subtitle an amendment or repeal is expressed in terms
7 of an amendment to, or repeal of, a section or other provi-
8 sion, the reference shall be considered to be made to a
9 section or other provision of the Internal Revenue Code
10 of 1986.
11 PART 1—INFRASTRUCTURE FINANCING
12 Subpart A—Bond Financing
13 SEC. 135101. CREDIT TO ISSUER FOR CERTAIN INFRA-
14 STRUCTURE BONDS.
15 (a) IN GENERAL.—Subchapter B of chapter 65 is

16 amended by inserting before section 6432 the following
17 new section:
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1 ‘‘SEC. 6431A. CREDIT ALLOWED TO ISSUER FOR QUALIFIED
2 INFRASTRUCTURE BONDS.
3 ‘‘(a) IN GENERAL.—In the case of a qualified infra-

4 structure bond, the issuer of such bond shall be allowed
5 a credit with respect to each interest payment under such
6 bond which shall be payable by the Secretary as provided
7 in subsection (b).
8 ‘‘(b) PAYMENT OF CREDIT.—
9 ‘‘(1) IN GENERAL.—The Secretary shall pay
10 (contemporaneously with each date on which interest
11 is paid, including any interest paid after the origi-
12 nally scheduled payment date) to the issuer of such
13 bond (or, at the direction of the issuer, to any per-
14 son who makes such interest payments on behalf of
15 such issuer) an amount equal to the applicable per-
16 centage of such interest so paid.
17 ‘‘(2) APPLICABLE PERCENTAGE.—For purposes
18 of this subsection, except as provided in subsection
19 (d), the applicable percentage with respect to any
20 bond shall be determined under the following table:
‘‘In the case of a bond issued The applicable percentage is:
during calendar year:
2022 through 2024 ...................................................................... 35%
2025 ............................................................................................. 32%
2026 ............................................................................................. 30%
2027 and thereafter ..................................................................... 28%
21 ‘‘(3) LIMITATION.—
22 ‘‘(A) IN GENERAL.—The amount of any
23 interest payment taken into account under
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1 paragraph (1) with respect to a bond for any
2 payment date shall not exceed the amount of
3 interest which would have been payable under
4 such bond for such payment date if interest
5 were determined at the applicable credit rate
6 multiplied by the applicable amount for such
7 bond for such payment date.
8 ‘‘(B) APPLICABLE CREDIT RATE.—For
9 purposes of subparagraph (A)—

10 ‘‘(i) IN GENERAL.—The applicable
11 credit rate is the rate which the Secretary
12 estimates will permit the issuance of quali-
13 fied infrastructure bonds with a specified
14 maturity or redemption date without dis-
15 count and without additional interest cost
16 to the issuer.
17 ‘‘(ii) DATE OF DETERMINATION.—The
18 applicable credit rate with respect to any

19 qualified infrastructure bond shall be de-
20 termined as of the first day on which there
21 is a binding, written contract for the sale
22 or exchange of the bond.
23 ‘‘(C) APPLICABLE AMOUNT.—
24 ‘‘(i) BONDS WITH MORE THAN DE
25 MINIMIS ORIGINAL ISSUE DISCOUNT.—In
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1 the case of any bond that has more than
2 a de minimis amount of original issue dis-
3 count (determined under the rules of sec-
4 tion 1273(a)(3)), the applicable amount for
5 a payment date is the issue price of such
6 bond (within the meaning of section 148),
7 as adjusted for any principal payments
8 made prior to such date.
9 ‘‘(ii) OTHER BONDS.—In the case of
10 any other bond, the applicable amount for
11 a payment date is the outstanding prin-
12 cipal amount of such bond on such pay-
13 ment date (determined without taking into
14 account any principal payment on such
15 bond on such date).
16 ‘‘(c) QUALIFIED INFRASTRUCTURE BOND.—
17 ‘‘(1) IN GENERAL.—For purposes of this sec-
18 tion, the term ‘qualified infrastructure bond’ means
19 any bond (other than a private activity bond) issued
20 as part of an issue if—
21 ‘‘(A) 100 percent of the excess of available
22 project proceeds of such issue over the amounts
23 in a reasonably required reserve (within the
24 meaning of section 150(a)(3)) with respect to
25 such issue are to be used for—
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1 ‘‘(i) capital expenditures or operations
2 and maintenance expenditures in connec-
3 tion with property the acquisition, con-
4 struction, or improvement of which would
5 be a capital expenditure, or
6 ‘‘(ii) payments made by a State or po-
7 litical subdivision of a State to a custodian
8 of a rail corridor for purposes of the trans-
9 fer, lease, sale, or acquisition of an estab-
10 lished railroad right-of-way consistent with
11 section 8(d) of the National Trails Act of
12 1968, but only if the Surface Transpor-
13 tation Board has issued a certificate of in-
14 terim trail use or notice of interim trail use
15 for purposes of authorizing such transfer,
16 lease, sale, or acquisition,
17 ‘‘(B) the interest on such bond would (but
18 for this section) be excludable from gross in-
19 come under section 103,
20 ‘‘(C) the issue price has not more than a
21 de minimis amount (determined under rules
22 similar to the rules of section 1273(a)(3)) of
23 premium over the stated principal amount of
24 the bond, and
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1 ‘‘(D) prior to the issuance of such bond,
2 the issuer makes an irrevocable election to have
3 this section apply.
4 ‘‘(2) APPLICABLE RULES.—For purposes of ap-
5 plying paragraph (1)—
6 ‘‘(A) NOT TREATED AS FEDERALLY GUAR-
7 ANTEED.—For purposes of section 149(b), a

8 qualified infrastructure bond shall not be treat-
9 ed as federally guaranteed by reason of the
10 credit allowed under this section.
11 ‘‘(B) APPLICATION OF ARBITRAGE
12 RULES.—For purposes of section 148, the yield

13 on a qualified infrastructure bond shall be re-
14 duced by the credit allowed under this section,
15 except that no such reduction shall apply in de-
16 termining the amount of gross proceeds of an
17 issue that qualifies as a reasonably required re-
18 serve or replacement fund.
19 ‘‘(d) DEFINITION AND SPECIAL RULES.—For pur-
20 poses of this section—
21 ‘‘(1) INTEREST INCLUDIBLE IN GROSS IN-
22 COME.—For purposes of this title, interest on any

23 qualified infrastructure bond shall be includible in
24 gross income.
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1 ‘‘(2) AVAILABLE PROJECT PROCEEDS.—The
2 term ‘available project proceeds’ means—

3 ‘‘(A) the excess of—
4 ‘‘(i) the proceeds from the sale of an
5 issue, over
6 ‘‘(ii) issuance costs financed by the
7 issue (to the extent that such costs do not
8 exceed 2 percent of such proceeds), and
9 ‘‘(B) the proceeds from any investment of
10 the excess described in subparagraph (A).
11 ‘‘(3) CURRENT REFUNDINGS ALLOWED.—
12 ‘‘(A) IN GENERAL.—In the case of a bond

13 issued to refund a qualified infrastructure bond,
14 such refunding bond shall not be treated as a
15 qualified infrastructure bond for purposes of
16 this section unless—
17 ‘‘(i) the average maturity date of the
18 issue of which the refunding bond is a part
19 is not later than the average maturity date
20 of the bonds to be refunded by such issue,
21 ‘‘(ii) the amount of the refunding
22 bond does not exceed the outstanding
23 amount of the refunded bond,
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1 ‘‘(iii) the refunded bond is redeemed
2 not later than 90 days after the date of the
3 issuance of the refunding bond, and
4 ‘‘(iv) the refunded bond was issued
5 more than 30 days after the date of the
6 enactment of this section.
7 ‘‘(B) APPLICABLE PERCENTAGE LIMITA-
8 TION.—The applicable percentage with respect

9 to any bond to which subparagraph (A) applies
10 shall be 28 percent.
11 ‘‘(C) DETERMINATION OF AVERAGE MATU-
12 RITY.—For purposes of subparagraph (A)(i),

13 average maturity shall be determined in accord-
14 ance with section 147(b)(2)(A).
15 ‘‘(4) APPLICATION OF DAVIS-BACON ACT RE-
16 QUIREMENTS WITH RESPECT TO QUALIFIED INFRA-
17 STRUCTURE BONDS.—Subchapter IV of chapter 31

18 of title 40, United States Code, shall apply to
19 projects financed with the proceeds of qualified in-
20 frastructure bonds.
21 ‘‘(e) REGULATIONS.—The Secretary may prescribe
22 such regulations and other guidance as may be necessary
23 or appropriate to carry out this section.’’.
24 (b) GROSS-UP OF PAYMENT TO ISSUERS IN CASE OF
25 SEQUESTRATION.—In the case of any payment under sec-
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1 tion 6431A of the Internal Revenue Code of 1986 made
2 after the date of the enactment of this Act to which se-
3 questration applies, the amount of such payment shall be
4 increased to an amount equal to—
5 (1) such payment (determined before such se-
6 questration), multiplied by
7 (2) the quotient obtained by dividing 1 by the
8 amount by which 1 exceeds the percentage reduction
9 in such payment pursuant to such sequestration.
10 For purposes of this subsection, the term ‘‘sequestration’’
11 means any reduction in direct spending ordered in accord-
12 ance with a sequestration report prepared by the Director
13 of the Office and Management and Budget pursuant to
14 the Balanced Budget and Emergency Deficit Control Act
15 of 1985 or the Statutory Pay-As-You-Go Act of 2010.
16 (c) CONFORMING AMENDMENTS.—
17 (1) Section 1324(b)(2) of title 31, United
18 States Code, is amended by striking ‘‘or 6431’’ and
19 inserting ‘‘6431, or 6431A’’.
20 (2) The table of sections for subchapter B of
21 chapter 65 is amended by inserting before the item
22 relating to section 6432 the following new item:
‘‘Sec. 6431A. Credit allowed to issuer for qualified infrastructure bonds.’’.
23 (d) EFFECTIVE DATE.—The amendments made by

24 this section shall apply to bonds issued after December
25 31, 2021.
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1 SEC. 135102. ADVANCE REFUNDING BONDS.
2 (a) IN GENERAL.—Section 149(d) is amended—

3 (1) by striking ‘‘to advance refund another
4 bond.’’ in paragraph (1) and inserting ‘‘as part of
5 an issue described in paragraph (2), (3), or (4).’’,
6 (2) by redesignating paragraphs (2) and (3) as
7 paragraphs (5) and (7), respectively,
8 (3) by inserting after paragraph (1) the fol-
9 lowing new paragraphs:
10 ‘‘(2) CERTAIN PRIVATE ACTIVITY BONDS.—An
11 issue is described in this paragraph if any bond

12 (issued as part of such issue) is issued to advance
13 refund a private activity bond (other than a qualified
14 501(c)(3) bond).
15 ‘‘(3) OTHER BONDS.—
16 ‘‘(A) IN GENERAL.—An issue is described

17 in this paragraph if any bond (issued as part of
18 such issue), hereinafter in this paragraph re-
19 ferred to as the ‘refunding bond’, is issued to
20 advance refund a bond unless—
21 ‘‘(i) the refunding bond is only—
22 ‘‘(I) the first advance refunding
23 of the original bond if the original
24 bond is issued after 1985, or
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1 ‘‘(II) the first or second advance
2 refunding of the original bond if the
3 original bond was issued before 1986,
4 ‘‘(ii) in the case of refunded bonds
5 issued before 1986, the refunded bond is
6 redeemed not later than the earliest date
7 on which such bond may be redeemed at
8 par or at a premium of 3 percent or less,
9 ‘‘(iii) in the case of refunded bonds
10 issued after 1985, the refunded bond is re-
11 deemed not later than the earliest date on
12 which such bond may be redeemed,
13 ‘‘(iv) the initial temporary period
14 under section 148(c) ends—
15 ‘‘(I) with respect to the proceeds
16 of the refunding bond not later than
17 30 days after the date of issue of such
18 bond, and
19 ‘‘(II) with respect to the proceeds
20 of the refunded bond on the date of
21 issue of the refunding bond, and
22 ‘‘(v) in the case of refunded bonds to
23 which section 148(e) did not apply, on and
24 after the date of issue of the refunding
25 bond, the amount of proceeds of the re-
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1 funded bond invested in higher yielding in-
2 vestments (as defined in section 148(b))
3 which are nonpurpose investments (as de-
4 fined in section 148(f)(6)(A)) does not ex-
5 ceed—
6 ‘‘(I) the amount so invested as
7 part of a reasonably required reserve
8 or replacement fund or during an al-
9 lowable temporary period, and
10 ‘‘(II) the amount which is equal
11 to the lesser of 5 percent of the pro-
12 ceeds of the issue of which the re-
13 funded bond is a part or $100,000 (to
14 the extent such amount is allocable to
15 the refunded bond).
16 ‘‘(B) SPECIAL RULES FOR REDEMP-
17 TIONS.—
18 ‘‘(i) ISSUER MUST REDEEM ONLY IF
19 DEBT SERVICE SAVINGS.—Clause (ii) and

20 (iii) of subparagraph (A) shall apply only
21 if the issuer may realize present value debt
22 service savings (determined without regard
23 to administrative expenses) in connection
24 with the issue of which the refunding bond
25 is a part.
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1 ‘‘(ii) REDEMPTIONS NOT REQUIRED
2 BEFORE 90TH DAY.—For purposes of

3 clauses (ii) and (iii) of subparagraph (A),
4 the earliest date referred to in such clauses
5 shall not be earlier than the 90th day after
6 the date of issuance of the refunding bond.
7 ‘‘(4) ABUSIVE TRANSACTIONS PROHIBITED.—
8 An issue is described in this paragraph if any bond

9 (issued as part of such issue) is issued to advance
10 refund another bond and a device is employed in
11 connection with the issuance of such issue to obtain
12 a material financial advantage (based on arbitrage)
13 apart from savings attributable to lower interest
14 rates.’’, and
15 (4) by inserting after paragraph (5) (as so re-
16 designated) the following new paragraph:
17 ‘‘(6) SPECIAL RULES FOR PURPOSES OF PARA-
18 GRAPH (3).—For purposes of paragraph (3), bonds

19 issued before October 22, 1986, shall be taken into
20 account under subparagraph (A)(i) thereof except—
21 ‘‘(A) a refunding which occurred before
22 1986 shall be treated as an advance refunding
23 only if the refunding bond was issued more
24 than 180 days before the redemption of the re-
25 funded bond, and
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1 ‘‘(B) a bond issued before 1986, shall be
2 treated as advance refunded no more than once
3 before March 15, 1986.’’.
4 (b) CONFORMING AMENDMENT.—Section
5 148(f)(4)(C) is amended by redesignating clauses (xiv)
6 through (xvi) as clauses (xv) to (xvii), respectively, and
7 by inserting after clause (xiii) the following new clause:
8 ‘‘(xiv) DETERMINATION OF INITIAL
9 TEMPORARY PERIOD.—For purposes of

10 this subparagraph, the end of the initial
11 section temporary period shall be deter-
12 mined without regard to section
13 149(d)(3)(A)(iv).’’.
14 (c) EFFECTIVE DATE.—The amendments made by
15 this section shall apply to advance refunding bonds issued
16 more than 30 days after the date of the enactment of this
17 Act.
18 SEC. 135103. PERMANENT MODIFICATION OF SMALL
19 ISSUER EXCEPTION TO TAX-EXEMPT INTER-
20 EST EXPENSE ALLOCATION RULES FOR FI-
21 NANCIAL INSTITUTIONS.
22 (a) PERMANENT INCREASE IN LIMITATION.—Sub-

23 paragraphs (C)(i), (D)(i), and (D)(iii)(II) of section
24 265(b)(3) are each amended by striking ‘‘$10,000,000’’
25 and inserting ‘‘$30,000,000’’.
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1 (b) PERMANENT MODIFICATION OF OTHER SPECIAL
2 RULES.—Section 265(b)(3) is amended—
3 (1) by redesignating clauses (iv), (v), and (vi)
4 of subparagraph (G) as clauses (ii), (iii), and (iv),
5 respectively, and moving such clauses to the end of
6 subparagraph (H) (as added by paragraph (2)), and
7 (2) by striking so much of subparagraph (G) as
8 precedes such clauses and inserting the following:
9 ‘‘(G) QUALIFIED 501(c)(3) BONDS TREATED
10 AS ISSUED BY EXEMPT ORGANIZATION.—In the

11 case of a qualified 501(c)(3) bond (as defined
12 in section 145), this paragraph shall be applied
13 by treating the 501(c)(3) organization for
14 whose benefit such bond was issued as the
15 issuer.
16 ‘‘(H) SPECIAL RULE FOR QUALIFIED
17 FINANCINGS.—
18 ‘‘(i) IN GENERAL.—In the case of a

19 qualified financing issue—
20 ‘‘(I) subparagraph (F) shall not
21 apply, and
22 ‘‘(II) any obligation issued as a
23 part of such issue shall be treated as
24 a qualified tax-exempt obligation if
25 the requirements of this paragraph
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1 are met with respect to each qualified
2 portion of the issue (determined by
3 treating each qualified portion as a
4 separate issue which is issued by the
5 qualified borrower with respect to
6 which such portion relates).’’.
7 (c) INFLATION ADJUSTMENT.—Section 265(b)(3), as
8 amended by subsection (b), is amended by adding at the
9 end the following new subparagraph:
10 ‘‘(I) INFLATION ADJUSTMENT.—In the
11 case of any calendar year after 2021, the
12 $30,000,000 amounts contained in subpara-
13 graphs (C)(i), (D)(i), and (D)(iii)(II) shall each
14 be increased by an amount equal to—
15 ‘‘(i) such dollar amount, multiplied by
16 ‘‘(ii) the cost-of-living adjustment de-
17 termined under section 1(f)(3) for such
18 calendar year, determined by substituting
19 ‘calendar year 2020’ for ‘calendar year
20 2016’ in subparagraph (A)(ii) thereof.
21 Any increase determined under the preceding
22 sentence shall be rounded to the nearest mul-
23 tiple of $100,000.’’.
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2 this section shall apply to obligations issued after the date
3 of the enactment of this Act.
4 SEC. 135104. MODIFICATIONS TO QUALIFIED SMALL ISSUE
5 BONDS.
6 (a) MANUFACTURING FACILITIES TO INCLUDE PRO-

7 DUCTION OF INTANGIBLE PROPERTY AND FUNCTIONALLY
8 RELATED FACILITIES.—Subparagraph (C) of section
9 144(a)(12) is amended to read as follows:
10 ‘‘(C) MANUFACTURING FACILITY.—For
11 purposes of this paragraph—

12 ‘‘(i) IN GENERAL.—The term ‘manu-
13 facturing facility’ means any facility
14 which—
15 ‘‘(I) is used in the manufacturing
16 or production of tangible personal
17 property (including the processing re-
18 sulting in a change in the condition of
19 such property),
20 ‘‘(II) is used in the creation or
21 production of intangible property
22 which is described in section
23 197(d)(1)(C)(iii), or
24 ‘‘(III) is functionally related and
25 subordinate to a facility described in
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1 subclause (I) or (II) if such facility is
2 located on the same site as the facility
3 described in subclause (I) or (II).
4 ‘‘(ii) CERTAIN FACILITIES IN-
5 CLUDED.—The term ‘manufacturing facil-

6 ity’ includes facilities that are directly re-
7 lated and ancillary to a manufacturing fa-
8 cility (determined without regard to this
9 clause) if—
10 ‘‘(I) those facilities are located on
11 the same site as the manufacturing
12 facility, and
13 ‘‘(II) not more than 25 percent
14 of the net proceeds of the issue are
15 used to provide those facilities.
16 ‘‘(iii) LIMITATION ON OFFICE
17 SPACE.—A rule similar to the rule of sec-

18 tion 142(b)(2) shall apply for purposes of
19 clause (i).
20 ‘‘(iv) LIMITATION ON REFUNDINGS
21 FOR CERTAIN PROPERTY.—Subclauses (II)

22 and (III) of clause (i) shall not apply to
23 any bond issued on or before the date of
24 the enactment of the Act to provide for
25 reconciliation pursuant to title II of S.
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1 Con. Res. 14, or to any bond issued to re-
2 fund a bond issued on or before such date
3 (other than a bond to which clause (iii) of
4 this subparagraph (as in effect before the
5 date of the enactment of such Act) ap-
6 plies), either directly or in a series of
7 refundings.’’.
8 (b) INCREASE IN LIMITATIONS.—Section 144(a)(4) is
9 amended—
10 (1) in subparagraph (A)(i), by striking
11 ‘‘$10,000,000’’ and inserting ‘‘$30,000,000’’, and
12 (2) in the heading, by striking ‘‘$10,000,000’’ and
13 inserting ‘‘$30,000,000’’.
14 (c) ADJUSTMENT FOR INFLATION.—Section
15 144(a)(4) is amended by adding at the end the following
16 new subparagraph:
17 ‘‘(H) ADJUSTMENT FOR INFLATION.—In
18 the case of any calendar year after 2021, the

19 $30,000,000 amount in subparagraph (A) shall
23 termined under section 1(f)(3) for the cal-
24 endar year, determined by substituting
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3 If any amount as increased under the preceding
4 sentence is not a multiple of $100,000, such
5 amount shall be rounded to the nearest multiple
6 of $100,000.’’.
8 this section shall apply to obligations issued after the date
9 of the enactment of this Act.
10 SEC. 135105. EXPANSION OF CERTAIN EXCEPTIONS TO THE
11 PRIVATE ACTIVITY BOND RULES FOR FIRST-
12 TIME FARMERS.
13 (a) INCREASE IN DOLLAR LIMITATION.—

14 (1) IN GENERAL.—Section 147(c)(2)(A) is
15 amended by striking ‘‘$450,000’’ and inserting
16 ‘‘$552,500’’.
17 (2) REPEAL OF SEPARATE LOWER DOLLAR LIM-
18 ITATION ON USED FARM EQUIPMENT.—Section
19 147(c)(2) is amended by striking subparagraph (F)

20 and by redesignating subparagraphs (G) and (H) as
21 subparagraphs (F) and (G), respectively.
22 (3) QUALIFIED SMALL ISSUE BOND LIMITATION
23 CONFORMED TO INCREASED DOLLAR LIMITATION.—
24 Section 144(a)(11)(A) is amended by striking

25 ‘‘$250,000’’ and inserting ‘‘$552,500’’.
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1 (4) INFLATION ADJUSTMENT.—
2 (A) IN GENERAL.—Section 147(c)(2)(G),

3 as redesignated by paragraph (2), is amended—
4 (i) by striking ‘‘after 2008, the dollar
5 amount in subparagraph (A) shall be in-
6 creased’’ and inserting ‘‘after 2021, the
7 dollar amounts in subparagraph (A) and
8 section 144(a)(11)(A) shall each be in-
9 creased’’, and
10 (ii) in clause (ii), by striking ‘‘2007’’
11 and inserting ‘‘2020’’.
12 (B) CROSS-REFERENCE.—Section
13 144(a)(11) is amended by adding at the end the
14 following new subparagraph:
15 ‘‘(D) INFLATION ADJUSTMENT.—For infla-
16 tion adjustment of dollar amount contained in
17 subparagraph (A), see section 147(c)(2)(G).’’.
18 (b) SUBSTANTIAL FARMLAND DETERMINED ON
19 BASIS OF AVERAGE RATHER THAN MEDIAN FARM

20 SIZE.—Section 147(c)(2)(E) is amended by striking ‘‘me-
21 dian’’ and inserting ‘‘average’’.
23 this section shall apply to bonds issued after the date of
24 the enactment of this Act.
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1 SEC. 135106. CERTAIN WATER AND SEWAGE FACILITY
2 BONDS EXEMPT FROM VOLUME CAP ON PRI-
3 VATE ACTIVITY BONDS.
4 (a) IN GENERAL.—Section 146(g) is amended by

5 striking ‘‘and’’ at the end of paragraph (3), striking the
6 period at the end of paragraph (4) and inserting ‘‘, and’’,
7 and inserting after paragraph (4) the following new para-
8 graph:
9 ‘‘(5) any exempt facility bond issued as part of
10 an issue described in paragraph (4) or (5) of section
11 142(a) if 95 percent or more of the net proceeds of
12 such issue are to be used to provide facilities
13 which—
14 ‘‘(A) will be used—
15 ‘‘(i) by a person who was, as of July
16 1, 2020, engaged in operation of a facility
17 described in such paragraph, and
18 ‘‘(ii) to provide service within the area
19 served by such person on such date (or
20 within a county or city any portion of
21 which is within such area), or
22 ‘‘(B) will be used by a successor in interest
23 to such person for the same use and within the
24 same service area as described in subparagraph
25 (A).’’.
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23
1 (b) EFFECTIVE DATE.—The amendments made by
4 SEC. 135107. EXEMPT FACILITY BONDS FOR ZERO-EMISSION
5 VEHICLE INFRASTRUCTURE.
6 (a) IN GENERAL.—Section 142 is amended—

7 (1) in subsection (a)—
8 (A) in paragraph (14), by striking ‘‘or’’ at
9 the end,
10 (B) in paragraph (15), by striking the pe-
11 riod at the end and inserting ‘‘, or’’, and
12 (C) by adding at the end the following new
13 paragraph:
14 ‘‘(16) zero-emission vehicle infrastructure.’’,
15 and
16 (2) by adding at the end the following new sub-
17 section:
18 ‘‘(n) ZERO-EMISSION VEHICLE INFRASTRUCTURE.—
19 ‘‘(1) IN GENERAL.—For purposes of subsection
20 (a)(16), the term ‘zero-emission vehicle infrastruc-
21 ture’ means any property (not including a building
22 and its structural components) if such property is
23 part of a unit which—
24 ‘‘(A) is used to charge or fuel zero-emis-
25 sions vehicles,
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24
1 ‘‘(B) is located where the vehicles are
2 charged or fueled,
3 ‘‘(C) is of a character subject to the allow-
4 ance for depreciation (or amortization in lieu of
5 depreciation),
6 ‘‘(D) is made available for use by members
7 of the general public,
8 ‘‘(E) accepts payment via a credit card
9 reader, including a credit card reader that uses
10 contactless technology, and
11 ‘‘(F) is capable of charging or fueling vehi-
12 cles produced by more than one manufacturer
13 (within the meaning of section 30D(d)(3)).
14 ‘‘(2) INCLUSION OF UTILITY SERVICE CONNEC-
15 TIONS, ETC.—The term ‘zero-emission vehicle infra-

16 structure’ shall include any utility service connec-
17 tions, utility panel upgrades, line extensions and
18 conduit, transformer upgrades, or similar property,
19 in connection with property meeting the require-
20 ments of paragraph (1).
21 ‘‘(3) ZERO-EMISSIONS VEHICLE.—The term
22 ‘zero-emissions vehicle’ means—
23 ‘‘(A) a zero-emission vehicle as defined in
24 section 88.102–94 of title 40, Code of Federal
25 Regulations, or
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1 ‘‘(B) a vehicle that produces zero exhaust
2 emissions of any criteria pollutant (or precursor
3 pollutant) or greenhouse gas under any possible
4 operational modes and conditions.
5 ‘‘(4) ZERO-EMISSIONS VEHICLE INFRASTRUC-
6 TURE LOCATED WITHIN OTHER FACILITIES OR
7 PROJECTS.—For purposes of subsection (a), any

8 zero-emission vehicle infrastructure located within—
9 ‘‘(A) a facility or project described in sub-
10 section (a), or
11 ‘‘(B) an area adjacent to a facility or
12 project described in subsection (a) that pri-
13 marily serves vehicles traveling to or from such
14 facility or project,
15 shall be treated as described in the paragraph in
16 which such facility or project is described.
17 ‘‘(5) EXCEPTION FOR REFUELING PROPERTY
18 FOR FLEET VEHICLES.—Subparagraphs (D), (E),

19 and (F) of paragraph (1) shall not apply to property
20 which is part of a unit which is used exclusively by
21 fleets of commercial or governmental vehicles.’’.
23 this section shall apply to obligations issued after Decem-
24 ber 31, 2021.
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1 SEC. 135108. APPLICATION OF DAVIS-BACON ACT REQUIRE-
2 MENTS WITH RESPECT TO CERTAIN EXEMPT
3 FACILITY BONDS.
4 (a) IN GENERAL.—Section 142(b) is amended by

5 adding at the end the following new paragraph:
6 ‘‘(3) APPLICATION OF DAVIS-BACON ACT RE-
7 QUIREMENTS WITH RESPECT TO CERTAIN EXEMPT
8 FACILITY BONDS.—If any proceeds of any issue are

9 used for construction, alteration, or repair of any fa-
10 cility otherwise described in paragraph (4), (5), (15),
11 or (16) of subsection (a), such facility shall be treat-
12 ed for purposes of subsection (a) as described in
13 such paragraph only if each entity that receives such
14 proceeds to conduct such construction, alteration, or
15 repair agrees to comply with the provisions of sub-
16 chapter IV of chapter 31 of title 40, United States
17 Code with respect to such construction, alteration, or
18 repair.’’.
19 (b) EFFECTIVE DATE.—The amendment made by
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1 Subpart B—Other Provisions Related to
2 Infrastructure Financing
3 SEC. 135111. CREDIT FOR OPERATIONS AND MAINTENANCE
4 COSTS OF GOVERNMENT-OWNED
5 BROADBAND.
6 (a) IN GENERAL.—Subchapter B of chapter 65, as

7 amended by the preceding provisions of this Act, is amend-
8 ed by inserting before section 6432 the following new sec-
9 tion:
10 ‘‘SEC. 6431B. CREDIT FOR OPERATIONS AND MAINTENANCE
11 COSTS OF GOVERNMENT-OWNED
12 BROADBAND.
13 ‘‘(a) IN GENERAL.—In the case of any eligible gov-

14 ernmental entity, there shall be allowed a credit equal to
15 the applicable percentage of the qualified broadband ex-
16 penses paid or incurred by such entity during the taxable
17 year which credit shall be payable by the Secretary as pro-
18 vided in subsection (b).
19 ‘‘(b) PAYMENT OF CREDIT.—Upon receipt from an
20 eligible governmental entity of such information as the
21 Secretary may require for purposes of carrying out this
22 section, the Secretary shall pay to such entity the amount
23 of the credit determined under subsection (a) for the tax-
24 able year.
25 ‘‘(c) LIMITATION.—The amount of qualified
26 broadband expenses taken into account under this section
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1 for any taxable year with respect to any qualified
2 broadband network shall not exceed the product of $400
3 multiplied by the number of qualified households sub-
4 scribed to the qualified broadband service provided by
5 such network (determined as of any time during such tax-
6 able year).
7 ‘‘(d) DEFINITIONS.—For purposes of this section—
8 ‘‘(1) APPLICABLE PERCENTAGE.—The term
9 ‘applicable percentage’ means—
10 ‘‘(A) in the case of any taxable year begin-
11 ning in 2021 through 2026, 30 percent,
12 ‘‘(B) in the case of any taxable year begin-
13 ning in 2027, 26 percent, and
14 ‘‘(C) in the case of any taxable year begin-
15 ning in 2028, 24 percent.
16 ‘‘(2) ELIGIBLE GOVERNMENTAL ENTITY.—The
17 term ‘eligible governmental entity’ means—

18 ‘‘(A) any State, local, or Indian tribal gov-
19 ernment,
20 ‘‘(B) any political subdivision or instru-
21 mentality of any government described in sub-
22 paragraph (A), and
23 ‘‘(C) any entity wholly owned by one or
24 more entities described in subparagraph (A) or
25 (B).
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1 For purposes of this paragraph, the term ‘State’ in-
2 cludes any possession of the United States.
3 ‘‘(3) QUALIFIED BROADBAND EXPENSES.—The
4 term ‘qualified broadband expenses’ means so much

5 of the amounts paid or incurred for the operation
6 and maintenance of a qualified broadband network
7 as are properly allocable to qualified households sub-
8 scribed to the qualified broadband service provided
9 by such network.
10 ‘‘(4) QUALIFIED HOUSEHOLD.—The term
11 ‘qualified household’ means a personal residence
12 which—
13 ‘‘(A) is located in a low-income community
14 (as defined in section 45D(e)), and
15 ‘‘(B) did not have access to qualified
16 broadband service from the eligible govern-
17 mental entity (determined as of the beginning
18 of the taxable year of such entity).
19 ‘‘(5) QUALIFIED BROADBAND NETWORK.—The
20 term ‘qualified broadband network’ means property

21 owned by an eligible governmental entity and used
22 for the purpose of providing qualified broadband
23 service.
24 ‘‘(6) QUALIFIED BROADBAND SERVICE.—The
25 term ‘qualified broadband service’ means fixed, ter-
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1 restrial broadband service providing downloads at a
2 speed of at least 25 megabits per second and
3 uploads at a speed of at least 3 megabits per second.
4 ‘‘(7) TAXABLE YEAR.—Except as otherwise pro-
5 vided by the Secretary, the term ‘taxable year’
6 means, with respect to any eligible governmental en-
7 tity, the fiscal year of such entity.
8 ‘‘(e) SPECIAL RULES.—
9 ‘‘(1) ALLOCATIONS.—For purposes of sub-
10 section (d)(3), amounts shall be treated as properly
11 allocated if allocated ratably among the subscribers
12 of the qualified broadband service.
13 ‘‘(2) DENIAL OF DOUBLE BENEFIT.—Qualified
14 broadband expenses shall not include any amount

15 which is paid or reimbursed (directly or indirectly)
16 by any grant from the Federal Government.
17 ‘‘(f) REGULATIONS.—The Secretary may prescribe
18 such regulations and other guidance as may be necessary
19 or appropriate to carry out this section.
20 ‘‘(g) TERMINATION.—No credit shall be allowed
21 under this section for any taxable year beginning after De-
22 cember 31, 2028.’’.
23 (b) PAYMENTS MADE UNDER SECTION 6431B(b) OF
24 INTERNAL REVENUE CODE OF 1986.—Section 255(h) of

25 the Balanced Budget and Emergency Deficit Control Act
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1 of 1985 (2 U.S.C. 905(h)) is amended by inserting: ‘‘Pay-
2 ments made under section 6431B(b) of the Internal Rev-
3 enue Code of 1986’’ after the item related to Payments
4 for Foster Care and Permanency.
7 States Code, as amended by the preceding provisions
8 of this Act, is amended by striking ‘‘or 6431A’’ and
9 inserting ‘‘6431A, or 6431B’’.
10 (2) The table of sections for subchapter B of
11 chapter 65, as amended by the preceding provisions
12 of this Act, is amended by inserting before the item
13 relating to section 6432 the following new item:
‘‘Sec. 6431B. Credit for operations and maintenance costs of government-
owned broadband.’’.

15 this section shall apply to taxable years beginning after
16 December 31, 2020.
17 PART 2—NEW MARKETS TAX CREDIT
18 SEC. 135201. PERMANENT EXTENSION OF NEW MARKETS
19 TAX CREDIT.
20 (a) TEMPORARY LIMIT INCREASE AND PERMANENT

21 EXTENSION.—Section 45D(f)(1) is amended by striking
22 ‘‘and’’ at the end of subparagraph (G) and by striking
23 subparagraph (H) and inserting the following new sub-
24 paragraphs:
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1 ‘‘(H) $5,000,000,000 for each of calendar
2 years 2020 and 2021,
3 ‘‘(I) $7,000,000,000 for calendar year
4 2022,
5 ‘‘(J) $6,000,000,000 for calendar year
6 2023, and
7 ‘‘(K) $5,000,000,000 for calendar year
8 2024 and each calendar year thereafter.’’.
9 (b) ALTERNATIVE MINIMUM TAX RELIEF.—Section
10 38(c)(4)(B) is amended—
11 (1) by redesignating clauses (v) through (xii) as
12 clauses (vi) through (xiii), respectively, and
13 (2) by inserting after clause (iv) the following
14 new clause:
15 ‘‘(v) the credit determined under sec-
16 tion 45D, but only with respect to credits
17 determined with respect to qualified equity
18 investments (as defined in section 45D(b))
19 initially made after December 31, 2021,’’.
20 (c) INFLATION ADJUSTMENT.—Section 45D(f) is
21 amended by adding at the end the following new para-
22 graph:
23 ‘‘(4) INFLATION ADJUSTMENT.—
24 ‘‘(A) IN GENERAL.—In the case of any cal-

25 endar year beginning after 2024, the dollar
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1 amount paragraph (1)(H) shall be increased by
2 an amount equal to—
9 ‘‘(B) ROUNDING RULE.—Any increase
10 under subparagraph (A) which is not a multiple
11 of $1,000,000 shall be rounded to the nearest
12 multiple of $1,000,000.’’.
13 (d) CONFORMING AMENDMENT.—Section 45D(f)(3)
14 is amended by striking the last sentence.
15 (e) EFFECTIVE DATES.—
16 (1) IN GENERAL.—Except as otherwise pro-
17 vided in this subsection, the amendments made by
18 this section shall apply to new markets tax credit
19 limitation determined for calendar years after 2021.
20 (2) ALTERNATIVE MINIMUM TAX RELIEF.—The
21 amendments made by subsection (b) shall apply to

22 credits determined with respect to qualified equity
23 investments (as defined in section 45D(b) of the In-
24 ternal Revenue Code of 1986) initially made after
25 December 31, 2021.
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1 PART 3—REHABILITATION TAX CREDIT
2 SEC. 135301. DETERMINATION OF CREDIT PERCENTAGE.
3 (a) IN GENERAL.—Section 47(a)(2) is amended by

4 striking ‘‘20 percent’’ and inserting ‘‘the applicable per-
5 centage’’.
6 (b) APPLICABLE PERCENTAGE.—Section 47(a) is
8 graph:
10 of this subsection, the term ‘applicable percentage’
11 means the percentage determined in accordance with
12 the following table:
‘‘In the case of taxable years begin- The applicable percentage is:
ning:
Before 2020 .......................................... 20 percent

In 2020 through 2025 ......................... 30 percent
In 2026 ................................................. 26 percent
In 2027 ................................................. 23 percent
After 2027 ............................................ 20 percent
13 ‘‘(4) APPLICATION OF PERCENTAGES TO YEAR
14 OF EXPENDITURE.—In the case of qualified rehabili-

15 tation expenditures with respect to the qualified re-
16 habilitated building that are paid or incurred in 2 or
17 more taxable years for which there is a different ap-
18 plicable percentage under paragraph (3), the ratable
19 share shall be determined by applying to such ex-
20 penditures the applicable percentage corresponding
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1 to the taxable year in which such expenditures were
2 paid or incurred.’’.
4 this section shall apply to property placed in service after
5 March 31, 2021.
6 SEC. 135302. INCREASE IN THE REHABILITATION CREDIT
7 FOR CERTAIN SMALL PROJECTS.
8 (a) IN GENERAL.—Section 47 is amended by adding

9 at the end the following new subsection:
10 ‘‘(e) SPECIAL RULE REGARDING CERTAIN SMALLER
11 PROJECTS.—
12 ‘‘(1) IN GENERAL.—In the case of any smaller
13 project—
14 ‘‘(A) the applicable percentage determined
15 under subsection (a)(3) shall be 30 percent, and
16 ‘‘(B) the qualified rehabilitation expendi-
17 tures taken into account under this section with
18 respect to such project shall not exceed
19 $2,500,000.
20 ‘‘(2) SMALLER PROJECT.—For purposes of this
21 subsection, the term ‘smaller project’ means the re-
22 habilitation of any qualified rehabilitated building
23 if—
24 ‘‘(A) the qualified rehabilitation expendi-
25 tures taken into account under this section (or
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1 which would be so taken into account but for
2 paragraph (1)(B)) with respect to such rehabili-
3 tation do not exceed $3,750,000,
4 ‘‘(B) no credit was allowed under this sec-
5 tion with respect to such building to any tax-
6 payer for either of the 2 taxable years imme-
7 diately preceding the first taxable year in which
8 expenditures described in subparagraph (A)
9 were paid or incurred, and
10 ‘‘(C) the taxpayer elects (at such time and
11 manner as the Secretary may provide) to have
12 this subsection apply with respect to such reha-
13 bilitation.’’.
16 December 31, 2021.
17 SEC. 135303. MODIFICATION OF DEFINITION OF SUBSTAN-
18 TIALLY REHABILITATED.
19 (a) IN GENERAL.—Section 47(c)(1)(B)(i)(I) is

20 amended by inserting ‘‘50 percent of’’ before ‘‘the ad-
21 justed basis’’.
23 subsection (a) shall apply to determinations with respect
24 to 24-month periods (referred to in clause (i) of section
25 47(c)(1)(B) of the Internal Revenue Code of 1986) and
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1 60-month periods (referred to in clause (ii) of such sec-
2 tion) which end after December 31, 2021.
3 SEC. 135304. ELIMINATION OF REHABILITATION CREDIT
4 BASIS ADJUSTMENT.
5 (a) IN GENERAL.—Section 50(c) is amended by add-

6 ing at the end the following new paragraph:
7 ‘‘(6) EXCEPTION FOR REHABILITATION CRED-
8 IT.—In the case of the rehabilitation credit, para-

9 graph (1) shall not apply.’’.
10 (b) TREATMENT IN CASE OF CREDIT ALLOWED TO
11 LESSEE.—Section 50(d) is amended by adding at the end

12 the following: ‘‘In the case of the rehabilitation credit,
13 paragraph (5)(B) of the section 48(d) referred to in para-
14 graph (5) of this subsection shall not apply.’’.
17 December 31, 2022.
18 SEC. 135305. MODIFICATIONS REGARDING CERTAIN TAX-EX-
19 EMPT USE PROPERTY.
20 (a) IN GENERAL.—Section 47(c)(2)(B)(v) is amend-

21 ed by adding at the end the following new subclause:
22 ‘‘(III) DISQUALIFIED LEASE
23 RULES TO APPLY ONLY IN CASE OF
24 GOVERNMENT ENTITY.—For purposes

25 of subclause (I), except in the case of
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1 a tax-exempt entity described in sec-
2 tion 168(h)(2)(A)(i) (determined with-
3 out regard to the last sentence of sec-
4 tion 168(h)(2)(A)), the determination
5 of whether property is tax-exempt use
6 property shall be made under section
7 168(h) without regard to whether the
8 property is leased in a disqualified
9 lease (as defined in section
10 168(h)(1)(B)(ii)).’’.
12 this section shall apply to leases entered into after Decem-
13 ber 31, 2021.
14 SEC. 135306. QUALIFICATION OF REHABILITATION EXPEND-
15 ITURES FOR PUBLIC SCHOOL BUILDINGS
16 FOR REHABILITATION CREDIT.
17 (a) IN GENERAL.—Section 47(c)(2)(B)(v), as amend-

18 ed by the preceding provisions of this Act, is amended by
19 adding at the end the following new subclause:
20 ‘‘(IV) CLAUSE NOT TO APPLY TO
21 PUBLIC SCHOOLS.—This clause shall

22 not apply in the case of the rehabilita-
23 tion of any building which was used
24 as a qualified public educational facil-
25 ity (as defined in section 142(k)(1),
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1 determined without regard to sub-
2 paragraph (B) thereof) at any time
3 during the 5-year period ending on
4 the date that such rehabilitation be-
5 gins and which is used as such a facil-
6 ity immediately after such rehabilita-
7 tion.’’.
8 (b) REPORT.—Not later than the date which is 5
9 years after the date of the enactment of this Act, the Sec-
10 retary of the Treasury, after consultation with the heads
11 of appropriate Federal agencies, shall report to Congress
12 on the effects resulting from the amendment made by sub-
13 section (a), including—
14 (1) the number of qualified public education fa-
15 cilities rehabilitated (stated separately with respect
16 to each State) and the number of students using
17 such facilities (stated separately with respect to each
18 such State),
19 (2) the number of qualified public education fa-
20 cilities rehabilitated in low income communities (as
21 section 45D(e)(1) of the Internal Revenue Code of
22 1986) and the number of students using such facili-
23 ties,
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1 (3) the amount of qualified rehabilitation ex-
2 penditures for each qualified public education facility
3 rehabilitated, and
4 (4) and any other data determined by the Sec-
5 retary to be useful in evaluating the impact of such
6 amendment.
7 (c) EFFECTIVE DATE.—The amendment made by
9 December 31, 2021.
10 PART 4—DISASTER AND RESILIENCY
11 SEC. 135401. EXCLUSION OF AMOUNTS RECEIVED FROM
12 STATE-BASED CATASTROPHE LOSS MITIGA-
13 TION PROGRAMS.
14 (a) IN GENERAL.—Section 139 is amended by redes-

15 ignating subsection (h) as subsection (i) and by inserting
16 after subsection (g) the following new subsection:
17 ‘‘(h) STATE-BASED CATASTROPHE LOSS MITIGATION
18 PROGRAMS.—
19 ‘‘(1) IN GENERAL.—Gross income shall not in-
20 clude any amount received by an individual as a
21 qualified catastrophe mitigation payment under a
22 program established by a State, or a political sub-
23 division or instrumentality thereof, for the purpose
24 of making such payments.
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1 ‘‘(2) QUALIFIED CATASTROPHE MITIGATION
2 PAYMENT.—For purposes of this section, the term

3 ‘qualified catastrophe mitigation payment’ means
4 any amount which is received by an individual to
5 make improvements to such individual’s residence
6 for the sole purpose of reducing the damage that
7 would be done to such residence by a windstorm,
8 earthquake, or wildfire.
9 ‘‘(3) NO INCREASE IN BASIS.—Rules similar to
10 the rules of subsection (g)(3) shall apply in the case
11 of this subsection.’’.
12 (b) CONFORMING AMENDMENTS.—
13 (1) Section 139(d) is amended by striking ‘‘and
14 qualified’’ and inserting ‘‘, qualified catastrophe
15 mitigation payments, and qualified’’.
16 (2) Section 139(i) (as redesignated by sub-
17 section (a)) is amended by striking ‘‘or qualified’’
18 and inserting ‘‘, qualified catastrophe mitigation
19 payment, or qualified’’.
22 December 31, 2020.
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1 SEC. 135402. REPEAL OF TEMPORARY LIMITATION ON PER-
2 SONAL CASUALTY LOSSES.
3 (a) IN GENERAL.—Section 165(h) is amended by

4 striking paragraph (5).
5 (b) EXTENSION OF PERIOD OF LIMITATION ON FIL-
6 ING CLAIM IN CERTAIN CIRCUMSTANCES.—In the case of
7 a claim for credit or refund which is properly allocable
8 to a loss which is—
9 (1) deductible under section 165(a) of the In-
10 ternal Revenue Code of 1986,
11 (2) described in Revenue Procedure 2017-60
12 (as modified by Revenue Procedure 2018-14), and
13 (3) claimed for a taxable year beginning after
14 December 31, 2016,
15 the period of limitation prescribed in section 6511 of the
16 Internal Revenue Code of 1986 for the filing of such claim
17 shall be treated as not expiring earlier than the date that
18 is 1 year after the date of the enactment of this Act.
20 subsection (a) shall apply to losses incurred in taxable
21 years beginning after December 31, 2017.
22 (d) REGULATIONS.—The Secretary of the Treasury
23 (or the Secretary’s delegate) shall issue such regulations
24 or other guidance as are necessary to implement the
25 amendment made by this section, including regulations or
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1 guidance consistent with Revenue Procedure 2017–60 (as
2 so modified).
3 SEC. 135403. CREDIT FOR QUALIFIED WILDFIRE MITIGA-
4 TION EXPENDITURES.
5 (a) IN GENERAL.—Subpart B of part IV of sub-

6 chapter A of chapter 1 is amended by inserting after sec-
7 tion 27 the following new section:
8 ‘‘SEC. 28. QUALIFIED WILDFIRE MITIGATION EXPENDI-
9 TURES.
10 ‘‘(a) IN GENERAL.—There shall be allowed as a cred-

11 it against the tax imposed by this chapter for the taxable
12 year an amount equal to 30 percent of the qualified wild-
13 fire mitigation expenditures paid or incurred by the tax-
14 payer during such taxable year with respect to real prop-
15 erty owned or leased by the taxpayer.
16 ‘‘(b) QUALIFIED WILDFIRE MITIGATION EXPENDI-
17 TURES.—For purposes of this section—
18 ‘‘(1) IN GENERAL.—The term ‘qualified wildfire
19 mitigation expenditures’ means any specified wildfire
20 mitigation expenditure made pursuant to a qualified
21 State wildfire mitigation program of a State which
22 requires expenditures for wildfire mitigation to be
23 paid both by the taxpayer and such State. Such
24 term shall not include any item of expenditure un-
25 less the ratio of the State’s expenditure for such
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1 item to the sum of the State’s and taxpayer’s ex-
2 penditures for such item is not less than 25 percent.
3 ‘‘(2) SPECIFIED WILDFIRE MITIGATION EX-
4 PENDITURE.—The term ‘specified wildfire mitigation

5 expenditure’ means, with respect to any real prop-
6 erty owned or leased by the taxpayer, any amount
7 paid or incurred to reduce the risk of wildfire by re-
8 moving accumulations of vegetation (including estab-
9 lishing, expanding, or maintaining fuel breaks to
10 serve as fire breaks) on such real property.
11 ‘‘(3) QUALIFIED STATE WILDFIRE MITIGATION
12 PROGRAM.—The term ‘qualified State wildfire miti-

13 gation program’ means any program of a State the
14 primary purpose of which is to mitigate the risk of
15 wildfires in such State.
16 ‘‘(4) TREATMENT OF REIMBURSEMENTS.—Any
17 amount originally paid or incurred by the taxpayer

18 which is reimbursed by a State under a qualified
19 wildfire mitigation program of such State shall be
20 treated as paid by such State (and not by such tax-
21 payer).
22 ‘‘(c) APPLICATION WITH OTHER CREDITS.—
23 ‘‘(1) BUSINESS CREDIT TREATED AS PART OF
24 GENERAL BUSINESS CREDIT.—So much of the credit

25 which would be allowed under subsection (a) for any
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1 taxable year (determined without regard to this sub-
2 section) that is attributable to expenditures made in
3 the ordinary course of the taxpayer’s trade or busi-
4 ness (or, in the case of expenditures made by a
5 State, would have been expenditures made in the or-
6 dinary course of the taxpayer’s trade or business if
7 made by the taxpayer) shall be treated as a credit
8 listed in section 38(b) for taxable year (and not al-
9 lowed under subsection (a)).
10 ‘‘(2) PERSONAL CREDIT.—For purposes of this
11 title, the credit allowed under subsection (a) for any
12 taxable year (determined after application of para-
13 graph (1)) shall be treated as a credit allowable
14 under subpart A for such taxable year.
15 ‘‘(d) REDUCTION OF CREDIT PERCENTAGE WHERE
16 TAXPAYER EXPENDITURES LESS THAN 30 PERCENT.—
17 ‘‘(1) IN GENERAL.—If the expenditure percent-
18 age with respect to any item of qualified wildfire
19 mitigation expenditure is less than 30 percent, sub-
20 section (a) shall be applied by substituting ‘the ex-
21 penditure percentage’ for ‘30 percent’ with respect
22 to such item of expenditure.
23 ‘‘(2) EXPENDITURE PERCENTAGE.—For pur-
24 poses of this section, the term ‘expenditure percent-
25 age’ means, with respect to any item of qualified
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1 wildfire mitigation expenditure any portion of which
2 is paid or incurred by a State, the ratio (expressed
3 as a percentage) of—
4 ‘‘(A) the taxpayer’s expenditure for such
5 item, divided by
6 ‘‘(B) the sum of the taxpayer’s and such
7 State’s expenditures for such item.
9 ‘‘(1) TREATMENT OF EXPENDITURES RELATED
10 TO MARKETABLE TIMBER.—An expenditure shall not

11 be taken into account for purposes of this section
12 (whether made by the taxpayer or a State pursuant
13 to a qualified State wildfire mitigation program of
14 such State) if such expenditure is properly allocable
15 to timber which is sold or exchanged by the tax-
16 payer. The preceding sentence shall not apply to the
17 extent that such amount exceeds the gain on such
18 sale or exchange.
19 ‘‘(2) BASIS REDUCTION.—For purposes of this
20 subtitle, if the basis of any property would (but for
21 this paragraph) be determined by taking into ac-
22 count any qualified wildfire mitigation expenditure,
23 the basis of such property shall be reduced by the
24 amount of the credit allowed under subsection (a)
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1 with respect to such expenditure (determined with-
2 out regard to subsection (c)).
3 ‘‘(3) DENIAL OF DOUBLE BENEFIT.—The
4 amount of any deduction or other credit allowable

5 under this chapter for any expenditure for which a
6 credit is allowable under subsection (a) shall be re-
7 duced by the amount of credit allowed under such
8 subsection for such expenditure (determined without
9 regard to subsection (c)).’’.
11 (1) Section 38(b), as amended by the preceding
12 provisions of this Act, is amended by striking ‘‘plus’’
13 at the end of paragraph (33), by striking the period
14 at the end of paragraph (34) and inserting ‘‘, plus’’,
15 and by adding at the end the following new para-
16 graph:
17 ‘‘(35) the portion of the qualified wildfire miti-
18 gation expenditures credit to which section 28(c)(1)
19 applies.’’.
20 (2) Section 1016(a) is amended by redesig-
21 nating paragraphs (35) through (38) as paragraphs
22 (36) through (39), respectively, and by inserting
23 after paragraph (34) the following new paragraph:
24 ‘‘(35) to the extent provided in section
25 28(e)(2),’’.
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1 (3) The table of sections for subpart B of part
2 IV of subchapter A of chapter 1 is amended by in-
3 serting after the item relating to section 27 the fol-
4 lowing new item:
‘‘Sec. 28. Qualified wildfire mitigation expenditures.’’.

6 this section shall apply to expenditures paid or incurred
7 after the date of the enactment of this Act, in taxable
8 years ending after such date.
9 PART 5—HOUSING
10 Subpart A—Low Income Housing Tax Credit
11 SEC. 135501. INCREASES IN STATE ALLOCATIONS.
12 (a) IN GENERAL.—Section 42(h)(3)(I) is amended to

13 read as follows:
14 ‘‘(I) INCREASE IN STATE HOUSING CREDIT
15 CEILING FOR 2022 THROUGH 2028.—

16 ‘‘(i) IN GENERAL.—In the case of cal-
17 endar years 2022 through 2028, the dollar
18 amounts under subclauses (I) and (II) of
19 subparagraph (C)(ii) for any such calendar
20 shall be determined under clause (ii) and
21 in accordance with the following table:
The sub- The sub-

clause (I) clause (II)
‘‘In the case of calendar year: amount amount
shall be: shall be:
2022 ........................................................................ $3.22 $3,711,575

2023 ........................................................................ $3.70 $4,269,471
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The sub- The sub-
clause (I) clause (II)
‘‘In the case of calendar year: amount amount
shall be: shall be:
2024 ........................................................................ $4.25 $4,901,620

2025 ........................................................................ $4.88 $5,632,880
1 ‘‘(ii) INFLATION ADJUSTMENT FOR
2 2026, 2027, AND 2028.—In the case of

3 calendar years 2026, 2027, and 2028, the
4 subclause (I) and (II) dollar amounts shall
5 be the respective dollar amounts cor-
6 responding to calendar year 2025 in the
7 table under clause (i) each increased by an
8 amount equal to—
9 ‘‘(I) such dollar amount, multi-
10 plied by
11 ‘‘(II) the cost-of-living adjust-
12 ment determined under section 1(f)(3)
13 for such calendar year by substituting
14 ‘calendar year 2025’ for ‘calendar
15 year 2016’ in paragraph (A)(ii) there-
16 of.
17 Any increase under this clause shall be
18 rounded to the nearest cent in the case of
19 the subclause (I) amount and the nearest
20 dollar in the case of the subclause (II)
21 amount.’’.
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2 this section shall apply to calendar years beginning after
4 SEC. 135502. TAX-EXEMPT BOND FINANCING REQUIRE-
5 MENT.
6 (a) IN GENERAL.—Section 42(h)(4)(B) is amended

7 by adding at the end the following: ‘‘The preceding sen-
8 tence shall be applied by substituting ‘25 percent’ for ‘50
9 percent’ in the case of any building which is financed by
10 any obligation issued in calendar year 2022, 2023, 2024,
11 2025, 2026, 2027, or 2028 (and not by any obligation on
12 which the application of this subparagraph is based during
13 any taxable year beginning during calendar year 2019,
14 2020, or 2021).’’.
16 this section shall apply to buildings placed in service in
17 taxable years beginning after December 31, 2021.
18 SEC. 135503. BUILDINGS DESIGNATED TO SERVE EX-
19 TREMELY LOW-INCOME HOUSEHOLDS.
20 (a) RESERVED STATE ALLOCATION.—

21 (1) IN GENERAL.—Section 42(h) is amended—
22 (A) by redesignating paragraphs (6), (7),
23 and (8) as paragraphs (7), (8), and (9), respec-
24 tively, and
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1 (B) by inserting after paragraph (5) the
2 following new paragraph:
3 ‘‘(6) PORTION OF STATE CEILING SET-ASIDE
4 FOR PROJECTS DESIGNATED TO SERVE EXTREMELY
5 LOW-INCOME HOUSEHOLDS.—
6 ‘‘(A) IN GENERAL.—Not more than 90

7 percent of the portion of the State housing
8 credit ceiling amount described in paragraph
9 (3)(C)(ii) for any State for any calendar year
10 shall be allocated to buildings other than build-
11 ings described in subparagraph (B).
12 ‘‘(B) BUILDINGS DESCRIBED.—A building
13 is described in this subparagraph if 20 percent
14 or more of the residential units in such building
15 are rent-restricted (determined as if the im-
16 puted income limitation applicable to such units
17 were 30 percent of area median gross income)
18 and are designated by the taxpayer for occu-
19 pancy by households the aggregate household
20 income of which does not exceed the greater
21 of—
22 ‘‘(i) 30 percent of area median gross
23 income, or
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1 ‘‘(ii) 100 percent of an amount equal
2 to the Federal poverty line (within the
3 meaning of section 36B(d)(3)).
4 ‘‘(C) STATE MAY NOT OVERRIDE SET-
5 ASIDE.—Nothing in subparagraph (F) of para-

6 graph (3) shall be construed to permit a State
7 not to comply with subparagraph (A) of this
8 paragraph.
9 ‘‘(D) TERMINATION.—This paragraph
10 shall not apply to allocations after December
11 31, 2031.’’.
12 (2) CONFORMING AMENDMENT.—Section
13 42(b)(4)(C) is amended by striking ‘‘(h)(7)’’ and in-

14 serting ‘‘(h)(8)’’.
15 (b) INCREASE IN CREDIT.—Paragraph (5) of section
16 42(d) is amended by adding at the end the following new
17 subparagraph:
18 ‘‘(C) INCREASE IN CREDIT FOR PROJECTS
19 DESIGNATED TO SERVE EXTREMELY LOW-IN-
20 COME HOUSEHOLDS.—
21 ‘‘(i) IN GENERAL.—In the case of any

22 building—
23 ‘‘(I) which is described in sub-
24 section (h)(6)(B), and
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1 ‘‘(II) which is designated by the
2 housing credit agency as requiring the
3 increase in credit under this subpara-
4 graph in order for such building to be
5 financially feasible as part of a quali-
6 fied low-income housing project,
7 subparagraph (B) shall not apply to the
8 portion of such building which is comprised
9 of such units, and the eligible basis of such
10 portion of the building shall be 150 per-
11 cent of such basis determined without re-
12 gard to this subparagraph.
13 ‘‘(ii) ALLOCATION RULES APPLICABLE
14 TO PROJECTS TO WHICH CLAUSE (i) AP-
15 PLIES.—
16 ‘‘(I) STATE HOUSING CREDIT
17 CEILING.—For any calendar year, the

18 housing credit agency shall not allo-
19 cate more than 15 percent of the por-
20 tion of the State housing credit ceiling
21 amount described in subsection
22 (h)(3)(C)(ii) to buildings to which
23 clause (i) applies, and
24 ‘‘(II) PRIVATE ACTIVITY BOND
25 VOLUME CAP.—In the case of projects
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1 financed by tax-exempt bonds as de-
2 scribed in subsection (h)(4), for any
3 calendar year, the State shall not
4 issue more than 10 percent of the pri-
5 vate activity bond volume cap as de-
6 scribed in section 146(d)(1) to build-
7 ings to which clause (i) applies.
8 ‘‘(iii) TERMINATION.—This subpara-
9 graph shall not apply to allocations after
10 December 31, 2031.’’.
12 this section shall apply to allocations, and determinations,
13 of housing credit dollar amount after December 31, 2021.
14 SEC. 135504. INCLUSION OF RURAL AREAS AS DIFFICULT
15 DEVELOPMENT AREAS.
16 (a) IN GENERAL.—Subclause (I) of section

17 42(d)(5)(B)(iii) is amended by inserting before the period
18 the following: ‘‘, and any rural area’’.
19 (b) RURAL AREA.—Clause (iii) of section
20 42(d)(5)(B) is amended by redesignating subclause (II)
21 as subclause (III) and by inserting after subclause (I) the
22 following new subclause:
23 ‘‘(II) RURAL AREA.—For pur-
24 poses of subclause (I), the term ‘rural
25 area’ means any non-metropolitan
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1 area, or any rural area as defined by
2 section 520 of the Housing Act of
3 1949, which is identified by the quali-
4 fied allocation plan under subsection
5 (m)(1)(B).’’.
7 this section shall apply to buildings placed in service after
9 SEC. 135505. REPEAL OF QUALIFIED CONTRACT OPTION.
10 (a) TERMINATION OF OPTION FOR CERTAIN BUILD-

11 INGS.—
12 (1) IN GENERAL.—Subclause (II) of section

13 42(h)(7)(E)(i), as redesignated by section 135503, is
14 amended by inserting ‘‘in the case of a building de-
15 scribed in clause (iii),’’ before ‘‘on the last day’’.
16 (2) BUILDINGS DESCRIBED.—Subparagraph
17 (E) of section 42(h)(7), as so redesignated, is

18 amended by adding at the end the following new
19 clause:
20 ‘‘(iii) BUILDINGS DESCRIBED.—A
21 building described in this clause is a build-

22 ing—
23 ‘‘(I) which received its allocation
24 of housing credit dollar amount before
25 January 1, 2022, or
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1 ‘‘(II) in the case of a building
2 any portion of which is financed as
3 described in paragraph (4), which re-
4 ceived before January 1, 2022, a de-
5 termination from the issuer of the
6 tax-exempt bonds or the housing cred-
7 it agency that the building is eligible
8 to receive an allocation of housing
9 credit dollar amount under the rules
10 of paragraphs (1) and (2) of sub-
11 section (m).’’.
12 (b) RULES RELATING TO EXISTING PROJECTS.—
13 Subparagraph (F) of section 42(h)(7), as redesignated by
14 section 135503, is amended by striking ‘‘the nonlow-in-
15 come portion’’ and all that follows and inserting ‘‘the
16 nonlow-income portion and the low-income portion of the
17 building for fair market value (determined by the housing
18 credit agency by taking into account the rent restrictions
19 required for the low-income portion of the building to con-
20 tinue to meet the standards of paragraphs (1) and (2) of
21 subsection (g)). The Secretary shall prescribe such regula-
22 tions as may be necessary or appropriate to carry out this
23 paragraph.’’.
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1 (1) Paragraph (7) of section 42(h), as redesig-
2 nated by section 135503, is amended by striking
3 subparagraph (G) and by redesignating subpara-
4 graphs (H), (I), (J), and (K) as subparagraphs (G),
5 (H), (I), and (J), respectively.
6 (2) Subclause (II) of section 42(h)(7)(E)(i), as
7 so redesignated and as amended by subsection (a),
8 is further amended by striking ‘‘subparagraph (I)’’
9 and inserting ‘‘subparagraph (H)’’.
10 (d) EFFECTIVE DATE.—
11 (1) IN GENERAL.—Except as provided in para-
12 graph (2), the amendments made by this section
13 shall take effect on the date of the enactment of this
14 Act.
15 (2) SUBSECTION (b).—The amendments made
16 by subsection (b) shall apply to buildings with re-
17 spect to which a written request described in section
18 42(h)(7)(H) of the Internal Revenue Code of 1986,
19 as redesignated by section 135503 and subsection
20 (c), is submitted after the date of the enactment of
21 this Act.
22 SEC. 135506. MODIFICATION AND CLARIFICATION OF
23 RIGHTS RELATING TO BUILDING PURCHASE.
24 (a) MODIFICATION OF RIGHT OF FIRST REFUSAL.—
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1 (1) IN GENERAL.—Subparagraph (A) of section
2 42(i)(7) is amended by striking ‘‘a right of 1st re-
3 fusal’’ and inserting ‘‘an option’’.
4 (2) CONFORMING AMENDMENT.—The heading
5 of paragraph (7) of section 42(i) is amended by
6 striking ‘‘RIGHT OF 1ST REFUSAL’’ and inserting
7 ‘‘OPTION’’.
8 (b) CLARIFICATION WITH RESPECT TO RIGHT OF
9 FIRST REFUSAL AND PURCHASE OPTIONS.—

10 (1) PURCHASE OF PARTNERSHIP INTEREST.—
11 Subparagraph (A) of section 42(i)(7), as amended

12 by subsection (a), is amended by striking ‘‘the prop-
13 erty’’ and inserting ‘‘the property or all of the part-
14 nership interests (other than interests of the person
15 exercising such option or a related party thereto
16 (within the meaning of section 267(b) or 707(b)(1)))
17 relating to the property’’.
18 (2) PROPERTY INCLUDES ASSETS RELATING TO
19 THE BUILDING.—Paragraph (7) of section 42(i) is

21 subparagraph:
22 ‘‘(C) PROPERTY.—For purposes of sub-
23 paragraph (A), the term ‘property’ may include
24 all or any of the assets held for the develop-
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1 ment, operation, or maintenance of a build-
2 ing.’’.
3 (3) EXERCISE OF RIGHT OF FIRST REFUSAL
4 AND PURCHASE OPTIONS.—Subparagraph (A) of

5 section 42(i)(7), as amended by subsection (a) and
6 paragraph (1)(A), is amended by adding at the end
7 the following: ‘‘For purposes of determining whether
8 an option, including a right of first refusal, to pur-
9 chase property or partnership interests holding (di-
10 rectly or indirectly) such property is described in the
11 preceding sentence—
12 ‘‘(i) such option or right of first re-
13 fusal shall be exercisable with or without
14 the approval of any owner of the project
15 (including any partner, member, or affili-
16 ated organization of such an owner), and
17 ‘‘(ii) a right of first refusal shall be
18 exercisable in response to any offer to pur-
19 chase the property or partnership interests,
20 including an offer by a related party.’’.
21 (c) CONFORMING AMENDMENTS.—Subparagraph (B)
22 of section 42(i)(7) is amended by striking ‘‘the sum of’’
23 and all that follows and inserting ‘‘the principal amount
24 of outstanding indebtedness secured by the building (other
25 than indebtedness incurred within the 5-year period end-
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1 ing on the date of the sale to the tenants). In the case
2 of a purchase of a partnership interest, the minimum pur-
3 chase price is an amount not less than such interest’s rat-
4 able share of the amount determined under the first sen-
5 tence of this subparagraph.’’.
6 (d) EFFECTIVE DATES.—
7 (1) MODIFICATION OF RIGHT OF FIRST RE-
8 FUSAL.—The amendments made by subsections (a)

9 and (c) shall apply to agreements entered into or
10 amended after the date of the enactment of this Act.
11 (2) CLARIFICATION.—The amendments made
12 by subsection (b) shall apply to agreements among
13 the owners of the project (including partners, mem-
14 bers, and their affiliated organizations) and persons
15 described in section 42(i)(7)(A) of the Internal Rev-
16 enue Code of 1986 entered into before, on, or after
17 the date of the enactment of this Act.
18 (3) NO EFFECT ON AGREEMENTS.—None of the
19 amendments made by this section is intended to su-
20 persede express language in any agreement with re-
21 spect to the terms of a right of first refusal or op-
22 tion permitted by section 42(i)(7) of the Internal
23 Revenue Code of 1986 in effect on the date of the
24 enactment of this Act.
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1 SEC. 135507. INCREASE IN CREDIT FOR BOND-FINANCED
2 PROJECTS DESIGNATED BY HOUSING CREDIT
3 AGENCY.
4 (a) IN GENERAL.—Section 42(d)(5)(B)(v) is amend-

5 ed by striking ‘‘The preceding sentence’’ and inserting ‘‘In
6 the case of determinations of housing credit dollar amount
7 after December 31, 2028, the preceding sentence’’.
9 this section shall apply to buildings which receive a deter-
10 mination of housing credit dollar amount pursuant to sec-
11 tion 42(m)(2)(D) of the Internal Revenue Code of 1986
12 after the date of the enactment of this Act.
13 Subpart B—Neighborhood Homes Investment Act
14 SEC. 135511. NEIGHBORHOOD HOMES CREDIT.
15 (a) IN GENERAL.—Subpart D of part IV of sub-

17 tion 42 the following new section:
18 ‘‘SEC. 42A. NEIGHBORHOOD HOMES CREDIT.
19 ‘‘(a) ALLOWANCE OF CREDIT.—For purposes of sec-

20 tion 38, the neighborhood homes credit determined under
21 this section for the taxable year is, with respect to each
22 qualified residence sold by the taxpayer during such tax-
23 able year in an affordable sale, the lesser of—
24 ‘‘(1) the excess (if any) of—
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1 ‘‘(A) the reasonable development costs paid
2 or incurred by the taxpayer with respect to such
3 qualified residence, over
4 ‘‘(B) the sale price of such qualified resi-
5 dence (reduced by any reasonable expenses paid
6 or incurred by the taxpayer in connection with
7 such sale), or
8 ‘‘(2) 35 percent of the lesser of—
9 ‘‘(A) the eligible development costs paid or
10 incurred by the taxpayer with respect to such
11 qualified residence, or
12 ‘‘(B) 80 percent of the national median
13 sale price for new homes (as determined pursu-
14 ant to the most recent census data available as
15 of the date on which the neighborhood homes
16 credit agency makes an allocation for the quali-
17 fied project).
18 ‘‘(b) DEVELOPMENT COSTS.—For purposes of this
19 section—
20 ‘‘(1) REASONABLE DEVELOPMENT COSTS.—
21 ‘‘(A) IN GENERAL.—The term ‘reasonable

22 development costs’ means amounts paid or in-
23 curred for the acquisition of buildings and land,
24 construction, substantial rehabilitation, demoli-
25 tion of structures, or environmental remedi-
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1 ation, to the extent that the neighborhood
2 homes credit agency determines that such
3 amounts meet the standards specified pursuant
4 to subsection (f)(1)(C) (as of the date on which
5 construction or substantial rehabilitation is sub-
6 stantially complete, as determined by such
7 agency) and are necessary to ensure the finan-
8 cial feasibility of such qualified residence.
9 ‘‘(B) CONSIDERATIONS IN MAKING DETER-
10 MINATION.—In making the determination under

11 subparagraph (A), the neighborhood homes
12 credit agency shall consider—
13 ‘‘(i) the sources and uses of funds and
14 the total financing,
15 ‘‘(ii) any proceeds or receipts gen-
16 erated or expected to be generated by rea-
17 son of tax benefits, and
18 ‘‘(iii) the reasonableness of the devel-
19 opmental costs and fees.
20 ‘‘(2) ELIGIBLE DEVELOPMENT COSTS.—The
21 term ‘eligible development costs’ means the amount

22 which would be reasonable development costs if the
23 amounts taken into account as paid or incurred for
24 the acquisition of buildings and land did not exceed
25 75 percent of such costs determined without regard
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1 to any amount paid or incurred for the acquisition
2 of buildings and land.
3 ‘‘(3) SUBSTANTIAL REHABILITATION.—The
4 term ‘substantial rehabilitation’ means amounts paid

5 or incurred for rehabilitation of a qualified residence
6 if such amounts exceed the greater of—
7 ‘‘(A) $20,000, or
8 ‘‘(B) 20 percent of the amounts paid or in-
9 curred by the taxpayer for the acquisition of
10 buildings and land with respect to such quali-
11 fied residence.
12 ‘‘(4) CONSTRUCTION AND REHABILITATION
13 ONLY AFTER ALLOCATION TAKEN INTO ACCOUNT.—
14 ‘‘(A) IN GENERAL.—The terms ‘reasonable

15 development costs’ and ‘eligible development
16 costs’ shall not include any amount paid or in-
17 curred before the date on which an allocation is
18 made to the taxpayer under subsection (e) with
19 respect to the qualified project of which the
20 qualified residence is part unless such amount
21 is paid or incurred for the acquisition of build-
22 ings or land.
23 ‘‘(B) LAND AND BUILDING ACQUISITION
24 COSTS.—Amounts paid or incurred for the ac-

25 quisition of buildings or land shall be included
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1 under paragraph (A) only if paid or incurred
2 not more than 3 years before the date on which
3 the allocation referred to in subparagraph (A)
4 is made. If the taxpayer acquired any building
5 or land from an entity (or any related party to
6 such entity) that holds an ownership interest in
7 the taxpayer, then such entity must also have
8 acquired such property within such 3-year pe-
9 riod, and the acquisition cost included under
10 subparagraph (A) with respect to the taxpayer
11 shall not exceed the amount such entity paid or
12 incurred to acquire such property.
13 ‘‘(c) QUALIFIED RESIDENCE.—For purposes of this
14 section—
15 ‘‘(1) IN GENERAL.—The term ‘qualified resi-
16 dence’ means a residence that—
17 ‘‘(A) is real property affixed on a perma-
18 nent foundation,
19 ‘‘(B) is—
20 ‘‘(i) a house which is comprised of 4
21 or fewer residential units,
22 ‘‘(ii) a condominium unit, or
23 ‘‘(iii) a house or an apartment owned
24 by a cooperative housing corporation (as
25 defined in section 216(b)),
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1 ‘‘(C) is part of a qualified project with re-
2 spect to the neighborhood homes credit agency
3 has made an allocation under subsection (e),
4 and
5 ‘‘(D) is located in a qualified census tract
6 (determined as of the date of such allocation).
7 ‘‘(2) QUALIFIED CENSUS TRACT.—
8 ‘‘(A) IN GENERAL.—The term ‘qualified

9 census tract’ means a census tract—
10 ‘‘(i) which—
11 ‘‘(I) has a median family income
12 which does not exceed 80 percent of
13 the median family income for the ap-
14 plicable area,
15 ‘‘(II) has a poverty rate that is
16 not less than 130 percent of the pov-
17 erty rate of the applicable area, and
18 ‘‘(III) has a median value for
19 owner-occupied homes that does not
20 exceed the median value for owner-oc-
21 cupied homes in the applicable area,
22 ‘‘(ii) which—
23 ‘‘(I) is located in a city which has
24 a population of not less than 50,000
25 and such city has a poverty rate that
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1 is not less than 150 percent of the
2 poverty rate of the applicable area,
3 ‘‘(II) has a median family income
4 which does not exceed the median
5 family income for the applicable area,
6 and
7 ‘‘(III) has a median value for
8 owner-occupied homes that does not
9 exceed 80 percent of the median value
10 for owner-occupied homes in the ap-
11 plicable area,
12 ‘‘(iii) which—
13 ‘‘(I) is located in a nonmetropoli-
14 tan county,
15 ‘‘(II) has a median family income
16 which does not exceed the median
17 family income for the applicable area,
18 and
19 ‘‘(III) has been designated by a
20 neighborhood homes credit agency
21 under this clause, or
22 ‘‘(iv) which is not otherwise a quali-
23 fied census tract and is located in a dis-
24 aster area (as defined in section
25 7508A(d)(3)), but only with respect to
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1 credits allocated in any period during
2 which the President of the United States
3 has determined that such area warrants in-
4 dividual or individual and public assistance
5 by the Federal Government under the Rob-
6 ert T. Stafford Disaster Relief and Emer-
7 gency Assistance Act.
8 ‘‘(B) APPLICABLE AREA.—The term ‘appli-
9 cable area’ means—
10 ‘‘(i) in the case of a metropolitan cen-
11 sus tract, the metropolitan area in which
12 such census tract is located, and
13 ‘‘(ii) in the case of a census tract
14 other than a census tract described in
15 clause (i), the State.
16 ‘‘(d) AFFORDABLE SALE.—For purposes of this sec-
17 tion—
18 ‘‘(1) IN GENERAL.—The term ‘affordable sale’
19 means a sale to a qualified homeowner of a qualified
20 residence that the neighborhood homes credit agency
21 certifies as meeting the standards promulgated
22 under subsection (f)(1)(D) for a price that does not
23 exceed—
24 ‘‘(A) in the case of any qualified residence
25 not described in subparagraph (B), (C), or (D),
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1 the amount equal to the product of 4 multiplied
2 by the median family income for the applicable
3 area (as determined pursuant to the most re-
4 cent census data available as of the date of the
5 contract for such sale),
6 ‘‘(B) in the case of a house comprised of
7 2 residential units, 125 percent of the amount
8 described in subparagraph (A),
9 ‘‘(C) in the case of a house comprised of
11 described in subparagraph (A), or
12 ‘‘(D) in the case of a house comprised of
14 described in subparagraph (A).
15 ‘‘(2) QUALIFIED HOMEOWNER.—The term
16 ‘qualified homeowner’ means, with respect to a
17 qualified residence, an individual—
18 ‘‘(A) who owns and uses such qualified res-
19 idence as the principal residence of such indi-
20 vidual, and
21 ‘‘(B) whose family income (determined as
22 of the date that a binding contract for the af-
23 fordable sale of such residence is entered into)
24 is 140 percent or less of the median family in-
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1 come for the applicable area in which the quali-
2 fied residence is located.
3 ‘‘(e) CREDIT CEILING AND ALLOCATIONS.—
4 ‘‘(1) CREDIT LIMITED BASED ON ALLOCATIONS
5 TO QUALIFIED PROJECTS.—
6 ‘‘(A) IN GENERAL.—The credit allowed

7 under subsection (a) to any taxpayer for any
8 taxable year with respect to one or more quali-
9 fied residences which are part of the same
10 qualified project shall not exceed the excess (if
11 any) of—
12 ‘‘(i) the amount allocated by the
13 neighborhood homes credit agency under
14 this paragraph to such taxpayer with re-
15 spect to such qualified project, over
16 ‘‘(ii) the aggregate amount of credit
17 allowed under subsection (a) to such tax-
18 payer with respect to qualified residences
19 which are a part of such qualified project
20 for all prior taxable years.
21 ‘‘(B) DEADLINE FOR COMPLETION.—No
22 credit shall be allowed under subsection (a)

23 with respect to any qualified residence unless
24 the affordable sale of such residence is during
25 the 5-year period beginning on the date of the
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1 allocation to the qualified project of which such
2 residence is a part (or, in the case of a qualified
3 residence to which subsection (i) applies, the re-
4 habilitation of such residence is completed dur-
5 ing such 5-year period).
6 ‘‘(2) LIMITATIONS ON ALLOCATIONS TO QUALI-
7 FIED PROJECTS.—
8 ‘‘(A) ALLOCATIONS LIMITED BY STATE
9 NEIGHBORHOOD HOMES CREDIT CEILING.—The
10 aggregate amount allocated to taxpayers with

11 respect to qualified projects by the neighbor-
12 hood homes credit agency of any State for any
13 calendar year shall not exceed the State neigh-
14 borhood homes credit amount of such State for
15 such calendar year.
16 ‘‘(B) SET-ASIDE FOR CERTAIN PROJECTS
17 INVOLVING QUALIFIED NONPROFIT ORGANIZA-
18 TIONS.—Rules similar to the rules of section

19 42(h)(5) shall apply for purposes of this sec-
20 tion.
21 ‘‘(3) DETERMINATION OF STATE NEIGHBOR-
22 HOOD HOMES CREDIT CEILING.—
23 ‘‘(A) IN GENERAL.—The State neighbor-

24 hood homes credit amount for a State for a cal-
25 endar year is an amount equal to the sum of—
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1 ‘‘(i) the greater of—
2 ‘‘(I) the product of $6, multiplied
3 by the State population (determined
4 in accordance with section 146(j)), or
5 ‘‘(II) $8,000,000, and
6 ‘‘(ii) any amount previously allocated
7 to any taxpayer with respect to any quali-
8 fied project by the neighborhood homes
9 credit agency of such State which can no
10 longer be allocated to any qualified resi-
11 dence because the 5-year period described
12 in paragraph (1)(B) expires during cal-
13 endar year.
14 ‘‘(B) 3-YEAR CARRYFORWARD OF UNUSED
15 LIMITATION.—The State neighborhood homes

16 credit amount for a State for a calendar year
17 shall be increased by the excess (if any) of the
18 State neighborhood homes credit amount for
19 such State for the preceding calendar year over
20 the aggregate amount allocated by the neigh-
21 borhood homes credit agency of such State dur-
22 ing such preceding calendar year. Any amount
23 carried forward under the preceding sentence
24 shall not be carried past the third calendar year
25 after the calendar year in which such credit
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1 amount originally arose, determined on a first-
2 in, first-out basis.
3 ‘‘(f) RESPONSIBILITIES OF NEIGHBORHOOD HOMES
4 CREDIT AGENCIES.—
5 ‘‘(1) IN GENERAL.—Notwithstanding subsection
6 (e), the State neighborhood homes credit dollar
7 amount shall be zero for a calendar year unless the
8 neighborhood homes credit agency of the State—
9 ‘‘(A) allocates such amount pursuant to a
10 qualified allocation plan of the neighborhood
11 homes credit agency,
12 ‘‘(B) allocates not more than 20 percent of
13 amounts allocated in the previous year (or for
14 allocations made in 2022, not more than 20
15 percent of the neighborhood homes credit ceil-
16 ing for such year) to projects with respect to
17 qualified residences which—
18 ‘‘(i) are located in census tracts de-
19 scribed in subsection (c)(2)(A)(iii),
20 (c)(2)(A)(iv), (i)(5), or
21 ‘‘(ii) are not located in a qualified
22 census tract but meet the requirements of
23 (i)(8),
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1 ‘‘(C) promulgates standards with respect
2 to reasonable qualified development costs and
3 fees,
4 ‘‘(D) promulgates standards with respect
5 to construction quality,
6 ‘‘(E) in the case of any neighborhood
7 homes credit agency which makes an allocation
8 to a qualified project which includes any quali-
9 fied residence to which subsection (i) applies,
10 promulgates standards with respect to pro-
11 tecting the owners of such residences, including
12 the capacity of such owners to pay rehabilita-
13 tion costs not covered by the credit provided by
14 this section and providing for the disclosure to
15 such owners of their rights and responsibilities
16 with respect to the rehabilitation of such resi-
17 dences, and
18 ‘‘(F) submits to the Secretary (at such
19 time and in such manner as the Secretary may
20 prescribe) an annual report specifying—
21 ‘‘(i) the amount of the neighborhood
22 homes credits allocated to each qualified
23 project for the previous year,
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1 ‘‘(ii) with respect to each qualified
2 residence completed in the preceding cal-
3 endar year—
4 ‘‘(I) the census tract in which
5 such qualified residence is located,
6 ‘‘(II) with respect to the qualified
7 project that includes such qualified
8 residence, the year in which such
9 project received an allocation under
10 this section,
11 ‘‘(III) whether such qualified res-
12 idence was new, substantially rehabili-
13 tated and sold to a qualified home-
14 owner, or substantially rehabilitated
15 pursuant to subsection (i),
16 ‘‘(IV) the eligible development
17 costs of such qualified residence,
18 ‘‘(V) the amount of the neighbor-
19 hood homes credit with respect to
20 such qualified residence,
21 ‘‘(VI) the sales price of such
22 qualified residence, if applicable, and
23 ‘‘(VII) the family income of the
24 qualified homeowner (expressed as a
25 percentage of the applicable area me-
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1 dian family income for the location of
2 the qualified residence), and
3 ‘‘(iii) such other information as the
4 Secretary may require.
5 ‘‘(2) QUALIFIED ALLOCATION PLAN.—For pur-
6 poses of this subsection, the term ‘qualified alloca-
7 tion plan’ means any plan which—
8 ‘‘(A) sets forth the selection criteria to be
9 used to prioritize qualified projects for alloca-
10 tions of State neighborhood homes credit dollar
11 amounts, including—
12 ‘‘(i) the need for new or substantially
13 rehabilitated owner-occupied homes in the
14 area addressed by the project,
15 ‘‘(ii) the expected contribution of the
16 project to neighborhood stability and revi-
17 talization, including the impact on neigh-
18 borhood residents,
19 ‘‘(iii) the capability and prior perform-
20 ance of the project sponsor, and
21 ‘‘(iv) the likelihood the project will re-
22 sult in long-term homeownership,
23 ‘‘(B) has been made available for public
24 comment, and
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1 ‘‘(C) provides a procedure that the neigh-
2 borhood homes credit agency (or any agent or
3 contractor of such agency) shall follow for pur-
4 poses of—
5 ‘‘(i) identifying noncompliance with
6 any provisions of this section, and
7 ‘‘(ii) notifying the Internal Revenue
8 Service of any such noncompliance of
9 which the agency becomes aware.
10 ‘‘(g) REPAYMENT.—
11 ‘‘(1) IN GENERAL.—
12 ‘‘(A) SOLD DURING 5-YEAR PERIOD.—If a

13 qualified residence is sold during the 5-year pe-
14 riod beginning immediately after the affordable
15 sale of such qualified residence referred to in
16 subsection (a), the seller (with respect to the
17 sale during such 5-year period) shall transfer
18 an amount equal to the repayment amount to
19 the relevant neighborhood homes credit agency.
20 ‘‘(B) USE OF REPAYMENTS.—A neighbor-
21 hood homes credit agency shall use any amount
22 received pursuant to subparagraph (A) only for
23 purposes of qualified projects.
24 ‘‘(2) REPAYMENT AMOUNT.—For purposes of
25 paragraph (1)(A), the repayment amount is an
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1 amount equal to 50 percent of the gain from the
2 sale to which the repayment relates, reduced by 20
3 percent for each year of the 5-year period referred
4 to in paragraph (1)(A) which ends before the date
5 of such sale.
6 ‘‘(3) LIEN FOR REPAYMENT AMOUNT.—A
7 neighborhood homes credit agency receiving an allo-

8 cation under this section shall place a lien on each
9 qualified residence that is built or rehabilitated as
10 part of a qualified project for an amount such agen-
11 cy deems necessary to ensure potential repayment
12 pursuant to paragraph (1)(A).
13 ‘‘(4) DENIAL OF DEDUCTIONS IF CONVERTED
14 TO RENTAL HOUSING.—If, during the 5-year period

15 described in paragraph (1), an individual who owns
16 a qualified residence fails to use such qualified resi-
17 dence as such individual’s principal residence for any
18 period of time, no deduction shall be allowed for ex-
19 penses paid or incurred by such individual with re-
20 spect to renting, during such period of time, such
21 qualified residence.
22 ‘‘(5) WAIVER.—The neighborhood homes credit
23 agency may waive the repayment required under
24 paragraph (1)(A) in the case of homeowner experi-
25 encing a hardship.
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1 ‘‘(h) OTHER DEFINITIONS AND SPECIAL RULES.—
2 For purposes of this section—
3 ‘‘(1) NEIGHBORHOOD HOMES CREDIT AGEN-
4 CY.—The term ‘neighborhood homes credit agency’

5 means the agency designated by the governor of a
6 State as the neighborhood homes credit agency of
7 the State.
8 ‘‘(2) QUALIFIED PROJECT.—The term ‘qualified
9 project’ means a project that a neighborhood homes
10 credit agency certifies will build or substantially re-
11 habilitate one or more qualified residences.
12 ‘‘(3) DETERMINATIONS OF FAMILY INCOME.—
13 Rules similar to the rules of section 143(f)(2) shall

14 apply for purposes of this section.
15 ‘‘(4) POSSESSIONS TREATED AS STATES.—The
16 term ‘State’ includes the District of Columbia and

17 the possessions of the United States.
18 ‘‘(5) SPECIAL RULES RELATED TO CONDOMIN-
19 IUMS AND COOPERATIVE HOUSING CORPORATIONS.—
20 ‘‘(A) DETERMINATION OF DEVELOPMENT
21 COSTS.—In the case of a qualified residence de-

22 scribed in clause (ii) or (iii) of subsection
23 (c)(1)(A), the reasonable development costs and
24 eligible development costs of such qualified resi-
25 dence shall be an amount equal to such costs,
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1 respectively, of the entire condominium or coop-
2 erative housing property in which such qualified
3 residence is located, multiplied by a fraction—
4 ‘‘(i) the numerator of which is the
5 total floor space of such qualified resi-
6 dence, and
7 ‘‘(ii) the denominator of which is the
8 total floor space of all residences within
9 such property.
10 ‘‘(B) TENANT-STOCKHOLDERS OF COOPER-
11 ATIVE HOUSING CORPORATIONS TREATED AS
12 OWNERS.—In the case of a cooperative housing

13 corporation (as such term is defined in section
14 216(b)), a tenant-stockholder shall be treated
15 as owning the house or apartment which such
16 person is entitled to occupy.
17 ‘‘(6) RELATED PARTY SALES NOT TREATED AS
18 AFFORDABLE SALES.—
19 ‘‘(A) IN GENERAL.—A sale between related

20 persons shall not be treated as an affordable
21 sale.
22 ‘‘(B) RELATED PERSONS.—For purposes
23 of this paragraph, a person (in this subpara-
24 graph referred to as the ‘related person’) is re-
25 lated to any person if the related person bears
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1 a relationship to such person specified in sec-
2 tion 267(b) or 707(b)(1), or the related person
3 and such person are engaged in trades or busi-
4 nesses under common control (within the mean-
5 ing of subsections (a) and (b) of section 52).
6 For purposes of the preceding sentence, in ap-
7 plying section 267(b) or 707(b)(1), ‘10 percent’
8 shall be substituted for ‘50 percent’.
10 ‘‘(A) IN GENERAL.—In the case of a cal-

11 endar year after 2022, the dollar amounts in
12 subsections (b)(3)(A), (e)(3)(A)(i)(I),
13 (e)(3)(A)(i)(II), and (i)(2)(C) shall each be in-
14 creased by an amount equal to—
17 termined under section 1(f)(3) for such
18 calendar year by substituting ‘calendar
19 year 2021’ for ‘calendar year 2016’ in sub-
20 paragraph (A)(ii) thereof.
21 ‘‘(B) ROUNDING.—
22 ‘‘(i) In the case of the dollar amounts
23 in subsection (b)(3)(A) and (i)(2)(C), any
24 increase under paragraph (1) which is not
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1 a multiple of $1,000 shall be rounded to
2 the nearest multiple of $1,000.
3 ‘‘(ii) In the case of the dollar amount
4 in subsection (e)(3)(A)(i)(I), any increase
5 under paragraph (1) which is not a mul-
6 tiple of $0.01 shall be rounded to the near-
7 est multiple of $0.01.
8 ‘‘(iii) In the case of the dollar amount
9 in subsection (e)(3)(A)(i)(II), any increase
10 under paragraph (1) which is not a mul-
11 tiple of $100,000 shall be rounded to the
12 nearest multiple of $100,000.
13 ‘‘(8) REPORT.—
14 ‘‘(A) IN GENERAL.—The Secretary shall
15 annually issue a report, to be made available to
16 the public, which contains the information sub-
17 mitted pursuant to subsection (f)(1)(F).
18 ‘‘(B) DE-IDENTIFICATION.—The Secretary
19 shall ensure that any information made public
20 pursuant to paragraph (1) excludes any infor-
21 mation that would allow for the identification of
22 qualified homeowners.
23 ‘‘(9) LIST OF QUALIFIED CENSUS TRACTS.—
24 The Secretary of Housing and Urban Development
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1 shall, for each year, make publicly available a list of
2 qualified census tracts under—
3 ‘‘(A) on a combined basis, clauses (i) and
4 (ii) of subsection (c)(2)(A),
5 ‘‘(B) clause (iii) of such subsection, and
6 ‘‘(C) subsection (i)(5)(A).
7 ‘‘(i) APPLICATION OF CREDIT WITH RESPECT TO
8 OWNER-OCCUPIED REHABILITATIONS.—
9 ‘‘(1) IN GENERAL.—In the case of a qualified
10 rehabilitation by the taxpayer of any qualified resi-
11 dence which is owned (as of the date that the writ-
12 ten binding contract referred to in paragraph (3) is
13 entered into) by a specified homeowner, the rules of
14 paragraphs (2) through (7) shall apply.
15 ‘‘(2) ALTERNATIVE CREDIT DETERMINATION.—
16 In the case of any qualified residence described in

17 paragraph (1), the neighborhood homes credit deter-
18 mined under subsection (a) with respect to such res-
19 idence shall (in lieu of any credit otherwise deter-
20 mined under subsection (a) with respect to such res-
21 idence) be allowed in the taxable year during which
22 the qualified rehabilitation is completed (as deter-
23 mined by the neighborhood homes credit agency)
24 and shall be equal to the least of—
25 ‘‘(A) the excess (if any) of—
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1 ‘‘(i) the amounts paid or incurred by
2 the taxpayer for the qualified rehabilitation
3 of the qualified residence to the extent that
4 such amounts are certified by the neigh-
5 borhood homes credit agency (at the time
6 of the completion of such rehabilitation) as
7 meeting the standards specified pursuant
8 to subsection (f)(1)(C), over
9 ‘‘(ii) any amounts paid to such tax-
10 payer for such rehabilitation,
11 ‘‘(B) 50 percent of the amounts described
12 in subparagraph (A)(i), or
13 ‘‘(C) $50,000.
14 ‘‘(3) QUALIFIED REHABILITATION.—
15 ‘‘(A) IN GENERAL.—For purposes of this

16 subsection, the term ‘qualified rehabilitation’
17 means a rehabilitation or reconstruction per-
18 formed pursuant to a written binding contract
19 between the taxpayer and the qualified home-
20 owner if the amount paid or incurred by the
21 taxpayer in the performance of such rehabilita-
22 tion or reconstruction exceeds the dollar
23 amount in effect under subsection (b)(3)(A).
24 ‘‘(B) APPLICATION OF LIMITATION TO EX-
25 PENSES PAID OR INCURRED AFTER ALLOCA-
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1 TION.—A rule similar to the rule of section
2 (b)(4) shall apply for purposes of this sub-
3 section.
4 ‘‘(4) SPECIFIED HOMEOWNER.—For purposes
5 of this subsection, the term ‘qualified homeowner’
6 means, with respect to a qualified residence, an indi-
7 vidual—
8 ‘‘(A) who owns and uses such qualified res-
9 idence as the principal residence of such indi-
10 vidual as of the date that the written binding
11 contract referred to in paragraph (3) is entered
12 into, and
13 ‘‘(B) whose family income (determined as
14 of such date) does not exceed the median family
15 income for the applicable area (with respect to
16 the census tract in which the qualified residence
17 is located).
18 ‘‘(5) ADDITIONAL CENSUS TRACTS IN WHICH
19 OWNER-OCCUPIED RESIDENCES MAY BE LOCATED.—
20 In the case of any qualified residence described in

21 paragraph (1), the term ‘qualified census tract’ in-
22 cludes any census tract which—
23 ‘‘(A) meets the requirements of subsection
24 (c)(2)(A)(i) without regard to subclause (III)
25 thereof, and
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1 ‘‘(B) is designated by the neighborhood
2 homes credit agency for purposes of this para-
3 graph.
4 ‘‘(6) MODIFICATION OF REPAYMENT REQUIRE-
5 MENT.—In the case of any qualified residence de-

6 scribed in paragraph (1), subsection (g) shall be ap-
7 plied by beginning the 5-year period otherwise de-
8 scribed therein on the date on which the qualified
9 owner acquired the residence.
10 ‘‘(7) RELATED PARTIES.—Paragraph (1) shall
11 not apply if the taxpayer is the owner of the quali-
12 fied residence described in paragraph (1) or is re-
13 lated (within the meaning of subsection (h)(6)(B))
14 to such owner.
15 ‘‘(8) PYRRHOTITE REMEDIATION.—The require-
16 ment of subsection (c)(1)(C) shall not apply to a
17 qualified rehabilitation under this subsection of a
18 qualified residence that is documented by an engi-
19 neer’s report and core testing to have a foundation
20 that is adversely impacted by pyrrhotite or other
21 iron sulfide minerals.
22 ‘‘(j) REGULATIONS.—The Secretary shall prescribe
23 such regulations as may be necessary or appropriate to
24 carry out the purposes of this section, including regula-
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1 tions that prevent avoidance of the rules, and abuse of
2 the purposes, of this section.’’.
3 (b) CREDIT ALLOWED AS PART OF GENERAL BUSI-
4 NESS CREDIT.—Section 38(b), as amended by the pre-
5 ceding provisions of this Act, is amended by striking
6 ‘‘plus’’ at the end of paragraph (34), by striking the period
7 at the end of paragraph (35) and inserting ‘‘, plus’’, and
8 by adding at the end the following new paragraph:
9 ‘‘(36) the neighborhood homes credit deter-
10 mined under section 42A(a),’’.
11 (c) CREDIT ALLOWED AGAINST ALTERNATIVE MIN-
12 IMUM TAX.—Section 38(c)(4)(B), as amended by the pre-
13 ceding provisions of this Act, is amended by redesginating
14 clauses (iv) through (xiii) as clauses (v) through (xiv), re-
15 spectively, and by inserting after clause (iii) the following
16 new clause:
17 ‘‘(iv) the credit determined under sec-
18 tion 42A,’’.
19 (d) CONFORMING AMENDMENTS.—
20 (1) Subsections (i)(3)(C), (i)(6)(B)(i), and
21 (k)(1) of section 469 are each amended by inserting
22 ‘‘or 42A’’ after ‘‘section 42’’.
23 (2) The table of sections for subpart D of part
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88
2 lowing new item:
‘‘Sec. 42A. Neighborhood homes credit.’’.
3 (e) EFFECTIVE DATE.—The amendments made by

6 PART 6—INVESTMENTS IN TRIBAL
7 INFRASTRUCTURE
8 SEC. 135601. TREATMENT OF INDIAN TRIBES AS STATES
9 WITH RESPECT TO BOND ISSUANCE.
10 (a) IN GENERAL.—Section 7871(c) is amended to

11 read as follows:
12 ‘‘(c) SPECIAL RULES FOR TAX-EXEMPT BONDS.—
13 ‘‘(1) IN GENERAL.—In applying section 146 to
14 bonds issued by Indian Tribal Governments the Sec-
15 retary shall annually—
16 ‘‘(A) establish a national bond volume cap
17 based on the greater of—
18 ‘‘(i) the State population formula ap-
19 proach in section 146(d)(1)(A) (using na-
20 tional Tribal population estimates supplied
21 annually by the Department of the Interior
22 in consultation with the Census Bureau),
23 and
24 ‘‘(ii) the minimum State ceiling
25 amount in section 146(d)(1)(B) (as ad-
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89
1 justed in accordance with the cost of living
2 provision in section 146(d)(2)),
3 ‘‘(B) allocate such national bond volume
4 cap among all Indian Tribal Governments seek-
5 ing such an allocation in a particular year
6 under regulations prescribed by the Secretary.
7 ‘‘(2) APPLICATION OF GEOGRAPHIC RESTRIC-
8 TION.—In the case of national bond volume cap allo-

9 cated under paragraph (1), section 146(k)(1) shall
10 not apply to the extent that such cap is used with
11 respect to financing for a facility located on qualified
12 Indian lands.
13 ‘‘(3) RESTRICTION ON FINANCING OF CERTAIN
14 GAMING FACILITIES.—No portion of the volume cap

15 allocated under this subsection may be used with re-
16 spect to the financing of any portion of a building
17 in which class II or class III gaming (as defined in
18 section 4 of the Indian Gaming Regulatory Act) is
19 conducted or housed or any property actually used
20 in the conduct of such gaming.
21 ‘‘(4) DEFINITIONS AND SPECIAL RULES.—For
22 purposes of this subsection—

23 ‘‘(A) INDIAN TRIBAL GOVERNMENT.—The
24 term ‘Indian Tribal Government’ means the

25 governing body of an Indian Tribe, band, na-
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1 tion, or other organized group or community, or
2 of Alaska Natives, which is recognized as eligi-
3 ble for the special programs and services pro-
4 vided by the United States to Indians because
5 of their status as Indians, and also includes any
6 agencies, instrumentalities or political subdivi-
7 sions thereof.
8 ‘‘(B) INTERTRIBAL CONSORTIUMS, ETC.—
9 In any case in which an Indian Tribal Govern-

10 ment has authorized an intertribal consortium,
11 a Tribal organization, or an Alaska Native re-
12 gional or village corporation, as defined in, or
13 established pursuant to, the Alaska Native
14 Claims Settlement Act, to plan for, coordinate
15 or otherwise administer services, finances, func-
16 tions, or activities on its behalf under this sub-
17 section, the authorized entity shall have the
18 rights and responsibilities of the authorizing In-
19 dian Tribal Government only to the extent pro-
20 vided in the Authorizing resolution.
21 ‘‘(C) QUALIFIED INDIAN LANDS.—The
22 term ‘qualified Indian lands’ shall mean an In-

23 dian reservation as defined in section 3(d) of
24 the Indian Financing Act of 1974 (25 U.S.C.
25 1452(d)), including lands which are within the
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1 jurisdictional area of an Oklahoma Indian Tribe
2 (as determined by the Secretary of the Interior)
3 and shall include lands outside a reservation
4 where the facility is to be placed in service in
5 connection with—
6 ‘‘(i) the active conduct of a trade or
7 business by an Indian Tribe on, contiguous
8 to, within reasonable proximity of, or with
9 a substantial connection to, an Indian res-
10 ervation or Alaska Native village, or
11 ‘‘(ii) infrastructure (including roads,
12 power lines, water systems, railroad spurs,
13 and communication facilities) serving an
14 Indian reservation or Alaska Native vil-
15 lage.’’.
16 (b) CONFORMING AMENDMENT.—Subparagraph (B)
17 of section 45(c)(9) is amended to read as follows:
18 ‘‘(B) INDIAN TRIBE.—For purposes of this
19 paragraph, the term ‘Indian tribe’ has the
20 meaning given the term ‘Indian Tribal Govern-
21 ment’ by section 7871(c)(3)(A).’’.
23 this section shall apply to obligations issued in calendar
24 years beginning after the date of the enactment of this
25 Act.
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1 SEC. 135602. NEW MARKETS TAX CREDIT FOR TRIBAL STA-
2 TISTICAL AREAS.
3 (a) ADDITIONAL ALLOCATIONS FOR TRIBAL STATIS-

4 TICAL AREAS.—Section 45D(f), as amended by the pre-
5 ceding provisions of this Act, is amended by adding at the
6 end the following new paragraph:
7 ‘‘(5) ADDITIONAL ALLOCATIONS FOR TRIBAL
8 STATISTICAL AREAS.—
9 ‘‘(A) IN GENERAL.—In the case of each

10 calendar year after 2021, there is (in addition
11 to any limitation under any other paragraph of
12 this subsection) a new markets tax credit limi-
13 tation of $175,000,000 which shall be allocated
14 by the Secretary as provided in paragraph (2)
15 except that such limitation may only be allo-
16 cated with respect to Tribal Statistical Areas.
17 ‘‘(B) CARRYOVER OF UNUSED TRIBAL STA-
18 TISTICAL AREA LIMITATION.—
19 ‘‘(i) IN GENERAL.—If the credit limi-

20 tation under subparagraph (A) for any cal-
21 endar year exceeds the amount of such
22 limitation allocated by the Secretary for
23 such calendar year, such limitation for the
24 succeeding calendar year shall be increased
25 by the amount of such excess.
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1 ‘‘(ii) LIMITATION ON CARRYOVER.—
2 No amount of credit limitation may be car-

3 ried under clause (i) past the 5th calendar
4 year following the calendar year in which
5 such amount of credit limitation arose.
6 ‘‘(iii) TRANSFER OF EXPIRED TRIBAL
7 STATISTICAL AREA LIMITATION TO GEN-
8 ERAL LIMITATION.—In the case of any

9 amount of credit limitation which would
10 (but for clause (ii)) be carried under clause
11 (i) to the 6th calendar year following the
12 calendar year in which such amount of
13 credit limitation arose, the new market tax
14 credit limitation under paragraph (1) for
15 such 6th calendar year shall be increased
16 by the amount of such credit limitation.
17 ‘‘(C) TRIBAL STATISTICAL AREA.—For
18 purposes of this paragraph, the term ‘Tribal

19 Statistical Area’ means—
20 ‘‘(i) any low-income community which
21 is located in any Tribal Census Tract,
22 Oklahoma Tribal Statistical Area, Tribal-
23 Designated Statistical Area, Alaska Native
24 Village Statistical Area, or Hawaiian
25 Home Land, and
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1 ‘‘(ii) any low-income community de-
2 scribed in subsection (e)(1)(B).’’.
3 (b) ELIGIBILITY OF CERTAIN PROJECTS SERVING
4 TRIBAL MEMBERS.—Section 45D(e)(1) is amended to
5 read as follows:
6 ‘‘(1) IN GENERAL.—The term ‘low-income com-
7 munity’ means any area—
8 ‘‘(A) comprising a population census tract
9 if—
10 ‘‘(i) the poverty rate for such tract is
11 at least 20 percent, or
12 ‘‘(ii)(I) in the case of a tract not lo-
13 cated within a metropolitan area, the me-
14 dian family income for such tract does not
15 exceed 80 percent of statewide median
16 family income, or
17 ‘‘(II) in the case of a tract located
18 within a metropolitan area, the median
19 family income for such tract does not ex-
20 ceed 80 percent of the greater of statewide
21 median family income or the metropolitan
22 area median family income,
23 ‘‘(B) which is used for a qualified active
24 low-income community business which—
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1 ‘‘(i) services a significant population
2 of Tribal or Alaska Native Village mem-
3 bers who are residents of a low-income
4 community described in subsection
5 (f)(5)(C)(i), and
6 ‘‘(ii) obtains a written statement from
7 the relevant Indian Tribal Government
8 (within the meaning of section 7871(c))
9 that documents the eligibility such project
10 with respect to the requirement of clause
11 (i).
12 Subparagraph (A)(ii) shall be applied using posses-
13 sion wide median family income in the case of cen-
14 sus tracts located within a possession of the United
15 States.’’.
16 (c) APPLICATION OF INFLATION ADJUSTMENT.—
17 Section 45D(f)(4), as added by the preceding provisions
18 of this Act, is amended by striking ‘‘the dollar amount
19 paragraph (1)(H) shall be increased’’ and inserting ‘‘the
20 dollar amounts in paragraphs (1)(H) and (5)(A) shall
21 each be increased’’.
22 (d) COORDINATION WITH EXISTING CARRYOVER.—
23 Section 45D(f)(3), as amended by the preceding provisions
24 of this Act, is amended to read as follows:
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1 ‘‘(3) CARRYOVER OF UNUSED LIMITATION.—If
2 the new markets tax credit limitation under para-

3 graph (1) for any calendar year exceeds the amount
4 of such limitation allocated by the Secretary under
5 paragraph (2) for such year, such limitation for the
6 succeeding calendar year shall be increased by the
7 amount of such excess.’’.
8 (e) REGULATORY AUTHORITY.—Section 45D(i) is
9 amended by striking ‘‘and’’ at the end of paragraph (5),
10 by striking the period at the end of paragraph (6) and
11 inserting ‘‘, and’’, and by adding at the end the following
12 new paragraph:
13 ‘‘(7) which provide documentation requirements
14 for the written statement required under subsection
15 (e)(1)(B)(ii), and
16 ‘‘(8) which provide procedures for determining
17 which projects under subsection (e)(1)(B) are quali-
18 fied active low-income community businesses with re-
19 spect to the populations described in such sub-
20 section. Such procedures shall take into account the
21 location needs of such projects, especially with re-
22 spect to projects that serve multiple tribal or Alaska
23 Native Village communities.’’.
24 (f) EFFECTIVE DATE.—The amendments made by
25 this section shall apply to new markets tax credit limita-
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1 tion determined for calendar years after December 31,
2 2021.
3 SEC. 135603. INCLUSION OF INDIAN AREAS AS DIFFICULT
4 DEVELOPMENT AREAS FOR PURPOSES OF
5 CERTAIN BUILDINGS.
6 (a) IN GENERAL.—Subclause (I) of section

7 42(d)(5)(B)(iii), as amended by the preceding provisions
8 of this Act, is amended by inserting ‘‘, any Indian area’’
9 after ‘‘median gross income’’.
10 (b) INDIAN AREA.—Clause (iii) of section
11 42(d)(5)(B), as amended by the preceding provisions of
12 this Act is amended by redesignating subclause (III) as
13 subclause (V) and by inserting after subclause (II) the fol-
14 lowing new subclauses:
15 ‘‘(III) INDIAN AREA.—For pur-
16 poses of subclause (I), the term ‘In-
17 dian area’ means any Indian area (as
18 defined in section 4(11) of the Native
19 American Housing Assistance and
20 Self Determination Act of 1996 (25
21 U.S.C. 4103(11))).
22 ‘‘(IV) SPECIAL RULE FOR BUILD-
23 INGS IN INDIAN AREAS.—In the case

24 of an area which is a difficult develop-
25 ment area solely because it is an In-
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1 dian area, a building shall not be
2 treated as located in such area unless
3 such building is assisted or financed
4 under the Native American Housing
5 Assistance and Self Determination
6 Act of 1996 (25 U.S.C. 4101 et seq.)
7 or the project sponsor is an Indian
8 tribe (as defined in section
9 45A(c)(6)), a tribally designated hous-
10 ing entity (as defined in section 4(22)
11 of such Act (25 U.S.C. 4103(22))), or
12 wholly owned or controlled by such an
13 Indian tribe or tribally designated
14 housing entity.’’.
16 this section shall apply to buildings placed in service after
17 December 31, 2021.
18 PART 7—INVESTMENTS IN THE TERRITORIES
19 SEC. 135701. POSSESSIONS ECONOMIC ACTIVITY CREDIT.

21 chapter A of chapter 1, as amended by the preceding pro-
22 visions of this Act, is amended by adding at the end the
23 following new section:
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1 ‘‘SEC. 45V. POSSESSIONS ECONOMIC ACTIVITY CREDIT.

3 tion 38, in the case of a qualified domestic corporation
4 the possessions economic activity credit determined under
5 this section for a taxable year is an amount equal to 20
6 percent of the sum of the qualified possession wages and
7 allocable employee fringe benefit expenses paid or incurred
8 by the taxpayer for the taxable year.
9 ‘‘(b) QUALIFIED DOMESTIC CORPORATION; QUALI-
10 FIED CORPORATION.—For purposes of this section—
11 ‘‘(1) IN GENERAL.—The term ‘qualified domes-
12 tic corporation’ means any domestic corporation
13 which is—
14 ‘‘(A) a qualified corporation, or
15 ‘‘(B) a United States shareholder of a for-
16 eign corporation which—
17 ‘‘(i) is a qualified corporation, and
18 ‘‘(ii) is wholly owned by the United
19 States shareholder together with any cor-
20 porations which are members of the same
21 affiliated group (within the meaning of sec-
22 tion 1504(a)) as such United States share-
23 holder.
24 ‘‘(2) QUALIFIED CORPORATION.—The term
25 ‘qualified corporation’ means any corporation if such
26 corporation meets the following requirements:
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1 ‘‘(A) SOURCE QUALIFICATION.—80 percent
2 or more of the gross income of the corporation
3 for the 3-year period immediately preceding the
4 close of the taxable year (or for such part of
5 such period immediately preceding the close of
6 such taxable year as may be applicable) was de-
7 rived from sources within a possession of the
8 United States (determined without regard to
9 section 904(f)).
10 ‘‘(B) TRADE OR BUSINESS QUALIFICA-
11 TION.—75 percent or more of the gross income

12 of the corporation for such period or such part
13 thereof was derived from the active conduct of
14 a trade or business within a possession of the
15 United States.
16 ‘‘(3) SPECIAL RULE FOR SEPARATE AND
17 CLEARLY IDENTIFIED UNITS OF FOREIGN CORPORA-
18 TIONS.—
19 ‘‘(A) IN GENERAL.—In the case of a

20 United States shareholder of a foreign corpora-
21 tion which—
22 ‘‘(i) is not a qualified corporation but
23 with respect to which the ownership re-
24 quirements of paragraph (1)(B)(ii) are
25 met, and
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1 ‘‘(ii) has an eligible foreign business
2 unit which, if such unit were a corporation,
3 would be a qualified corporation with re-
4 spect to which such ownership require-
5 ments would be met,
6 then, for purposes of this section, the United
7 States shareholder may elect to treat such unit
8 as a separate foreign corporation which meets
9 the requirements of paragraph (1)(B) and with
10 respect to which such shareholder is a United
11 States shareholder.
12 ‘‘(B) ELIGIBLE FOREIGN BUSINESS
13 UNIT.—For purposes of this paragraph, the

14 term ‘eligible foreign business unit’ means a
15 separate and clearly identified foreign unit of a
16 trade or business, including a partnership or an
17 entity treated as disregarded as a separate enti-
18 ty from its owner (under section 7701 or other
19 provision under this title), which maintains sep-
20 arate books and records.
21 ‘‘(C) SPECIAL ELECTION FOR AFFILIATED
22 GROUPS.—In the case of an affiliated group de-

23 scribed in paragraph (1)(B)(ii), the election
24 under subparagraph (A) with respect to any eli-
25 gible foreign business unit shall be made by the
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1 common parent of such group and shall apply
2 uniformly to all members of such group which
3 are United States shareholders with respect to
4 the foreign corporation which has such unit.
5 ‘‘(c) QUALIFIED POSSESSION WAGES.—For purposes
6 of this section—
7 ‘‘(1) IN GENERAL.—The term ‘qualified posses-
8 sion wages’ means wages paid or incurred by the
9 qualified corporation during the taxable year in con-
10 nection with the active conduct of a trade or busi-
11 ness within a possession of the United States to any
12 employee for services performed in such possession,
13 but only if such services are performed while the
14 principal place of employment of such employee is
15 within such possession.
16 ‘‘(2) LIMITATION ON AMOUNT OF WAGES
17 TAKEN INTO ACCOUNT.—
18 ‘‘(A) IN GENERAL.—The amount of wages

19 which may be taken into account under para-
20 graph (1) with respect to any employee for any
21 taxable year shall not exceed $50,000.
22 ‘‘(B) TREATMENT OF PART-TIME EMPLOY-
23 EES, ETC.—If—
24 ‘‘(i) any employee is not employed by

25 the qualified corporation on a substantially
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1 full-time basis at all times during the tax-
2 able year, or
3 ‘‘(ii) the principal place of employ-
4 ment of any employee with the qualified
5 corporation is not within a possession at
6 all times during the taxable year,
7 the limitation applicable under paragraph (1)
8 with respect to such employee shall be the ap-
9 propriate portion (as determined by the Sec-
10 retary) of the limitation which would otherwise
11 be in effect under paragraph (1).
12 ‘‘(C) WAGES.—
13 ‘‘(i) IN GENERAL.—Except as pro-
14 vided in clause (ii), the term ‘wages’ has
15 the meaning given to such term by sub-
16 section (b) of section 3306 (determined
17 without regard to any dollar limitation
18 contained in such section). For purposes of
19 the preceding sentence, such subsection (b)
20 shall be applied as if the term ‘United
21 States’ included all possessions of the
22 United States.
23 ‘‘(ii) SPECIAL RULE FOR AGRICUL-
24 TURAL LABOR AND RAILWAY LABOR.—In
25 any case to which subparagraph (A) or (B)
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1 of paragraph (1) of section 51(h) applies,
2 the term ‘wages’ has the meaning given to
3 such term by section 51(h)(2).
4 ‘‘(3) ALLOCABLE EMPLOYEE FRINGE BENEFIT
5 EXPENSES.—
6 ‘‘(A) IN GENERAL.—The allocable em-

7 ployee fringe benefit expenses of any qualified
8 corporation for any taxable year is an amount
9 which bears the same ratio to the amount de-
10 termined under subparagraph (B) for such tax-
11 able year as—
12 ‘‘(i) the aggregate amount of the
13 qualified corporation’s qualified possession
14 wages for such taxable year, bears to
15 ‘‘(ii) the aggregate amount of the
16 wages paid or incurred by such qualified
17 corporation during such taxable year.
18 In no event shall the amount determined under
19 the preceding sentence exceed 15 percent of the
20 amount referred to in clause (i).
21 ‘‘(B) EXPENSES TAKEN INTO ACCOUNT.—
22 For purposes of subparagraph (A), the amount

23 determined under this subparagraph for any
24 taxable year is the aggregate amount allowable
25 (or, in the case of a foreign corporation, which
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1 would be allowable if such foreign corporation
2 were a domestic corporation) as a deduction
3 under this chapter to the qualified corporation
4 for such taxable year with respect to—
5 ‘‘(i) employer contributions under a
6 stock bonus, pension, profit-sharing, or an-
7 nuity plan,
8 ‘‘(ii) employer-provided coverage
9 under any accident or health plan for em-
10 ployees, and
11 ‘‘(iii) the cost of life or disability in-
12 surance provided to employees.
13 Any amount treated as wages under paragraph
14 (2)(C) shall not be taken into account under
15 this subparagraph.
16 ‘‘(d) POSSESSION.—
17 ‘‘(1) IN GENERAL.—The term ‘possession of the
18 United States’ means American Samoa, the Com-
19 monwealth of the Northern Mariana Islands, the
20 Commonwealth of Puerto Rico, Guam, and the Vir-
21 gin Islands.
22 ‘‘(2) MIRROR CODE POSSESSIONS.—In the case
23 of any possession of the United States with a mirror
24 code tax system (as defined in section 24(k)), this
25 section shall not be treated as part of the income tax
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1 laws of the United States for purposes of deter-
2 mining the income tax law of such possession unless
3 such possession elects to have this section be so
4 treated.
5 ‘‘(e) SEPARATE APPLICATION TO EACH POSSES-
6 SION.—For purposes of determining the amount of the
7 credit allowed under this section, this section shall be ap-
8 plied separately with respect to each possession of the
9 United States.
10 ‘‘(f) TERMINATION.—No credit shall be allowed
12 cember 31, 2031.’’.
13 (b) CREDIT MADE PART OF GENERAL BUSINESS
14 CREDIT.—Subsection (b) of section 38, as amended by the
15 preceding provisions of this Act, is amended by striking
19 ‘‘(37) the possessions economic activity credit
20 determined under section 45V.’’.
21 (c) CLERICAL AMENDMENT.—The table of sections
22 for subpart B of part IV of subchapter A of chapter 1
23 is amended by adding at the end the following:
‘‘Sec. 45V. Possessions Economic Activity Credit.’’.

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1 the date of the enactment of this Act, and in the case
2 of a qualified corporation that is a foreign corporation,
3 to taxable years beginning after the date of enactment and
4 to taxable years of United States shareholders in which
5 or with which such taxable years of foreign corporations
6 end.
7 SEC. 135702. ADDITIONAL NEW MARKETS TAX CREDIT AL-
8 LOCATIONS FOR THE TERRITORIES.
9 (a) IN GENERAL.—Section 45D(f), as amended by

10 the preceding provisions of this Act, is amended by adding
11 at the end the following new paragraph:
12 ‘‘(6) ADDITIONAL ALLOCATIONS FOR POSSES-
13 SIONS OF THE UNITED STATES.—
14 ‘‘(A) IN GENERAL.—In the case of each

15 calendar year after 2021, there is (in addition
16 to the limitation under paragraph (1)—
17 ‘‘(i) a new markets tax credit limita-
18 tion of $80,000,000 which shall be allo-
19 cated by the Secretary as provided in para-
20 graph (2) except that such limitation may
21 only be allocated with respect to low-in-
22 come communities located in Puerto Rico,
23 and
24 ‘‘(ii) a new markets tax credit limita-
25 tion of $20,000,000 which shall be allo-
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1 cated by the Secretary as provided in para-
2 graph (2) except that such limitation may
3 only be allocated with respect to low-in-
4 come communities located in possessions of
5 the United States other than Puerto Rico.
6 ‘‘(B) CARRYOVER OF UNUSED LIMITA-
7 TION.—
8 ‘‘(i) IN GENERAL.—If the credit limi-

9 tation under clause (i) or clause (ii) of sub-
10 paragraph (A) for any calendar year ex-
11 ceeds the amount of such limitation allo-
12 cated by the Secretary for such calendar
13 year, such limitation for the succeeding
14 calendar year shall be increased by the
15 amount of such excess.
16 ‘‘(ii) LIMITATION ON CARRYOVER.—
17 No amount of credit limitation may be car-

18 ried under clause (i) past the 5th calendar
19 year following the calendar year in which
20 such amount of credit limitation arose.
21 ‘‘(iii) TRANSFER OF EXPIRED POSSES-
22 SION LIMITATION TO GENERAL LIMITA-
23 TION.—In the case of any amount of credit

24 limitation which would (but for clause (ii))
25 be carried under clause (i) to the 6th cal-
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1 endar year following the calendar year in
2 which such amount of credit limitation
3 arose, the new market tax credit limitation
4 under paragraph (1) for such 6th calendar
5 year shall be increased by the amount of
6 such credit limitation.’’.
7 (b) APPLICATION OF INFLATION ADJUSTMENT.—
8 Section 45D(f)(4), as added and amended by the pre-
9 ceding provisions of this Act, is amended by striking
10 ‘‘paragraphs (1)(H) and (5)(A)’’ and inserting ‘‘para-
11 graphs (1)(H), (5)(A), (6)(A)(i), and (6)(A)(ii)’’.
12 (c) EFFECTIVE DATES.—The amendments made by
13 this subsection shall apply to new markets tax credit limi-
14 tation determined for calendar years after December 31,
15 2021.
16 Subtitle G—Green Energy

23 of 1986.
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1 PART 1—RENEWABLE ELECTRICITY AND
2 REDUCING CARBON EMISSIONS
3 SEC. 136101. EXTENSION AND MODIFICATION OF CREDIT
4 FOR ELECTRICITY PRODUCED FROM CER-
5 TAIN RENEWABLE RESOURCES.
6 (a) IN GENERAL.—The following provisions of sec-

7 tion 45(d) are each amended by striking ‘‘January 1,
8 2022’’ each place it appears and inserting ‘‘January 1,
9 2034’’:
10 (1) Paragraph (2)(A).
11 (2) Paragraph (3)(A).
12 (3) Paragraph (4)(B).
13 (4) Paragraph (6).
16 (7) Paragraph (11)(B).
17 (b) APPLICATION OF EXTENSION TO SOLAR.—Sec-
18 tion 45(d)(4)(A) is amended by striking ‘‘is placed in serv-
19 ice before January 1, 2006’’ and inserting ‘‘the construc-
20 tion of which begins before January 1, 2034.’’.
21 (c) EXTENSION OF ELECTION TO TREAT QUALIFIED
22 FACILITIES AS ENERGY PROPERTY.—Section
23 48(a)(5)(C)(ii) is amended by striking ‘‘January 1, 2022’’
24 and inserting ‘‘January 1, 2034’’.
25 (d) APPLICATION OF EXTENSION TO WIND FACILI-
26 TIES.—
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1 (1) IN GENERAL.—Section 45(d)(1) is amended
2 by striking ‘‘January 1, 2022’’ and inserting ‘‘Janu-
3 ary 1, 2034’’.
4 (2) APPLICATION OF PHASEOUT PERCENT-
5 AGE.—
6 (A) RENEWABLE ELECTRICITY PRODUC-
7 TION CREDIT.—Section 45(b)(5)(D) is amended

8 by inserting ‘‘placed in service before January
9 1, 2022’’ after ‘‘In the case of any facility’’.
10 (B) ENERGY CREDIT.—Section
11 48(a)(5)(E)(iv) is amended by inserting ‘‘placed

12 in service before January 1, 2022’’ after ‘‘In
13 the case of any facility’’.
14 (3) QUALIFIED OFFSHORE WIND FACILITIES
15 UNDER ENERGY CREDIT.—Section 48(a)(5)(F)(i) is

16 amended by striking ‘‘offshore wind facility—’’ and
17 all that follows and inserting the following: ‘‘offshore
18 wind facility, subparagraph (E) shall not apply.’’.
19 (e) PERCENTAGE PHASEOUT OF CREDIT.—Section
20 45(b) is amended by adding at the end the following new
21 paragraph:
22 ‘‘(6) PERCENTAGE PHASEOUT OF CREDIT.—In
23 the case of any facility, the amount of the credit de-

24 termined under subsection (a) shall be reduced by—
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1 ‘‘(A) in the case of any facility the con-
2 struction of which begins after December 31,
3 2031 and before January 1, 2033, 20 percent,
4 ‘‘(B) in the case of any facility the con-
6 2032 and before January 1, 2034, 40 percent,
7 and
8 ‘‘(C) in the case of any facility the con-
10 2033, 100 percent.’’.
11 (f) WAGE AND APPRENTICESHIP REQUIREMENTS.—
12 Section 45(b) is amended by adding at the end the fol-
14 ‘‘(7) BASE CREDIT AMOUNT AND INCREASED
15 CREDIT AMOUNT FOR QUALIFIED FACILITIES.—
16 ‘‘(A) IN GENERAL.—In the case of any

17 qualified facility which does not satisfy the re-
18 quirements of subparagraph (B), the amount of
19 the credit determined under subsection (a) (de-
20 termined after the application of paragraphs (1)
21 through (6)) shall be 20 percent of such
22 amount (determined without regard to this sen-
23 tence).
24 ‘‘(B) INCREASED CREDIT FOR CERTAIN FA-
25 CILITIES MEETING PROJECT REQUIREMENTS.—
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2 qualified facility which meets the project
3 requirements of this subparagraph, sub-
4 paragraph (A) shall not apply.
5 ‘‘(ii) PROJECT REQUIREMENTS.—A
6 project meets the requirements of this sub-

7 paragraph if it is one of the following:
8 ‘‘(I) A project with a maximum
9 net output of less than 1 megawatt.
10 ‘‘(II) A project which commences
11 construction prior to the date of the
12 enactment of this paragraph.
13 ‘‘(III) A project which satisfies
14 the requirements of paragraphs (8)
15 and (9).
16 ‘‘(8) PREVAILING WAGE REQUIREMENTS.—
17 ‘‘(A) IN GENERAL.—The requirements de-

18 scribed in this subparagraph with respect to
19 any qualified facility are that the taxpayer shall
20 ensure that any laborers and mechanics em-
21 ployed by contractors and subcontractors in—
22 ‘‘(i) the construction of such facility,
23 and
24 ‘‘(ii) for the 10-year period beginning
25 on the date the facility was originally
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1 placed in service, the alteration or repair of
2 such facility,
3 shall be paid wages at rates not less than the
4 prevailing rates for construction, alteration, or
5 repair of a similar character in the locality as
6 most recently determined by the Secretary of
7 Labor, in accordance with subchapter IV of
8 chapter 31 of title 40, United States Code.
9 ‘‘(B) CORRECTION AND PENALTY RELATED
10 TO FAILURE TO SATISFY WAGE REQUIRE-
11 MENTS.—

13 taxpayer which fails to satisfy the require-
14 ment under subparagraph (A) with respect
15 to the construction of any qualified facility
16 or with respect to the alteration or repair
17 of a facility in any year during the period
18 described in subparagraph (A)(ii), such
19 taxpayer shall be deemed to have satisfied
20 such requirement under such subparagraph
21 with respect to such facility for any year if,
22 with respect to any laborer or mechanic
23 who was paid wages at a rate below the
24 rate described in such subparagraph for
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1 any period during such year, such tax-
2 payer—
3 ‘‘(I) makes payment to such la-
4 borer or mechanic in an amount equal
5 to the sum of—
6 ‘‘(aa) an amount equal to
7 the difference between the
8 amount of wages paid to such la-
9 borer or mechanic during such
10 period, and—
11 ‘‘(AA) the amount of
12 wages required to be paid to
13 such laborer or mechanic
14 pursuant to such subpara-
15 graph during such period,
16 plus
17 ‘‘(BB) interest on the
18 amount determined under
19 item (aa) at the under-
20 payment rate established
21 under section 6621 for the
22 period described in such
23 item, and
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1 ‘‘(II) makes payment to the Sec-
2 retary of a penalty in an amount
3 equal to the product of—
4 ‘‘(aa) $5,000, multiplied by
5 ‘‘(bb) the total number of la-
6 borers and mechanics who were
7 paid wages at a rate below the
8 rate described in subparagraph
9 (A) for any period during such
10 year.
11 ‘‘(ii) PENALTY ASSESSED AS TAX.—
12 The penalty described in clause (i)(II)

13 shall be treated in the same manner as a
14 penalty imposed under subchapter B of
15 chapter 68.
16 ‘‘(9) APPRENTICESHIP REQUIREMENTS.—The
17 requirements described in this subparagraph with re-

18 spect to the construction of any qualified facility are
19 as follows:
20 ‘‘(A) LABOR HOURS.—
21 ‘‘(i) PERCENTAGE OF TOTAL LABOR
22 HOURS.—All contractors and subcontrac-

23 tors engaged in the performance of con-
24 struction, alteration, or repair work on any
25 project shall, subject to subparagraph (B),
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1 ensure that not less than the applicable
2 percentage of the total labor hours of such
3 work be performed by qualified appren-
4 tices.
5 ‘‘(ii) APPLICABLE PERCENTAGE.—For
6 purposes of paragraph (1), the applicable

7 percentage shall be—
8 ‘‘(I) in the case of any applicable
9 project the construction of which be-
10 gins before January 1, 2023, 5 per-
11 cent,
12 ‘‘(II) in the case of any applica-
13 ble project the construction of which
14 begins after December 31, 2022, and
15 before January 1, 2024, 10 percent,
16 and
17 ‘‘(III) in the case of any applica-
19 begins after December 31, 2023, 15
20 percent.
21 ‘‘(B) APPRENTICE TO JOURNEYWORKER
22 RATIO.—The requirement under subparagraph

23 (A)(i) shall be subject to any applicable require-
24 ments for apprentice-to-journeyworker ratios of
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1 the Department of Labor or the applicable
2 State apprenticeship agency.
3 ‘‘(C) PARTICIPATION.—Each contractor
4 and subcontractor who employs 4 or more indi-
5 viduals to perform construction, alteration, or
6 repair work on an applicable project shall em-
7 ploy 1 or more qualified apprentices to perform
8 such work.
9 ‘‘(D) EXCEPTION.—
10 ‘‘(i) IN GENERAL.—Notwithstanding
11 any other provision of this paragraph, this

12 paragraph shall not apply in the case of a
13 taxpayer who—
14 ‘‘(I) demonstrates a lack of avail-
15 ability of qualified apprentices in the
16 geographic area of the construction,
17 alteration, or repair work, and
18 ‘‘(II) makes a good faith effort to
19 comply with the requirements of this
20 paragraph, or
21 ‘‘(ii) GOOD FAITH EFFORT.—For pur-
22 poses of clause (i), a taxpayer shall be
23 deemed to have satisfied the requirements
24 under such paragraph with respect to an
25 applicable project if such taxpayer has re-
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1 quested qualified apprentices from a reg-
2 istered apprenticeship program, as defined
3 in section 3131(e)(3)(B), and such request
4 has been denied, provided that such denial
5 is not the result of a refusal by the con-
6 tractors or subcontractors engaged in the
7 performance of construction, alteration, or
8 repair work on such applicable project to
9 comply with the established standards and
10 requirements of such apprenticeship pro-
11 gram.
12 ‘‘(E) DEFINITIONS.—For purposes of this
13 paragraph—
14 ‘‘(i) LABOR HOURS.—The term ‘labor
15 hours’—
16 ‘‘(I) means the total number of
17 hours devoted to the performance of
18 construction, alteration, or repair
19 work by employees of the contractor
20 or subcontractor, and
21 ‘‘(II) excludes any hours worked
22 by—
23 ‘‘(aa) foremen,
24 ‘‘(bb) superintendents,
25 ‘‘(cc) owners, or
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1 ‘‘(dd) persons employed in a
2 bona fide executive, administra-
3 tive, or professional capacity
4 (within the meaning of those
5 terms in part 541 of title 29,
6 Code of Federal Regulations).
7 ‘‘(ii) QUALIFIED APPRENTICE.—The
8 term ‘qualified apprentice’ means an indi-

9 vidual who is an employee of the con-
10 tractor or subcontractor and who is par-
11 ticipating in a registered apprenticeship
12 program, as defined in section
13 3131(e)(3)(B).
14 ‘‘(10) DOMESTIC CONTENT BONUS CREDIT
15 AMOUNT.—

17 qualified facility which satisfies the requirement
18 under subparagraph (B), the amount of the
19 credit determined under subsection (a) (deter-
20 mined after the application of paragraphs (1)
21 through (9)) shall be increased by an amount
22 equal to 10 percent of the amount otherwise in
23 effect under such subsection.
24 ‘‘(B) REQUIREMENT.—
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1 ‘‘(i) IN GENERAL.—Subject to clause
2 (iii), the requirement described in this sub-
3 clause with respect to any qualified facility
4 is that, prior to the end of the taxable year
5 in which such facility is placed in service,
6 the taxpayer shall certify to the Secretary
7 that, any steel, iron, or manufactured
8 product used in the construction of such
9 facility was produced in the United States.
10 ‘‘(ii) STEEL AND IRON.—In the case
11 of steel or iron, clause (i) shall be applied
12 in a manner consistent with section
13 661.5(b) of title 49, Code of Federal Regu-
14 lations.
15 ‘‘(iii) MANUFACTURED PRODUCT.—
16 For purposes of clause (i), a manufactured

17 product shall be deemed to have been man-
18 ufactured in the United States if not less
19 than 55 percent of the total cost of the
20 components of such product is attributable
21 to components which are mined, produced,
22 or manufactured in the United States.
23 ‘‘(C) INTERNATIONAL AGREEMENTS.—This
24 paragraph shall be applied in a manner which
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1 is consistent with the obligations of the United
2 States under international agreements.
3 ‘‘(11) PENALTY FOR DIRECT PAY.—
4 ‘‘(A) IN GENERAL.—In the case of a tax-

5 payer making an election under section 6417
6 with respect to a credit under this section, the
7 amount of such credit shall be replaced with—
8 ‘‘(i) the value of such credit (deter-
9 mined without regard to this paragraph),
10 multiplied by
11 ‘‘(ii) the applicable percentage.
12 ‘‘(B) 100 PERCENT APPLICABLE PERCENT-
13 AGE FOR CERTAIN QUALIFIED FACILITIES.—In
14 the case of any qualified facility—

15 ‘‘(i) which satisfies the requirements
16 under paragraph (10) with respect to the
17 construction of such facility, or
18 ‘‘(ii) with a maximum net output of
19 less than 1 megawatt,
20 the applicable percentage shall be 100 percent.
21 ‘‘(C) PHASED DOMESTIC CONTENT RE-
22 QUIREMENT.—Subject to subparagraph (D), in

23 the case of any qualified facility which is not
24 described in subparagraph (B), the applicable
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1 ‘‘(i) if construction of such facility
2 began before January 1, 2024, 100 per-
3 cent,
4 ‘‘(ii) if construction of such facility
5 began in calendar year 2024, 90 percent,
6 ‘‘(iii) if construction of such facility
8 and
9 ‘‘(iv) if construction of such facility
10 began after December 31, 2025, 0 percent.
11 ‘‘(D) EXCEPTIONS.—In order to facilitate
12 the use of amounts made available in this sec-
13 tion, increase the tax incentives for investment
14 in clean energy, and grow the domestic supply
15 chains, the Secretary shall provide appropriate
16 exceptions to the domestic content requirements
17 for products under subparagraph (C) for the
18 construction of qualified facilities if either the
19 inclusion of domestic products increases the
20 overall costs of projects by more than 25 per-
21 cent or relevant manufactured products are not
22 produced in the United States in sufficient and
23 reasonably available quantities or of a satisfac-
24 tory quality.
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1 ‘‘(12) REGULATIONS AND GUIDANCE.—The
2 Secretary shall issue such regulations or other guid-

3 ance as the Secretary determines necessary or ap-
4 propriate to carry out the purposes of this sub-
5 section.’’.
6 (g) EFFECTIVE DATE.—The amendments made by
7 this section shall apply to facilities placed in service after
9 SEC. 136102. EXTENSION AND MODIFICATION OF ENERGY
10 CREDIT.
11 (a) EXTENSION OF CREDIT.—The following provi-

12 sions of section 48 are each amended by striking ‘‘January
13 1, 2024’’ each place it appears and inserting ‘‘January
14 1, 2034’’:
15 (1) Subsection (a)(3)(A)(ii).
16 (2) Subsection (a)(3)(A)(vii).
17 (3) Subsection (c)(1)(D).
18 (4) Subsection (c)(2)(D).
19 (5) Subsection (c)(3)(A)(iv).
20 (6) Subsection (c)(4)(C).
21 (b) PHASEOUT OF CREDIT.—Section 48(a) is amend-
22 ed by striking paragraphs (6) and (7) and inserting the
23 following new paragraphs:
24 ‘‘(6) PHASEOUT FOR SOLAR ENERGY PROP-
25 ERTY.—
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1 ‘‘(A) IN GENERAL.—Subject to subpara-
2 graph (B), in the case of any energy property
3 described in paragraph (3)(A)(i) the construc-
4 tion of which begins before January 1, 2034,
5 the energy percentage determined under para-
6 graph (2) shall be equal to—
7 ‘‘(i) in the case of any property the
8 construction of which begins after Decem-
9 ber 31, 2019, and which is placed in serv-
10 ice before January 1, 2022, 26 percent,
11 ‘‘(ii) in the case of any property the
12 construction of which begins before Janu-
13 ary 1, 2032, and which is placed in service
14 after December 31, 2021, 30 percent,
15 ‘‘(iii) in the case of any property the
17 ber 31, 2031 and before January 1, 2033,
18 26 percent, and
19 ‘‘(iv) in the case of any property the
22 22 percent.
23 ‘‘(B) PLACED IN SERVICE DEADLINE.—In
24 the case of any energy property described in

25 paragraph (3)(A)(i) the construction of which
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1 begins before January 1, 2034, and which is
2 not placed in service before January 1, 2036,
3 the energy percentage determined under para-
4 graph (2) shall be equal to 10 percent.
5 ‘‘(7) PHASEOUT FOR CERTAIN OTHER ENERGY
6 PROPERTY.—
7 ‘‘(A) IN GENERAL.—Subject to subpara-

8 graph (B), in the case of any qualified fuel cell
9 property, qualified small wind property, waste
10 energy recovery property, or energy property
11 described in paragraph (3)(A)(ii), the energy
12 percentage determined under paragraph (2)
13 shall be equal to—
14 ‘‘(i) in the case of any property the
16 ber 31, 2019, and which is placed in serv-
17 ice before January 1, 2022, 26 percent,
18 ‘‘(ii) in the case of any property the
19 construction of which begins before Janu-
20 ary 1, 2032, and which is placed in service
21 after December 31, 2021, 30 percent,
22 ‘‘(iii) in the case of any property the
25 26 percent, and
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1 ‘‘(iv) in the case of any property the
4 22 percent.
5 ‘‘(B) PLACED IN SERVICE DEADLINE.—In
6 the case of any energy property described in

7 subparagraph (A) which is not placed in service
8 before January 1, 2036, the energy percentage
9 determined under paragraph (2) shall be equal
10 to 0 percent.’’.
11 (c) 30 PERCENT CREDIT FOR SOLAR AND GEO-
12 THERMAL.—
13 (1) EXTENSION FOR SOLAR.—Section
14 48(a)(2)(A)(i)(II) is amended by striking ‘‘January

15 1, 2024’’ and inserting ‘‘January 1, 2034’’.
16 (2) APPLICATION TO GEOTHERMAL.—
17 (A) IN GENERAL.—Paragraphs
18 (2)(A)(i)(II), (6)(A), and (6)(B) of section

19 48(a) are each amended by striking ‘‘paragraph
20 (3)(A)(i)’’ and inserting ‘‘clause (i), (iii), or
21 (vii) of paragraph (3)(A)’’.
22 (B) CONFORMING AMENDMENT.—The
23 heading of section 48(a)(6) is amended by in-

24 serting ‘‘AND GEOTHERMAL’’ after ‘‘SOLAR EN-
25 ERGY’’.
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1 (d) ENERGY STORAGE TECHNOLOGIES; QUALIFIED
2 BIOGAS PROPERTY; MICROGRID CONTROLLERS; EXTEN-
3 SION OF WASTE ENERGY RECOVERY PROPERTY.—
4 (1) IN GENERAL.—Section 48(a)(3)(A) is
5 amended by striking ‘‘or’’ at the end of clause (vii),
6 and by adding at the end the following new clauses:
7 ‘‘(viii) energy storage technology,
8 ‘‘(ix) qualified biogas property, or
9 ‘‘(x) microgrid controllers,’’.
10 (2) APPLICATION OF 30 PERCENT CREDIT.—
11 Section 48(a)(2)(A)(i) is amended by striking ‘‘and’’

12 at the end of subclauses (IV) and (V) and adding at
13 the end the following new subclauses:
14 ‘‘(VI) energy storage technology,
15 ‘‘(VII) qualified biogas property,
16 and
17 ‘‘(VIII) microgrid controllers,
18 and’’.
19 (3) APPLICATION OF PHASEOUT.—Section
20 48(a)(7) is amended by inserting ‘‘energy storage

21 technology, qualified biogas property, microgrid
22 contollers,’’ after ‘‘waste energy recovery property,’’.
23 (4) DEFINITIONS.—Section 48(c) is amended
24 by adding at the end the following new paragraphs:
25 ‘‘(6) ENERGY STORAGE TECHNOLOGY.—
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1 ‘‘(A) IN GENERAL.—The term ‘energy
2 storage technology’ means equipment (other
3 than equipment primarily used in the transpor-
4 tation of goods or individuals and not for the
5 production of electricity) which uses batteries,
6 compressed air, pumped hydropower, hydrogen
7 storage, thermal energy storage, regenerative
8 fuel cells, flywheels, capacitors, superconducting
9 magnets, or other technologies identified by the
10 Secretary, after consultation with the Secretary
11 of Energy, to store energy for conversion to
12 electricity (or, in the case of hydrogen storage,
13 to store energy), and has a capacity of not less
14 than 5 kilowatt hours.
15 ‘‘(B) MODIFICATIONS OF CERTAIN PROP-
16 ERTY.—In the case of any equipment which ei-

17 ther—
18 ‘‘(i) would be described in subpara-
19 graph (A) except that such equipment has
20 a capacity of less than 5 kilowatt hours is
21 modified such that such equipment (after
22 such modification) has a capacity of not
23 less than 5 kilowatt hours, or
24 ‘‘(ii) is described in subparagraph (A)
25 and which has a capacity of not less than
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1 5 kilowatt hours and is modified such that
2 such equipment (after such modification)
3 has an increased capacity,
4 such equipment shall be treated as described in
5 subparagraph (A) except that the basis of any
6 property which was part of such equipment be-
7 fore such modification shall not be taken into
8 account for purposes of this section. In the case
9 of any property to which this subparagraph ap-
10 plies, subparagraph (C) shall be applied by sub-
11 stituting ‘modification’ for ‘construction’.
12 ‘‘(C) TERMINATION.—The term ‘energy
13 storage technology’ shall not include any prop-
14 erty the construction of which does not begin
15 before January 1, 2034.
16 ‘‘(7) QUALIFIED BIOGAS PROPERTY.—

18 biogas property’ means property comprising a
19 system which—
20 ‘‘(i) converts biomass (as defined in
21 section 45K(c)(3), as in effect on the date
22 of enactment of this paragraph) into a gas
23 which—
24 ‘‘(I) consists of not less than 52
25 percent methane, or
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1 ‘‘(II) is concentrated by such sys-
2 tem into a gas which consists of not
3 less than 52 percent methane, and
4 ‘‘(ii) captures such gas for productive
5 use.
6 ‘‘(B) INCLUSION OF CLEANING AND CON-
7 DITIONING PROPERTY.—The term ‘qualified

8 biogas property’ includes any property which is
9 part of such system which cleans or conditions
10 such gas.
11 ‘‘(C) TERMINATION.—The term ‘qualified
12 biogas property’ shall not include any property
13 the construction of which does not begin before
14 January 1, 2034.
15 ‘‘(8) MICROGRID CONTROLLER.—
16 ‘‘(A) IN GENERAL.—The term ‘microgrid

17 controller’ means equipment which is—
18 ‘‘(i) part of a qualified microgrid, and
19 ‘‘(ii) designed and used to monitor
20 and control the energy resources and loads
21 on such microgrid to maintain acceptable
22 frequency, voltage, or economic dispatch.
23 ‘‘(B) QUALIFIED MICROGRID.—The term
24 ‘qualified microgrid’ means an electrical system
25 which—
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1 ‘‘(i) includes equipment which is capa-
2 ble of generating not less than 4 kilowatts
3 and not greater than 20 megawatts of elec-
4 tricity,
5 ‘‘(ii) is capable of operating—
6 ‘‘(I) in connection with the elec-
7 trical grid and as a single controllable
8 entity with respect to such grid, and
9 ‘‘(II) independently (and discon-
10 nected) from such grid, and
11 ‘‘(iii) is not part of a bulk-power sys-
12 tem (as defined in section 215 of the Fed-
13 eral Power Act (16 U.S.C. 24o)).
14 ‘‘(C) TERMINATION.—The term ‘microgrid
15 controller’ shall not include any property the
16 construction of which does not begin before
17 January 1, 2034.’’.
18 (5) DENIAL OF DOUBLE BENEFIT FOR QUALI-
19 FIED BIOGAS PROPERTY.—Section 45(e) is amended

21 ‘‘(12) COORDINATION WITH ENERGY CREDIT
22 FOR QUALIFIED BIOGAS PROPERTY.—The term

23 ‘qualified facility’ shall not include any facility which
24 produces electricity from gas produced by qualified
25 biogas property (as defined in section 48(c)(7)) if a
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1 credit is determined under section 48 with respect to
2 such property for the taxable year or any prior tax-
3 able year.’’.
4 (6) EXTENSION OF WASTE ENERGY RECOVERY
5 PROPERTY.—Section 48(c)(5)(D) is amended by

6 striking ‘‘January 1, 2024’’ and inserting ‘‘January
7 1, 2034’’.
8 (e) FUEL CELLS USING ELECTROMECHANICAL
9 PROCESSES.—
10 (1) IN GENERAL.—Section 48(c)(1) is amend-
11 ed—
12 (A) in subparagraph (A)(i)—
13 (i) by inserting ‘‘or electromechanical’’
14 after ‘‘electrochemical’’, and
15 (ii) by inserting ‘‘(1 kilowatts in the
16 case of a fuel cell power plant with a linear
17 generator assembly)’’ after ‘‘0.5 kilowatt’’,
18 and
19 (B) in subparagraph (C)—
20 (i) by inserting ‘‘, or linear generator
21 assembly,’’ after ‘‘a fuel cell stack assem-
22 bly’’, and
23 (ii) by inserting ‘‘or
24 electromechanical’’ after ‘‘electrochemical’’.
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1 (2) LINEAR GENERATOR ASSEMBLY LIMITA-
2 TION.—Section 48(c)(1) is amended by redesig-

3 nating subparagraph (D) as subparagraph (E) and
4 by inserting after subparagraph (C) the following
5 new subparagraph:
6 ‘‘(D) LINEAR GENERATOR ASSEMBLY.—
7 The term ‘linear generator assembly’ does not

8 include any assembly which contains rotating
9 parts.’’.
10 (f) DYNAMIC GLASS.—Section 48(a)(3)(A)(ii) is
11 amended by inserting ‘‘, or electrochromic glass which
12 uses electricity to change its light transmittance properties
13 in order to heat or cool a structure,’’ after ‘‘sunlight’’.
14 (g) COORDINATION WITH LOW INCOME HOUSING
15 TAX CREDIT.—Paragraph (3) of section 50(c) of the In-
16 ternal Revenue Code of 1986 is amended—
17 (1) by striking ‘‘and’’ at the end of subpara-
18 graph (A),
19 (2) by striking the period at the end of sub-
20 paragraph (B) and inserting ‘‘, and’’, and
22 paragraph:
23 ‘‘(C) paragraph (1) shall not apply for pur-
24 poses of determining eligible basis under section
25 42.’’.
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1 (h) WAGE AND APPRENTICESHIP REQUIREMENTS.—
2 Section 48(a) is amended by adding at the end the fol-
5 CREDIT AMOUNT FOR ENERGY PROJECTS.—
6 ‘‘(A) IN GENERAL.—
7 ‘‘(i) RULE.—In the case of any energy

8 project which does not satisfy the require-
9 ments of subparagraph (B), the amount of
10 the credit determined under this subsection
11 (determined after the application of para-
12 graphs (1) through (7)) shall be 20 per-
13 cent of such amount (determined without
14 regard to this sentence).
15 ‘‘(ii) ENERGY PROJECT DEFINED.—
16 For purposes of this subsection the term

17 ‘energy project’ means a project consisting
18 of multiple energy properties that are part
19 of a single project. The requirements of
20 this paragraph shall be applied to such
21 project.
22 ‘‘(B) INCREASED CREDIT FOR ENERGY
23 PROJECTS MEETING PROJECT REQUIRE-
24 MENTS.—
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2 energy project which meets the project re-
3 quirements of this subparagraph, subpara-
4 graph (A) shall not apply.

15 and (10).

19 any energy project are that the taxpayer shall
21 ployed by contractors and subcontractors in—
22 ‘‘(i) the construction of such energy
23 project , and
24 ‘‘(ii) for any year during the period
25 beginning on the date any energy property
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1 of such project is originally placed in serv-
2 ice, the alteration or repair of such prop-
3 erty,
12 MENTS.—A taxpayer shall not be treated as

13 failing to satisfy the requirements of this para-
14 graph if such taxpayer meets requirements
15 similar to the requirements of section
16 45(b)(8)(B).

19 spect to the construction of any applicable facility
20 are as follows:

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1 applicable facility prior to such facility
2 being placed into service shall, subject to
3 subparagraph (B), ensure that not less
4 than the applicable percentage of the total
5 labor hours of such work be performed by
6 qualified apprentices.

13 cent,
18 and
22 percent.

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9 such work.

14 taxpayer who—
21 paragraph.
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12 gram.
14 paragraph—
16 hours’ has the meaning given such term in
17 section 45(b)(9)(E)(i).
19 term ‘qualified apprentice’ has the mean-

20 ing given such term in section
21 45(b)(9)(E)(ii).
23 AMOUNT.—
24 ‘‘(A) IN GENERAL.—In the case of any en-

25 ergy project which satisfies the requirements
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1 under subparagraph (B), the energy percentage
2 in subsection (a)(2) shall be increased by the
3 applicable rate in subparagraph (C).
4 ‘‘(B) REQUIREMENTS.—
5 ‘‘(i) IN GENERAL.—The requirement
6 described in this subclause with respect to
7 any energy project is satisfied if the tax-
8 payer certifies to the Secretary (at such
9 time, and in such form and manner, as the
10 Secretary may prescribe) that the facility
11 is composed of steel, iron, or manufactured
12 products which were produced in the
13 United States.
18 lations.

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3 ‘‘(C) APPLICABLE RATE INCREASE.—For
4 purposes of subparagraph (A), the applicable

5 credit rate increase shall be an amount equal
6 to—
7 ‘‘(i) in the case of energy project that
8 does not meet the requirements of sub-
9 clause (I) or (III) of paragraph (8)(B)(ii),
10 2 percentage points, and
11 ‘‘(ii) in the case of energy property
12 that meets the requirements of subclause
13 (I) or (III) of paragraph (8)(B)(ii), 10 per-
14 centage points.
15 ‘‘(D) INTERNATIONAL AGREEMENTS.—
16 This paragraph shall be applied in a manner

17 which is consistent with the obligations of the
18 United States under international agreements.

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3 multiplied by
6 AGE FOR CERTAIN ENERGY PROJECTS.—In the

7 case of any energy project—
10 construction of such project, or
12 less than 1 megawatt

16 the case of any energy project which is not de-
17 scribed in subparagraph (B), the applicable per-
18 centage shall be—
19 ‘‘(i) if construction of such project
21 cent,
22 ‘‘(ii) if construction of such project
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1 ‘‘(iii) if construction of such project
3 and
4 ‘‘(iv) if construction of such project
19 tory quality.
20 ‘‘(13) REGULATIONS AND GUIDANCE.—The
21 Secretary shall issue such regulations or other guid-

22 ance as the Secretary determines necessary or ap-
23 propriate to carry out the purposes of this sub-
24 section.’’.
25 (i) EFFECTIVE DATES.—
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1 (1) The amendments made by subsections (a),
2 (b), (c), (e), (f), (g), and (h) of this section shall
3 apply to property placed in service after December
4 31, 2021.
5 (2) The amendment made by subsection (d)
6 shall apply to periods after December 31, 2021,
7 under rules similar to the rules of section 48(m) of
8 the Internal Revenue Code of 1986 (as in effect on
9 the day before the date of the enactment of the Rev-
10 enue Reconciliation Act of 1990).
11 SEC. 136103. INCREASE IN ENERGY CREDIT FOR SOLAR FA-
12 CILITIES PLACED IN SERVICE IN CONNEC-
13 TION WITH LOW-INCOME COMMUNITIES.
14 (a) IN GENERAL.—Section 48 is amended by adding

15 at the end the following new subsection:
16 ‘‘(e) SPECIAL RULES FOR CERTAIN SOLAR FACILI-
17 TIES PLACED IN SERVICE IN CONNECTION WITH LOW-
18 INCOME COMMUNITIES.—
19 ‘‘(1) IN GENERAL.—In the case of any qualified
20 solar facility with respect to which the Secretary,
21 after consultation with the Secretary of Energy and
22 the Administrator of the Environmental Protection
23 Agency, makes an allocation of environmental justice
24 solar capacity limitation under paragraph (4)—
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1 ‘‘(A) equipment described in paragraph
2 (3)(B) shall be treated for purposes of this sec-
3 tion as energy property described in subsection
4 (a)(2)(A)(i),
5 ‘‘(B) the energy percentage otherwise de-
6 termined under subsection (a)(2) with respect
7 to any eligible property which is part of such
8 facility shall be increased by—
9 ‘‘(i) in the case of a facility described
10 in subclause (I) of paragraph (2)(A)(iii)
11 and not described in subclause (II) of such
12 paragraph, 10 percentage points, and
13 ‘‘(ii) in the case of a facility described
14 in subclause (II) of paragraph (2)(A)(iii),
15 20 percentage points, and
16 ‘‘(C) the increase in the credit determined
17 under subsection (a) by reason of this sub-
18 section for any taxable year with respect to all
19 property which is part of such facility shall not
20 exceed the amount which bears the same ratio
21 to the amount of such increase (determined
22 without regard to this subparagraph) as—
23 ‘‘(i) the environmental justice solar
24 capacity limitation allocated to such facil-
25 ity, bears to
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1 ‘‘(ii) the total megawatt nameplate ca-
2 pacity of such facility, as measured in di-
3 rect current.
4 ‘‘(2) QUALIFIED SOLAR FACILITY.—For pur-
5 poses of this subsection—
7 solar facility’ means any facility—
8 ‘‘(i) which generates electricity solely
9 from property described in subsection
10 (a)(3)(A)(i),
11 ‘‘(ii) which has a nameplate capacity
12 of 5 megawatts or less, and
13 ‘‘(iii) which—
14 ‘‘(I) is located in a low-income
15 community (as defined in section
16 45D(e)), or
17 ‘‘(II) is part of a qualified low-in-
18 come residential building project or a
19 qualified low-income economic benefit
20 project.
21 ‘‘(B) QUALIFIED LOW-INCOME RESIDEN-
22 TIAL BUILDING PROJECT.—A facility shall be

23 treated as part of a qualified low-income resi-
24 dential building project if—
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1 ‘‘(i) such facility is installed on a resi-
2 dential rental building which participates
3 in a covered housing program (as defined
4 in section 41411(a) of the Violence Against
5 Women Act of 1994 (34 U.S.C.
6 12491(a)(3)), a Housing Development
7 Fund Corporation cooperative under Arti-
8 cle XI of the New York State Private
9 Housing Finance Law, a housing assist-
10 ance program administered by the Depart-
11 ment of Agriculture under title V of the
12 Housing Act of 1949, or such other afford-
13 able housing programs as the Secretary
14 may provide, and
15 ‘‘(ii) the financial benefits of the elec-
16 tricity produced by such facility are allo-
17 cated equitably among the occupants of the
18 dwelling units of such building.
19 ‘‘(C) QUALIFIED LOW-INCOME ECONOMIC
20 BENEFIT PROJECT.—A facility shall be treated

21 as part of a qualified low-income economic ben-
22 efit project if at least 50 percent of the finan-
23 cial benefits of the electricity produced by such
24 facility are provided to households with income
25 of—
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1 ‘‘(i) less than 200 percent of the pov-
2 erty line applicable to a family of the size
3 involved, or
4 ‘‘(ii) less than 80 percent of area me-
5 dian gross income (as determined under
6 section 142(d)(2)(B)).
7 ‘‘(D) FINANCIAL BENEFIT.—For purposes
8 of subparagraphs (B) and (C), electricity ac-
9 quired at a below-market rate shall not fail to
10 be taken into account as a financial benefit.
11 ‘‘(3) ELIGIBLE PROPERTY.—

13 section, the term ‘eligible property’ means—
14 ‘‘(i) energy property which is de-
15 scribed in subsection (a)(3)(A)(i), includ-
16 ing energy storage property (described in
17 subsection (a)(3)(A)(viii)) installed in con-
18 nection with such energy property, and
19 ‘‘(ii) the amount of any expenditures
20 which are paid or incurred by the taxpayer
21 for qualified interconnection property in-
22 stalled in connection with the installation
23 of property described in subparagraph (A)
24 to provide for the transmission or distribu-
25 tion of the electricity produced or stored by
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1 such property, and which are properly
2 chargeable to the capital account of the
3 taxpayer.
4 ‘‘(B) DEFINITIONS.—For purposes of sub-
5 paragraph (A)—
6 ‘‘(i) QUALIFIED INTERCONNECTION
7 PROPERTY.—The term ‘qualified inter-

8 connection property’ means, with respect
9 to a qualified facility which is not a
10 microgrid, any tangible property—
11 ‘‘(I) which is part of an addition,
12 modification, or upgrade to a trans-
13 mission or distribution system which
14 is required at or beyond the point at
15 which the qualified facility intercon-
16 nects to such transmission or distribu-
17 tion system in order to accommodate
18 such interconnection,
19 ‘‘(II) either—
20 ‘‘(aa) which is constructed,
21 reconstructed, or erected by the
22 taxpayer, or
23 ‘‘(bb) for which the cost
24 with respect to the construction,
25 reconstruction, or erection of
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1 such property is paid or incurred
2 by such taxpayer, and
3 ‘‘(III) the original use of which,
4 pursuant to an interconnection agree-
5 ment, commences with the utility.
6 ‘‘(ii) INTERCONNECTION AGREE-
7 MENT.—The term ‘interconnection agree-

8 ment’ means an agreement with a utility
9 for the purposes of interconnecting the
10 qualified facility owned by such taxpayer to
11 the transmission or distribution system of
12 such utility.
13 ‘‘(iii) UTILITY.—The term ‘utility’
14 means the owner or operator of an elec-
15 trical transmission or distribution system
16 which is subject to the regulatory authority
17 of—
18 ‘‘(I) the Federal Energy Regu-
19 latory Commission, or
20 ‘‘(II) a State or political subdivi-
21 sion thereof, any agency or instrumen-
22 tality of the United States, a public
23 service or public utility commission or
24 other similar body of any State or po-
25 litical subdivision thereof, or the gov-
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1 erning or ratemaking body of an elec-
2 tric cooperative.
3 ‘‘(C) SPECIAL RULE FOR INTERCONNEC-
4 TION PROPERTY.—In the case of expenses paid

5 or incurred for interconnection property,
6 amounts otherwise chargeable to capital ac-
7 count with respect to such expenses shall be re-
8 duced under rules similar to the rules of section
9 50(c).
10 ‘‘(4) ALLOCATIONS.—
11 ‘‘(A) IN GENERAL.—Not later than 180
12 days after the date of enactment of this sub-
13 section, the Secretary shall establish a program
14 to allocate amounts of environmental justice
15 solar capacity limitation to qualified solar facili-
16 ties.
17 ‘‘(B) LIMITATION.—The amount of envi-
18 ronmental justice solar capacity limitation allo-
19 cated by the Secretary under subparagraph (A)
20 during any calendar year shall not exceed the
21 annual capacity limitation with respect to such
22 year.
23 ‘‘(C) ANNUAL CAPACITY LIMITATION.—For
24 purposes of this paragraph, the term ‘annual

25 capacity limitation’ means 1.8 gigawatts of di-
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1 rect current capacity for each of calendar years
2 2022 through 2031, and zero thereafter.
3 ‘‘(D) CARRYOVER OF UNUSED LIMITA-
4 TION.—If the annual capacity limitation for any

5 calendar year exceeds the aggregate amount al-
6 located for such year under this paragraph,
7 such limitation for the succeeding calendar year
8 shall be increased by the amount of such excess.
9 No amount may be carried under the preceding
10 sentence to any calendar year after 2033.
11 ‘‘(E) PLACED IN SERVICE DEADLINE.—
12 ‘‘(i) IN GENERAL.—Paragraph (1)

13 shall not apply with respect to any prop-
14 erty which is placed in service after the
15 date that is 4 years after the date of the
16 allocation with respect to the facility of
17 which such property is a part.
18 ‘‘(ii) APPLICATION OF CARRYOVER.—
19 Any amount of environmental justice solar

20 capacity limitation which expires under
21 clause (i) during any calendar year shall be
22 taken into account as an excess described
23 in subparagraph (D) (or as an increase in
24 such excess) for such calendar year, sub-
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1 ject to the limitation imposed by the last
2 sentence of such subparagraph.
3 ‘‘(F) SELECTION CRITERIA.—In deter-
4 mining to which qualified solar facilities to allo-
5 cate environmental justice solar capacity limita-
6 tion under this paragraph, the Secretary shall
7 take into consideration which facilities will re-
8 sult in—
9 ‘‘(i) the greatest health and economic
10 benefits, including the ability to withstand
11 extreme weather events, for individuals de-
12 scribed in section 45D(e)(2),
13 ‘‘(ii) the greatest employment and
14 wages for such individuals, and
15 ‘‘(iii) the greatest engagement with,
16 outreach to, or ownership by, such individ-
17 uals, including through partnerships with
18 local governments and community-based
19 organizations.
20 ‘‘(G) DISCLOSURE OF ALLOCATIONS.—The
21 Secretary shall, upon making an allocation of

22 environmental justice solar capacity limitation
23 under this paragraph, publicly disclose the iden-
24 tity of the applicant, the amount of the environ-
25 mental justice solar capacity limitation allocated
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1 to such applicant, and the location of the facil-
2 ity for which such allocation is made.
3 ‘‘(5) RECAPTURE.—The Secretary shall, by reg-
4 ulations or other guidance, provide for recapturing
5 the benefit of any increase in the credit allowed
6 under subsection (a) by reason of this subsection
7 with respect to any property which ceases to be
8 property eligible for such increase (but which does
9 not cease to be investment credit property within the
10 meaning of section 50(a)). The period and percent-
11 age of such recapture shall be determined under
12 rules similar to the rules of section 50(a). To the ex-
13 tent provided by the Secretary, such recapture may
14 not apply with respect to any property if, within 12
15 months after the date the taxpayer becomes aware
16 (or reasonably should have become aware) of such
17 property ceasing to be property eligible for such in-
18 crease, the eligibility of such property for such in-
19 crease is restored. The preceding sentence shall not
20 apply more than once with respect to any facility.’’.
22 this section shall apply to periods after December 31,
23 2021, under rules similar to the rules of section 48(m)
24 of the Internal Revenue Code of 1986 (as in effect on the
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1 day before the date of the enactment of the Revenue Rec-
2 onciliation Act of 1990).
3 SEC. 136104. ELECTIVE PAYMENT FOR ENERGY PROPERTY
4 AND ELECTRICITY PRODUCED FROM CER-
5 TAIN RENEWABLE RESOURCES, ETC.
6 (a) IN GENERAL.—Subchapter B of chapter 65 is

7 amended by inserting after section 6416 the following new
8 section:
9 ‘‘SEC. 6417. ELECTIVE PAYMENT OF APPLICABLE CREDITS.
10 ‘‘(a) IN GENERAL.—In the case of a taxpayer making

11 an election (at such time and in such manner as the Sec-
12 retary may provide) under this section with respect to any
13 applicable credit determined with respect to such taxpayer,
14 such taxpayer shall be treated as making a payment
15 against the tax imposed by subtitle A (for the taxable year
16 with respect to which such credit was determined) equal
17 to the amount of such credit.
18 ‘‘(b) APPLICABLE CREDIT.—The term ‘applicable
19 credit’ means each of the following:
20 ‘‘(1) The renewable electricity production credit
21 determined under section 45.
22 ‘‘(2) The energy credit determined under sec-
23 tion 48.
24 ‘‘(3) The credit for carbon oxide sequestration
25 determined under section 45Q.
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1 ‘‘(4) The credit for alternative fuel vehicle re-
2 fueling property allowed under section 30C.
3 ‘‘(5) The qualifying advanced energy project
4 credit determined under section 48C.
5 ‘‘(c) SPECIAL RULES.—For purposes of this sec-
6 tion—
7 ‘‘(1) APPLICATION TO TAX-EXEMPT AND GOV-
8 ERNMENTAL ENTITIES.—In the case of any organi-

9 zation exempt from the tax imposed by subtitle A,
10 any State or local government (or political subdivi-
11 sion thereof), or any Indian tribal government (with-
12 in the meaning of section 139E), which makes the
13 election described in subsection (a), any applicable
14 credit shall be determined—
15 ‘‘(A) without regard to paragraphs (3) and
16 (4)(A)(i) of section 50(b), and
17 ‘‘(B) by treating any property with respect
18 to which such credit is determined as used in
19 a trade or business of the taxpayer.
20 ‘‘(2) APPLICATION TO PARTNERSHIPS AND S
21 CORPORATIONS.—
22 ‘‘(A) IN GENERAL.—In the case of any ap-

23 plicable credit determined with respect to any
24 qualified resources, qualified facility, or energy
25 property held directly by a partnership or S
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1 corporation, if such partnership or S corpora-
2 tion makes an election under this subsection (in
3 such manner as the Secretary may provide)
4 with respect to such credit—
5 ‘‘(i) the Secretary shall make a pay-
6 ment to such partnership or S corporation
7 equal to the amount of such credit,
8 ‘‘(ii) subsection (d) shall be applied
9 with respect to such credit before deter-
10 mining any partner’s distributive share, or
11 shareholder’s pro rata share, of such cred-
12 it,
13 ‘‘(iii) any amount with respect to
14 which the election in subsection (a) is
15 made excluded from gross income by rea-
16 son of paragraph (4) shall be treated as
17 tax exempt income for purposes of sections
18 705 and 1366, and
19 ‘‘(iv) a partner’s distributive share of
20 such tax exempt income shall be based on
21 such partner’s distributive share of the
22 otherwise applicable credit for each taxable
23 year.
24 ‘‘(B) COORDINATION WITH APPLICATION
25 AT PARTNER OR SHAREHOLDER LEVEL.—In the
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1 case of any partnership or S corporation, sub-
2 section (a) shall be applied at the partner or
3 shareholder level after application of paragraph
4 (2)(A)(ii).
5 ‘‘(3) IRREVOCABLE ELECTION.—Any election
6 under this subsection shall be made not later than
7 the due date (including extensions of time) for the
8 return of tax for the taxable year for which the ap-
9 plicable credit is determined, but in no event earlier
10 than 180 days after the date of the enactment of
11 this section. Any such election, once made, shall be
12 irrevocable.
13 ‘‘(4) TIMING.—The payment described in sub-
14 section (a) shall be treated as made on—
15 ‘‘(A) in the case of any government, or po-
16 litical subdivision, described in paragraph (1)
17 and for which no return is required under sec-
18 tion 6011 or 6033(a), the later of the date that
19 a return would be due under section 6033(a) if
20 such government or subdivision were described
21 in that section or the date on which such gov-
22 ernment or subdivision submits a claim for
23 credit or refund (at such time and in such man-
24 ner as the Secretary shall provide), and
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1 ‘‘(B) in any other case, the later of the due
2 date of the return of tax for the taxable year
3 or the date on which such return is filed.
4 ‘‘(5) TREATMENT OF PAYMENTS TO PARTNER-
5 SHIPS AND S CORPORATIONS.—For purposes of sec-

6 tion 1324 of title 31, United States Code, the pay-
7 ments under subparagraph (A)(ii) of paragraph (2)
8 shall be treated in the same manner as a refund due
9 from a credit provision referred to in subparagraph
10 (B) of such paragraph.
11 ‘‘(6) ADDITIONAL INFORMATION.—As a condi-
12 tion of, and prior to, a payment under this section,
13 the Secretary may require such information or reg-
14 istration as the Secretary deems necessary or appro-
15 priate for purposes of preventing duplication, fraud,
16 improper payments, or excessive payments under
17 this section.
18 ‘‘(7) EXCESSIVE PAYMENT.—
19 ‘‘(A) IN GENERAL.—In the case of a pay-

20 ment made to a taxpayer under this subsection
21 or any amount treated as a payment which is
22 made by the taxpayer under subsection (a)
23 which the Secretary determines constitutes an
24 excessive payment, the tax imposed on such tax-
25 payer by chapter 1 for the taxable year in
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1 which such determination is made shall be in-
2 creased by an amount equal to the sum of—
3 ‘‘(i) the amount of such excessive pay-
4 ment, plus
5 ‘‘(ii) an amount equal to 20 percent of
6 such excessive payment.
7 ‘‘(B) REASONABLE CAUSE.—Subparagraph
8 (A)(ii) shall not apply if the taxpayer dem-

9 onstrates to the satisfaction of the Secretary
10 that the excessive payment resulted from rea-
11 sonable cause.
12 ‘‘(C) EXCESSIVE PAYMENT DEFINED.—For
13 purposes of this paragraph, the term ‘excessive

14 payment’ means, with respect to a facility for
15 which an election is made under this section for
16 any taxable year, an amount equal to the excess
17 of—
18 ‘‘(i) the amount of the payment made
19 to the taxpayer under this subsection with
20 respect to such facility for such taxable
21 year, over
22 ‘‘(ii) the amount of the credit which,
23 without application of this subsection,
24 would be otherwise allowable under this
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1 section with respect to such facility for
2 such taxable year.
3 ‘‘(d) DENIAL OF DOUBLE BENEFIT.—In the case of
4 a taxpayer making an election under this section with re-
5 spect to an applicable credit, such credit shall be reduced
6 to zero and such taxpayer shall be deemed to have taken
7 such credit.
8 ‘‘(e) MIRROR CODE POSSESSIONS.—In the case of
9 any possession of the United States with a mirror code
10 tax system (as defined in section 24(k)), this section shall
11 not be treated as part of the income tax laws of the United
12 States for purposes of determining the income tax law of
13 such possession unless such possession elects to have this
14 section be so treated.
15 ‘‘(f) BASIS REDUCTION AND RECAPTURE.—Rules
16 similar to the rules of subsections (a) and (c) of section
17 50 shall apply for purposes of this section.
18 ‘‘(g) REGULATIONS.—The Secretary shall issue such
19 regulations or other guidance as may be necessary or ap-
20 propriate to carry out the purposes of this section, includ-
21 ing—
22 ‘‘(1) regulations or other guidance providing
23 rules for determining a partner’s distributive share
24 of the tax exempt income described in subsection
25 (c)(2)(A)(iii), and
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1 ‘‘(2) guidance to ensure that the amount of the
2 payment or deemed payment made under this sec-
3 tion is commensurate with the amount of the credit
4 that would be otherwise allowable.’’.
5 (b) CLERICAL AMENDMENT.—The table of sections
6 for subchapter B of chapter 65 is amended by inserting
7 after the item relating to section 6416 the following new
8 item:
‘‘Sec. 6417. Elective payment of applicable credits.’’.
9 (c) IN GENERAL.—The amendments made by this

10 section shall apply to property placed in service after the
11 December 31, 2021.
12 SEC. 136105. INVESTMENT CREDIT FOR ELECTRIC TRANS-
13 MISSION PROPERTY.
14 (a) IN GENERAL.—Subpart E of part IV of sub-

16 tion 48C the following new section:
17 ‘‘SEC. 48D. QUALIFYING ELECTRIC TRANSMISSION PROP-
18 ERTY.

20 tion 46, the qualifying electric transmission property cred-
21 it for any taxable year is an amount equal to 30 percent
22 of the basis of qualifying electric transmission property
23 placed in service by the taxpayer during such taxable year.
24 ‘‘(b) QUALIFYING ELECTRIC TRANSMISSION PROP-
25 ERTY.—For purposes of this section—
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1 ‘‘(1) IN GENERAL.—The term ‘qualifying elec-
2 tric transmission property’ means tangible prop-
3 erty—
4 ‘‘(A) which is a qualifying electric trans-
5 mission line or related transmission property,
6 ‘‘(B)(i) the construction, reconstruction, or
7 erection of which is completed by the taxpayer,
8 or
9 ‘‘(ii) which is acquired by the taxpayer if
10 the original use of such property commences
11 with the taxpayer, and
12 ‘‘(C) with respect to which depreciation (or
13 amortization in lieu of depreciation) is allow-
14 able.
15 ‘‘(2) QUALIFYING ELECTRIC TRANSMISSION
16 LINE.—The term ‘qualifying electric transmission

17 line’ means an electric transmission line which—
18 ‘‘(A) is capable of transmitting electricity
19 at a voltage of not less than 275 kilovolts, and
20 ‘‘(B) has a transmission capacity of not
21 less than 500 megawatts.
22 ‘‘(3) RELATED TRANSMISSION PROPERTY.—
23 ‘‘(A) IN GENERAL.—The term ‘related

24 transmission property’ means, with respect to
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1 any electric transmission line, any property
2 which—
3 ‘‘(i) is listed as ‘transmission plant’ in
4 the Uniform System of Accounts for the
5 Federal Energy Regulatory Commission
6 under part 101 of subchapter C of chapter
7 I of title 18, Code of Federal Regulations,
8 and
9 ‘‘(ii) is necessary for the operation of
10 such electric transmission line.
11 ‘‘(B) CREDIT NOT ALLOWED SEPARATELY
12 WITH RESPECT TO RELATED PROPERTY.—No
13 credit shall be allowed to any taxpayer under

14 this section with respect to any related trans-
15 mission property unless such taxpayer is al-
16 lowed a credit under this section with respect to
17 the qualifying electric transmission line to
18 which such related transmission property re-
19 lates.
20 ‘‘(c) APPLICATION TO REPLACEMENT AND UP-
21 GRADED SYSTEMS.—
22 ‘‘(1) IN GENERAL.—In the case of any quali-
23 fying electric transmission line (determined without
24 regard to this subsection) which replaces any exist-
25 ing electric transmission line—
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1 ‘‘(A) the 500 megawatts referred to in sub-
2 section (b)(2)(B) shall be increased by the
3 transmission capacity of such existing electric
4 transmission line, and
5 ‘‘(B) in no event shall the basis of such ex-
6 isting electric transmission line (or related
7 transmission property with respect to such ex-
8 isting electric transmission line) be taken into
9 account in determining the credit allowed under
10 this section.
11 ‘‘(2) UPGRADES TREATED AS REPLACE-
12 MENTS.—For purposes of this subsection, any up-

13 grade of an existing electric transmission line shall
14 be treated as a replacement of such line.
15 ‘‘(d) EXCEPTION FOR CERTAIN PROPERTY AND
16 PROJECTS ALREADY IN PROCESS.—No credit shall be al-

17 lowed under this section with respect to—
18 ‘‘(1) any property if a State or political subdivi-
19 sion thereof, any agency or instrumentality of the
20 United States, a public service or public utility com-
21 mission or other similar body of any State or polit-
22 ical subdivision thereof, or the governing or rate-
23 making body of an electric cooperative has, before
24 the date of the enactment of this section, selected
25 for cost allocation such property for cost recovery, or
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1 ‘‘(2) any property if—
2 ‘‘(A) construction of such property begins
3 before January 1, 2022, or
4 ‘‘(B) construction of any portion of the
5 qualifying electric transmission line to which
6 such property relates begins before such date.
7 ‘‘(e) CERTAIN QUALIFIED PROGRESS EXPENDITURES
8 RULES MADE APPLICABLE.—Rules similar to the rules of
9 subsections (c)(4) and (d) of section 46 (as in effect on
10 the day before the enactment of the Revenue Reconcili-
11 ation Act of 1990) shall apply for purposes of this section.
12 ‘‘(f) CREDIT ADJUSTMENTS; WAGE AND APPREN-
13 TICESHIP REQUIREMENTS.—
15 CREDIT AMOUNT FOR APPLICABLE FACILITIES.—
16 ‘‘(A) IN GENERAL.—
17 ‘‘(i) RULE.—In the case of any appli-

18 cable facility which does not satisfy the re-
19 quirements of subparagraph (B), the
20 amount of the credit determined under this
21 subsection shall be 20 percent of such
22 amount (determined without regard to this
23 sentence).
24 ‘‘(ii) APPLICABLE FACILITY DE-
25 FINED.—For purposes of this subsection,
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1 the term ‘applicable facility’ means a quali-
2 fying electric transmission line and related
3 transmission property to which such quali-
4 fying electric transmission line relates.
5 ‘‘(B) INCREASED CREDIT FOR APPLICABLE
6 FACILITY MEETING PROJECT REQUIREMENTS.—

8 applicable facility which meets the project
9 requirements of this subparagraph, sub-
10 paragraph (A) shall not apply.

21 and (3).

25 any applicable facility are that the taxpayer
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1 shall ensure that any laborers and mechanics
2 employed by contractors and subcontractors
3 in—
5 and
6 ‘‘(ii) for any year during the 5-year
7 period beginning on the date the facility or
8 property is originally placed in service, the
9 alteration or repair of such facility or prop-
10 erty,
19 MENTS.—A taxpayer shall not be treated as

20 failing to satisfy the requirements of this para-
21 graph if such taxpayer meets requirements
22 similar to the requirements of section
23 45(b)(8)(B).
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1 spect to the construction of any applicable facility
2 are as follows:

8 applicable facility prior to such facility
9 being placed into service shall, subject to

20 cent,
25 and
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4 percent.

16 such work.

21 taxpayer who—
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3 paragraph.
19 gram.
21 paragraph—
24 section 45(b)(9)(E)(i).
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4 45(b)(9)(E)(ii).
6 AMOUNT.—
7 ‘‘(A) IN GENERAL.—In the case of any ap-

8 plicable facility which satisfies the requirements
9 under subparagraph (B), the credit determined
10 under subsection (a) shall be increased by the
11 applicable rate in subparagraph (C).
12 ‘‘(B) REQUIREMENTS.—
13 ‘‘(i) IN GENERAL.—The requirement
14 described in this subclause with respect to
15 any applicable facility is satisfied if the
16 taxpayer certifies to the Secretary (at such
17 time, and in such form and manner, as the
18 Secretary may prescribe) that the facility
19 is composed of steel, iron, or manufactured
20 products which were produced in the
21 United States.
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2 lations.

11 ‘‘(C) APPLICABLE RATE INCREASE.—For
12 purposes of subparagraph (A), the applicable

13 credit rate increase shall be an amount equal
14 to—
15 ‘‘(i) in the case of applicable facility
16 that does not meet the requirements of
17 subclause (I) or (III) of paragraph
18 (1)(B)(ii), 2 percentage points, and
19 ‘‘(ii) in the case of applicable facility
20 that meets the requirements of subclause
21 (I) or (III) of paragraph (1)(B)(ii), 10 per-
22 centage points.
23 ‘‘(D) INTERNATIONAL AGREEMENTS.—
24 This paragraph shall be applied in a manner
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1 which is consistent with the obligations of the
2 United States under international agreements.

10 multiplied by
13 AGE FOR CERTAIN APPLICABLE FACILITY.—In
14 the case of any applicable facility—

17 construction of such property, or

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3 cent,
8 and
24 tory quality.
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1 ‘‘(g) TERMINATION.—This section shall not apply to
2 any property unless—
3 ‘‘(1) such property is placed in service before
4 January 1, 2032, and
5 ‘‘(2) the qualifying electric transmission line
6 with respect to which such property relates is placed
7 in service before such date.
8 ‘‘(h) REGULATIONS AND GUIDANCE.—The Secretary,
9 after consultation with the Chairman of the Federal En-
10 ergy Regulatory Commission, shall issue such regulations
11 or other guidance as the Secretary determines necessary
12 or appropriate to carry out the purposes of this section.’’.
13 (b) ELECTIVE PAYMENT OF CREDIT.—Section
14 6417(b), as added by the preceding provisions of this Act,
15 is amended by adding at the end the following new para-
16 graph:
17 ‘‘(6) The qualifying electric transmission prop-
18 erty credit determined under section 48D.’’.
20 (1) Section 46 is amended—
21 (A) by striking ‘‘and’’ at the end of para-
22 graph (5),
23 (B) by striking the period at the end of
24 paragraph (6) and inserting ‘‘, and’’, and
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2 paragraph:
3 ‘‘(7) the qualifying electric transmission prop-
4 erty credit.’’.
5 (2) Section 49(a)(1)(C) is amended—
6 (A) by striking ‘‘and’’ at the end of clause
7 (iv),
8 (B) by striking the period at the end of
9 clause (v) and inserting ‘‘, and’’, and
11 clause:
12 ‘‘(vi) the basis of any qualifying elec-
13 tric transmission property under section
14 48D.’’.
15 (3) Section 50(a)(2)(E) is amended by striking
16 ‘‘or 48C(b)(2)’’ and inserting ‘‘48C(b)(2), or 48D’’.
17 (4) The table of sections for subpart E of part
18 IV of subchapter A of chapter 1 of such Code is
19 amended by inserting after the item relating to sec-
20 tion 48C the following new item:
‘‘Sec. 48D. Qualifying electric transmission property.’’.
21 (d) EFFECTIVE DATE.—

22 (1) IN GENERAL.—The amendments made by
23 this section shall apply to property placed in service
24 after December 31, 2021.
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1 (2) EXCEPTION FOR CERTAIN PROPERTY AND
2 PROJECTS ALREADY IN PROCESS.—For exclusion of

3 certain property and projects already in process, see
4 section 48D(d) of the Internal Revenue Code of
5 1986 (as added by this section).
6 SEC. 136106. ZERO EMISSIONS FACILITY CREDIT.
7 (a) IN GENERAL.—Subpart E of part IV of sub-

9 tion 48C the following new section:
10 ‘‘SEC. 48E. ZERO EMISSIONS FACILITY CREDIT.
11 ‘‘(a) IN GENERAL.—For purposes of section 46, the

12 zero emissions facility credit for any taxable year is an
13 amount equal to 30 percent of the qualified investment
14 for such taxable year with respect to any zero emissions
15 facility of the taxpayer.
16 ‘‘(b) QUALIFIED INVESTMENT.—
18 (a), the qualified investment for any taxable year is
19 the basis of eligible property placed in service by the
20 taxpayer during such taxable year which is part of
21 a zero emissions facility.
22 ‘‘(2) CERTAIN QUALIFIED PROGRESS EXPENDI-
23 TURES RULES MADE APPLICABLE.—Rules similar to

24 the rules of subsections (c)(4) and (d) of section 46
25 (as in effect on the day before the enactment of the
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1 Revenue Reconciliation Act of 1990) shall apply for
2 purposes of this section.
3 ‘‘(3) LIMITATION.—The amount which is treat-
4 ed as the qualified investment for all taxable years
5 with respect to any zero emissions facility shall not
6 exceed the amount designated by the Secretary as el-
7 igible for the credit under this section.
8 ‘‘(c) ZERO EMISSIONS FACILITY.—
10 tion, the term ‘zero emissions facility’ means any fa-
11 cility—
12 ‘‘(A) which generates electricity,
13 ‘‘(B) which does not generate any green-
14 house gases (within the meaning of section
15 211(o)(1)(G) of the Clean Air Act (42 U.S.C.
16 7545(o)(1)(G)), as in effect on the date of the
17 enactment of this section),
18 ‘‘(C) which uses a technology or process
19 which, in the calendar year in which an amount
20 of credit is designated with respect to such fa-
21 cility, achieved a market penetration level of
22 less than 3 percent,
23 ‘‘(D) no portion of which is—
24 ‘‘(i) a qualified facility (as defined in
25 section 45(d)),
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1 ‘‘(ii) an advanced nuclear power facil-
2 ity (as defined in section 45J(d)),
3 ‘‘(iii) a qualified facility (as defined in
4 section 45Q), or
5 ‘‘(iv) energy property (as defined in
6 section 48(a)(3)).
7 ‘‘(2) MARKET PENETRATION LEVEL.—For pur-
8 poses of this subsection, the term ‘market penetra-
9 tion level’ means, with respect to any calendar year,
10 the amount equal to the greater of—
11 ‘‘(A) the amount (expressed as a percent-
12 age) equal to the quotient of—
13 ‘‘(i) the sum of all electricity produced
14 (expressed in terawatt hours) from the
15 technology or method used for the produc-
16 tion of electricity by all electricity gener-
17 ating facilities in the United States during
18 such calendar year (as determined by the
19 Secretary on the basis of data reported by
20 the Energy Information Administration),
21 divided by the total domestic power sector
22 electricity production (expressed in
23 terawatt hours) for such calendar year, or
24 ‘‘(ii) the amount determined under
25 this subparagraph for the preceding cal-
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1 endar year with respect to such technology
2 or method.
3 ‘‘(d) ELIGIBLE PROPERTY.—For purposes of this
4 section, the term ‘eligible property’ means any property—
5 ‘‘(1) which is necessary for the generation of
6 electricity,
7 ‘‘(2) which is—
8 ‘‘(A) tangible personal property, or
9 ‘‘(B) other tangible property (not including
10 a building or its structural components), but
11 only if such property is used as an integral part
12 of the zero emissions facility, and
13 ‘‘(3) with respect to which depreciation (or am-
14 ortization in lieu of depreciation) is allowable.
15 ‘‘(e) ALLOCATIONS.—
16 ‘‘(1) IN GENERAL.—Not later than 180 days
17 after the date of enactment of this section, the Sec-
18 retary, after consultation with the Secretary of En-
19 ergy and the Administrator of the Environmental
20 Protection Agency, shall establish a program to con-
21 sider and award certification amounts of zero emis-
22 sions facility credit limitation to zero emissions fa-
23 cilities.
24 ‘‘(2) ANNUAL LIMITATION.—
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1 ‘‘(A) IN GENERAL.—The amount of zero
2 emissions facility credit limitation that may be
3 designated under this subsection during any
4 calendar year shall not exceed the annual credit
5 limitation with respect to such year.
6 ‘‘(B) ANNUAL CREDIT LIMITATION.—For
7 purposes of this subsection, the term ‘annual

8 credit limitation’ means $250,000,000 for each
9 of calendar years 2022 through 2031, and zero
10 thereafter.
11 ‘‘(C) CARRYOVER OF UNUSED LIMITA-
12 TION.—If the annual credit limitation for any

13 calendar year exceeds the aggregate amount
14 designated for such year under this subsection,
19 ‘‘(3) PLACED IN SERVICE DEADLINE.—
20 ‘‘(A) IN GENERAL.—No credit shall be de-

21 termined under subsection (a) with respect to
22 any zero emissions facility which is placed in
23 service after the date that is 4 years after the
24 date of the designation under this subsection
25 relating to such zero emissions facility.
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1 ‘‘(B) APPLICATION OF CARRYOVER.—Any
2 amount of credit which expires under subpara-

3 graph (A) during any calendar year shall be
4 taken into account as an excess described in
5 paragraph (2)(C) (or as an increase in such ex-
6 cess) for such calendar, subject to the limitation
7 imposed by the last sentence of such paragraph.
8 ‘‘(4) SELECTION CRITERIA.—In determining
9 which zero emissions facilities to certify under this
10 section, the Secretary, after consultation with the
11 Secretary of Energy and the Administrator of the
12 Environmental Protection Agency, shall—
13 ‘‘(A) take into consideration which facili-
14 ties—
15 ‘‘(i) will result in the greatest reduc-
16 tion of greenhouse gas emissions,
17 ‘‘(ii) have the greatest potential for
18 technological innovation and commercial
19 deployment, and
20 ‘‘(iii) will result in the greatest reduc-
21 tion of local environmental effects that are
22 harmful to human health, and
23 ‘‘(B) require that applicants provide writ-
24 ten assurances to the Secretary that all laborers
25 and mechanics employed by contractors and
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1 subcontractors in the performance of construc-
2 tion, alteration or repair work on a zero emis-
3 sions facility shall be paid wages at rates not
4 less than those prevailing on projects of a simi-
5 lar character in the locality as determined by
6 the Secretary of Labor in accordance with sub-
7 chapter IV of chapter 31 of title 40, United
8 States Code.
9 ‘‘(5) DISCLOSURE OF CERTIFICATIONS.—The
10 Secretary shall, upon making a certification under

11 this subsection, publicly disclose the identity of the
12 applicant, the amount of the credit awarded with re-
13 spect to such applicant, and the location of the zero-
14 emissions facility for which such credit is awarded.
15 ‘‘(f) CREDIT CONDITIONED UPON WAGE AND AP-
16 PRENTICESHIP REQUIREMENTS.—
17 ‘‘(1) IN GENERAL.—No credit shall be allocated
18 for a zero emissions facility under this section unless
19 the zero emissions facility meets the prevailing wage
20 requirements of paragraph (2) and the apprentice-
21 ship requirements of paragraph (3).

24 scribed in this paragraph with respect to a zero
25 emissions facility are that the taxpayer shall en-
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1 sure that any laborers and mechanics employed
2 by contractors and subcontractors in—
3 ‘‘(i) the construction of such zero
4 emissions facility, and
5 ‘‘(ii) for any year during the 5-year
6 period beginning on the date the facility is
7 originally placed in service, the alteration
8 or repair of such zero emissions facility,
17 MENTS.—

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2 with respect to such zero emissions facility
3 for any year if, with respect to any laborer
4 or mechanic who was paid wages at a rate
5 below the rate described in such subpara-
6 graph for any period during such year,
7 such taxpayer—
10 to the sum of—
15 period, and—
16 ‘‘(bb) the amount of wages
17 required to be paid to such la-
18 borer or mechanic pursuant to
19 such subparagraph during such
20 period, plus
21 ‘‘(AA) interest on the
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2 item, and
12 year.

17 chapter 68.

20 spect to a zero emissions facility are as follows:

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1 facility prior to such facility being placed
2 into service shall, subject to subparagraph
3 (B), ensure that not less than the applica-
4 ble percentage of the total labor hours of
5 such work be performed by qualified ap-
6 prentices.

11 zero emissions facility the construc-
12 tion of which begins before January 1,
13 2023, 5 percent,
15 ble zero emissions facility the con-
16 struction of which begins after De-
17 cember 31, 2022, and before January
18 1, 2024, 10 percent, and
20 ble zero emissions facility the con-
21 struction of which begins after De-
22 cember 31, 2023, 15 percent.

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7 repair work on an applicable zero emissions fa-
8 cility shall employ 1 or more qualified appren-
9 tices to perform such work.

14 taxpayer who—
21 paragraph.
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12 gram.
14 paragraph—
16 hours’—
17 ‘‘(I) means the total number of
18 hours devoted to the performance of
19 construction, alteration, or repair
20 work by employees of the contractor
21 or subcontractor prior to a facility
22 being placed into service, and
23 ‘‘(II) excludes any hours worked
24 by—
25 ‘‘(aa) foremen,
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1 ‘‘(bb) superintendents,
2 ‘‘(cc) owners, or
3 ‘‘(dd) persons employed in a
4 bona fide executive, administra-
5 tive, or professional capacity
6 (within the meaning of those
7 terms in part 541 of title 29,
8 Code of Federal Regulations).
9 ‘‘(ii QUALIFIED APPRENTICE.—The

12 45(b)(9)(E)(ii).
13 ‘‘(4) REGULATIONS AND GUIDANCE.—The Sec-
14 retary shall issue such regulations or other guidance
15 as the Secretary determines necessary or appropriate
16 to carry out the purposes of this subsection.

24 multiplied by
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2 AGE FOR CERTAIN QUALIFIED FACILITIES.—In
3 the case of any qualified facility—

6 construction of such facility, or

17 cent,
22 and
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1 ‘‘(D) EXCEPTION.—If the Secretary, after
2 consultation with the Secretary of Commerce
3 and the United States Trade Representative,
4 determines that, for purposes of application of
5 the requirements under paragraph (5) with re-
6 spect to the construction of the qualified facil-
7 ity—
8 ‘‘(i) their application would be incon-
9 sistent with the public interest,
10 ‘‘(ii) such materials and products are
11 not produced in the United States in suffi-
12 cient and reasonably available quantities
13 and of a satisfactory quality, or
14 ‘‘(iii) inclusion of domestic material
15 will increase the cost of the construction of
16 the qualified facility by more than 25 per-
17 cent,
18 the applicable percentage shall be 100 per-
19 cent.’’.
20 (b) ELECTIVE PAYMENT OF CREDIT.—Section
21 6417(b), as added and amended by the preceding provi-
22 sions of this Act, is amended by adding at the end the
24 ‘‘(7) The zero emissions facility credit deter-
25 mined under section 48E.’’.
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2 (1) Section 46 is amended by striking ‘‘and’’ at
3 the end of paragraph (6), by striking the period at
4 the end of paragraph (7) and inserting ‘‘, and’’, and
6 ‘‘(8) the zero emissions facility credit.’’.
7 (2) Section 49(a)(1)(C) is amended by striking
8 ‘‘and’’ at the end of clause (v), by striking the pe-
9 riod at the end of clause (vi) and inserting a comma,
10 and by adding at the end the following new clause:
11 ‘‘(vii) the basis of any eligible prop-
12 erty which is part of a zero emissions facil-
13 ity under section 48D.’’.
14 (3) Section 50(a)(2)(E) is amended by striking
15 ‘‘ or 48D’’ and inserting ‘‘48D, or 48E(b)(2)’’.
16 (4) The table of sections for subpart E of part
18 serting after the item relating to section 48D the
19 following new item:
Sec. 48E. Zero emissions facility credit.

21 this section shall apply to periods after December 31,
22 2021, under rules similar to the rules of section 48(m)
23 of the Internal Revenue Code of 1986 (as in effect on the
24 day before the date of the enactment of the Revenue Rec-
25 onciliation Act of 1990)
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1 SEC. 136107. EXTENSION AND MODIFICATION OF CREDIT
2 FOR CARBON OXIDE SEQUESTRATION.
3 (a) EXTENSION.—Section 45Q(d)(1) is amended by

4 striking ‘‘January 1, 2026’’ and inserting ‘‘January 1,
5 2032’’.
6 (b) MODIFICATION OF CARBON OXIDE CAPTURE RE-
7 QUIREMENTS.—Section 45Q(d)(2) is amended to read as
8 follows:
9 ‘‘(2) which captures—
10 ‘‘(A) in the case of a direct air capture fa-
11 cility, not less than 1,000 metric tons of quali-
12 fied carbon oxide during the taxable year,
13 ‘‘(B) in the case of an electricity gener-
14 ating facility, not less than 18,750 metric tons
15 of qualified carbon oxide during the taxable
16 year and not less than 75 percent of the carbon
17 oxide that would otherwise be released into the
18 atmosphere by such facility during such taxable
19 year, and
20 ‘‘(C) in the case of any other facility, not
21 less than 12,500 metric tons of qualified carbon
22 oxide during the taxable year and not less than
23 50 percent of the carbon oxide that would oth-
24 erwise be released into the atmosphere by such
25 facility during such taxable year.’’.
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1 (c) DETERMINATION OF APPLICABLE DOLLAR
2 AMOUNT.—
3 (1) IN GENERAL.—Section 45Q(b)(1) is amend-
4 ed by redesignating subparagraph (B) as subpara-
5 graph (C) and by inserting after subparagraph (A)
6 the following new subparagraph:
7 ‘‘(B) SPECIAL RULE FOR DIRECT AIR CAP-
8 TURE FACILITIES.—For any taxable year begin-

9 ning after December 31, 2021, in the case of
10 any qualified facility described in subsection
11 (d)(2)(C), the applicable dollar amount shall be
13 ‘‘(i) for purposes of paragraph (3) of
14 subsection (a), an amount equal to the
15 product of $180 and the inflation adjust-
16 ment factor for such calendar year deter-
17 mined under section 43(b)(3)(B) for such
19 ‘2020’ for ‘1990’, and
20 ‘‘(ii) for purposes of paragraph (4) of
21 such subsection, an amount equal to the
22 product of $130 and the inflation adjust-
23 ment factor for such calendar year deter-
24 mined under section 43(b)(3)(B) for such
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2 ‘2020’ for ‘1990’.’’.
3 (2) CONFORMING AMENDMENTS.—
4 (A) Section 45Q(b)(1)(A) is amended by

5 striking ‘‘The applicable dollar amount’’ and in-
6 serting ‘‘Except as provided in subparagraph
7 (B), the applicable dollar amount’’.
8 (B) Section 45Q(b)(1)(C), as redesignated
9 by subparagraph (A), is amended by striking
10 ‘‘subparagraph (A)’’ and inserting ‘‘subpara-
11 graph (A) or (B)’’.
12 (d) WAGE AND APPRENTICESHIP REQUIREMENTS.—
13 Section 45Q is amended by redesignating subsection (h)
14 as subsection (i) and inserting after subsection (g) fol-
15 lowing new subsection:
16 ‘‘(h) BASE CREDIT AMOUNT AND INCREASED CRED-
17 IT AMOUNT FOR QUALIFIED FACILITIES AND CARBON
18 CAPTURE EQUIPMENT.—
20 facility and any carbon capture equipment which
21 does not satisfy the requirements of paragraph (2),
22 the amount of the credit determined under sub-
23 section (a) shall be 20 percent of such amount (de-
24 termined without regard to this sentence).
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1 ‘‘(2) INCREASED CREDIT FOR CERTAIN FACILI-
2 TIES AND CARBON CAPTURE EQUIPMENT MEETING
3 PROJECT REQUIREMENTS.—

5 qualified facility and any carbon capture equip-
6 ment placed in service at such facility which
7 meets the project requirements of this subpara-
8 graph, subparagraph (A) shall not apply.
9 ‘‘(B) PROJECT REQUIREMENTS.—A project
10 meets the requirements of this subparagraph if
11 it is one of the following:
12 ‘‘(i) A qualified facility with a max-
13 imum net output of less than 1 megawatt.
14 ‘‘(ii) A qualified facility or any carbon
15 capture equipment placed in service at
16 such facility which commences construction
17 prior to the date of the enactment of this
18 paragraph.
19 ‘‘(iii) A project which satisfies the re-
20 quirements of paragraphs (3) and (4).

24 any qualified facility and any carbon capture
25 equipment placed in service at such facility are
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1 that the taxpayer shall ensure that any laborers
2 and mechanics employed by contractors and
3 subcontractors in—
4 ‘‘(i) the construction of such facility
5 and carbon capture equipment,
6 ‘‘(ii) the alteration or repair of such
7 facility and carbon capture equipment dur-
8 ing the 12 year-period after being placed
9 into service, or for carbon capture equip-
10 ment placed in service prior to 2018, until
11 the date determined by the Secretary
12 under subsection (g),
21 MENTS.—

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6 with respect to such facility and carbon
7 capture equipment for any year if, with re-
8 spect to any laborer or mechanic who was
9 paid wages at a rate below the rate de-
10 scribed in such subparagraph for any pe-
11 riod during such year, such taxpayer—
14 to the sum of an amount equal to the
15 difference between the amount of
16 wages paid to such laborer or me-
17 chanic during such period, and—
18 ‘‘(aa) the amount of wages
19 required to be paid to such la-
20 borer or mechanic pursuant to
21 such subparagraph during such
22 period, plus
23 ‘‘(bb) interest on the
24 amount determined under item
25 (aa) at the underpayment rate
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1 established under section 6621
2 for the period described in such
3 item, and
13 year.

18 chapter 68.
20 requirements described in this paragraph with re-

21 spect to any qualified facility and carbon capture
22 equipment are as follows:
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3 facility and carbon capture equipment
4 prior to such facility being placed into
5 service shall, subject to subparagraph (B),
9 tices.

16 cent,
21 and
25 percent.
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12 such work.

17 taxpayer who—
24 paragraph.
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16 gram.
18 paragraph—
21 section 45(b)(9)(E)(i).

25 45(b)(9)(E)(ii).
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4 to carry out the purposes of this subsection.’’.
5 (e) INCREASED APPLICABLE DOLLAR AMOUNT.—
6 (1) IN GENERAL.—Section 45Q(b)(1) is amend-
7 ed—
8 (A) by amending clause (i) of subpara-
9 graph (A) to read as follows:
10 ‘‘(i) for any taxable year beginning in
11 a calendar year after 2016 and before
12 2027—
13 ‘‘(I) for purposes of paragraph
14 (3) of subsection (a), $50 for each
15 calendar year during such period, and
16 ‘‘(II) for purposes of paragraph
17 (4) of such subsection, $35 for each
18 calendar year during such period,
19 and’’,
20 (B) by redesignating subparagraphs (B)
21 and (C) as subparagraphs (C) and (D), and
22 (C) by inserting after subparagraph (A)
24 ‘‘(B) INFLATION ADJUSTMENT.—In the
25 case of any taxable year beginning in a calendar
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1 year after 2025, each of the dollar amounts in
2 subparagraph (A)(i) shall be increased by an
7 endar year in which the taxable year be-
8 gins, determined by substituting ‘calendar
11 Any increase determined under the preceding
12 sentence shall be rounded to the nearest cent.’’.
13 (f) EFFECTIVE DATES.—
14 (1) EXTENSION.—The amendment made by
15 subsection (a) shall apply to facilities the construc-
16 tion of which begins after December 31, 2025.
17 (2) OTHER AMENDMENTS.—The amendments
18 made by subsections (b), (c), (d), and (e) shall apply
19 to taxable years beginning after December 31, 2021.
20 SEC. 136108. GREEN ENERGY PUBLICLY TRADED PARTNER-
21 SHIPS.
22 (a) IN GENERAL.—Section 7704(d)(1)(E) is amend-

23 ed—
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1 (1) by striking ‘‘income and gains derived from
2 the exploration’’ and inserting ‘‘income and gains
3 derived from—
4 ‘‘(i) the exploration’’,
5 (2) by inserting ‘‘or’’ before ‘‘industrial
6 source’’, and
7 (3) by striking ‘‘, or the transportation or stor-
8 age’’ and all that follows and inserting the following:
9 ‘‘(ii) the generation of electric power
10 or thermal energy exclusively using any
11 qualified energy resource (as defined in
12 section 45(c)(1)),
13 ‘‘(iii) the operation of energy property
14 (as defined in section 48(a)(3), determined
15 without regard to any date by which the
16 construction of the facility is required to
17 begin),
18 ‘‘(iv) in the case of a facility described
19 in paragraph (3) or (7) of section 45(d)
20 (determined without regard to any placed
21 in service date or date by which construc-
22 tion of the facility is required to begin),
23 the accepting or processing of open-loop
24 biomass or municipal solid waste,
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1 ‘‘(v) the transportation or storage of
2 any fuel described in subsection (b), (c),
3 (d), or (e) of section 6426,
4 ‘‘(vi) the conversion of renewable bio-
5 mass (as defined in subparagraph (I) of
6 section 211(o)(1) of the Clean Air Act (as
7 in effect on the date of the enactment of
8 this clause)) into renewable fuel (as de-
9 fined in subparagraph (J) of such section
10 as so in effect), or the storage or transpor-
11 tation of such fuel,
12 ‘‘(vii) the production, storage, or
13 transportation of any fuel which—
14 ‘‘(I) uses as its primary feedstock
15 carbon oxides captured from an an-
16 thropogenic source or the atmosphere,
17 ‘‘(II) does not use as its primary
18 feedstock carbon oxide which is delib-
19 erately released from naturally occur-
20 ring subsurface springs, and
21 ‘‘(III) is determined by the Sec-
22 retary, after consultation with the
23 Secretary of Energy and the Adminis-
24 trator of the Environmental Protec-
25 tion Agency, to achieve a reduction of
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1 not less than a 60 percent in lifecycle
2 greenhouse gas emissions (as defined
3 in section 211(o)(1)(H) of the Clean
4 Air Act, as in effect on the date of the
5 enactment of this clause) compared to
6 baseline lifecycle greenhouse gas emis-
7 sions (as defined in section
8 211(o)(1)(C) of such Act, as so in ef-
9 fect), or
10 ‘‘(viii) a qualified facility (as defined
11 in section 45Q(d), without regard to any
12 date by which construction of the facility is
13 required to begin).’’.
15 this section apply to taxable years beginning after Decem-
16 ber 31, 2021.
17 SEC. 136109. ZERO-EMISSION NUCLEAR POWER PRODUC-
18 TION CREDIT.

20 chapter A of chapter 1 of the Internal Revenue Code of
21 1986 is amended by adding at the end the following new
22 section:
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1 ‘‘SEC. 45W. ZERO-EMISSION NUCLEAR POWER PRODUCTION
2 CREDIT.
3 ‘‘(a) AMOUNT OF CREDIT.—For purposes of section

4 38, the zero-emission nuclear power production credit for
5 any taxable year is an amount equal to the amount by
6 which—
7 ‘‘(1) the product of—
8 ‘‘(A) 1.5 cents, multiplied by
9 ‘‘(B) the kilowatt hours of electricity—
10 ‘‘(i) produced by the taxpayer at a
11 qualified nuclear power facility, and
12 ‘‘(ii) sold by the taxpayer to an unre-
13 lated person during the taxable year, ex-
14 ceeds
15 ‘‘(2) the reduction amount for such taxable
16 year.
17 ‘‘(b) DEFINITIONS.—
18 ‘‘(1) QUALIFIED NUCLEAR POWER FACILITY.—
19 For purposes of this section, the term ‘qualified nu-

20 clear power facility’ means any nuclear facility—
21 ‘‘(A) which is owned by the taxpayer and
22 which uses nuclear energy to produce elec-
23 tricity,
24 ‘‘(B) which has not received an allocation
25 under section 45J(b), and
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1 ‘‘(C) which is placed in service before the
2 date of the enactment of this section.
3 ‘‘(2) REDUCTION AMOUNT.—

5 section, the term ‘reduction amount’ means,
6 with respect to any qualified nuclear power fa-
7 cility for any taxable year, the amount equal to
8 the lesser of—
9 ‘‘(i) the amount determined under
10 subsection (a)(1), or
11 ‘‘(ii) the amount equal to 80 percent
12 of the excess of—
13 ‘‘(I) subject to subparagraph (B),
14 the gross receipts from any electricity
15 produced by such facility (including
16 any electricity services or products
17 provided in conjunction with the elec-
18 tricity produced by such facility) and
19 sold to an unrelated person during
20 such taxable year, over
21 ‘‘(II) the amount equal to the
22 product of—
23 ‘‘(aa) 2.5 cents, multiplied
24 by
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1 ‘‘(bb) the amount deter-
2 mined under subsection
3 (a)(1)(B).
4 ‘‘(B) TREATMENT OF CERTAIN RE-
5 CEIPTS.—
6 ‘‘(i) IN GENERAL.—The amount de-

7 termined under subparagraph (A)(ii)(I)
8 shall include any amount received by the
9 taxpayer during the taxable year with re-
10 spect to the qualified nuclear power facility
11 from a zero-emission credit program unless
12 the amount received by the taxpayer is
13 subject to reduction—
14 ‘‘(I) by the full amount of the
15 credit determined under this section,
16 or
17 ‘‘(II) by any lesser amount if
18 such amount entirely offsets the
19 amount received from a zero-emission
20 credit program.
21 ‘‘(ii) ZERO-EMISSION CREDIT PRO-
22 GRAM.—For purposes of this subpara-

23 graph, the term ‘zero-emission credit pro-
24 gram’ means any payments to a qualified
25 nuclear power facility as a result of any
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1 Federal, State or local government pro-
2 gram for, in whole or in part, the zero-
3 emission, zero-carbon, or air quality at-
4 tributes of any portion of the electricity
5 produced by such facility.
6 ‘‘(3) ELECTRICITY.—For purposes of this sec-
7 tion, the term ‘electricity’ means the energy pro-
8 duced by a qualified nuclear power facility from the
9 conversion of nuclear fuel into electric power.
10 ‘‘(c) OTHER RULES.—
11 ‘‘(1) INFLATION ADJUSTMENT.—The 1.5 cent
12 amount in subsection (a)(1)(A) and the 2.5 cent
13 amount in subsection (b)(2)(A)(ii)(II)(aa) shall each
14 be adjusted by multiplying such amount by the infla-
15 tion adjustment factor (as determined under section
16 45(e)(2), as applied by substituting ‘calendar year
17 2022’ for ‘calendar year 1992’ in subparagraph (B)
18 thereof) for the calendar year in which the sale oc-
19 curs. If any amount as increased under the pre-
20 ceding sentence is not a multiple of 0.1 cent, such
21 amount shall be rounded to the nearest multiple of
22 0.1 cent.
23 ‘‘(2) SPECIAL RULES.—Rules similar to the
24 rules of paragraphs (1), (3), (4), and (5) of section
25 45(e) shall apply for purposes of this section.
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1 ‘‘(3) DENIAL OF DOUBLE BENEFIT.—No credit
2 shall be allowed under section 48E for any power
3 production for which a credit is taken under this
4 section.
5 ‘‘(d) WAGE AND APPRENTICESHIP REQUIRE-
6 MENTS.—
8 CREDIT AMOUNT FOR QUALIFIED NUCLEAR POWER
9 FACILITIES.—

11 qualified nuclear power facility which does not
12 satisfy the requirements of subparagraph (B),
13 the amount of the credit determined under sub-
14 section (a) and the 2.5 cent amount in sub-
15 section (b)(2)(A)(ii)(II)(aa) shall be 20 percent
16 of such amount (determined without regard to
17 this sentence).
18 ‘‘(B) INCREASED CREDIT FOR CERTAIN FA-
19 CILITIES MEETING PROJECT REQUIREMENTS.—

21 qualified nuclear power facility which
22 meets the project requirements of this sub-
23 paragraph, subparagraph (A) shall not
24 apply.
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6 ‘‘(II) A project which satisfies
8 and (3).
10 ‘‘(A) IN GENERAL.—The taxpayer shall en-

11 sure that any laborers and mechanics employed
12 by contractors and subcontractors in the alter-
13 ation or repair of a facility shall be paid wages
14 at rates not less than the prevailing rates for
15 construction, alteration, or repair of a similar
16 character in the locality as most recently deter-
17 mined by the Secretary of Labor, in accordance
18 with subchapter IV of chapter 31 of title 40,
19 United States Code.
22 MENTS.—

25 ment under subparagraph (A), such tax-
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1 payer shall be deemed to have satisfied
3 with respect to such facility for any year if,
4 with respect to any laborer or mechanic
5 who was paid wages at a rate below the
6 rate described in such subparagraph for
7 any period during such year, such tax-
8 payer—
11 to the sum of—
16 period, and—
17 ‘‘(AA) the amount of
18 wages required to be paid to
19 such laborer or mechanic
20 pursuant to such subpara-
21 graph during such period,
22 plus
23 ‘‘(BB) interest on the
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4 item, and
14 year.

19 chapter 68.

22 spect to any qualified nuclear power facility are as
23 follows:
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3 tors engaged in the performance of alter-
4 ation or repair work on any qualified nu-
5 clear power facility shall, subject to sub-
6 paragraph (B), ensure that not less than
7 the applicable percentage of the total labor
8 hours of such work be performed by quali-
9 fied apprentices.

16 cent,
21 and
25 percent.
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12 such work.

17 taxpayer who—
24 paragraph.
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16 gram.
18 paragraph—
21 section 45(b)(9)(E)(i).

25 45(b)(9)(E)(ii).
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5 ‘‘(e) TERMINATION.—This section shall not apply to
6 taxable years beginning after December 31, 2026.’’.
8 (1) Section 38(b) of the Internal Revenue Code
9 of 1986 is amended—
10 (A) in paragraph (36), by striking ‘‘plus’’
11 at the end,
12 (B) in paragraph (37), by striking the pe-
13 riod at the end and inserting ‘‘, plus’’, and
15 paragraph:
16 ‘‘(38) the zero-emission nuclear power produc-
17 tion credit determined under section 45W(a).’’.
19 IV of subchapter A of chapter 1 of such Code is
21 item:
‘‘Sec. 45W. Zero-emission nuclear power production credit.’’.
22 (c) ELECTIVE PAYMENT OF CREDIT.—Section

23 6417(b), as added by the preceding provisions of this Act,
25 graph:
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1 ‘‘(8) The zero-emission nuclear power produc-
2 tion credit determined under section 45W.’’.
3 (d) EFFECTIVE DATE.—This section shall apply to
4 electricity produced and sold after December 31, 2021, in
5 taxable years beginning after such date.
6 PART 2—RENEWABLE FUELS
7 SEC. 136201. EXTENSION OF INCENTIVES FOR BIODIESEL,
8 RENEWABLE DIESEL AND ALTERNATIVE
9 FUELS.
10 (a) BIODIESEL AND RENEWABLE DIESEL CREDIT.—

11 Section 40A(g) is amended by striking ‘‘December 31,
12 2022’’ and inserting ‘‘December 31, 2031’’.
13 (b) BIODIESEL MIXTURE CREDIT.—
14 (1) IN GENERAL.—Section 6426(c)(6) is
15 amended by striking ‘‘December 31, 2022’’ and in-
16 serting ‘‘December 31, 2031’’.
17 (2) FUELS NOT USED FOR TAXABLE PUR-
18 POSES.—Section 6427(e)(6)(B) is amended by strik-

19 ing ‘‘December 31, 2022’’ and inserting ‘‘December
20 31, 2031’’.
21 (c) ALTERNATIVE FUEL CREDIT.—Section
22 6426(d)(5) is amended by striking ‘‘December 31, 2021’’
23 and inserting ‘‘December 31, 2031’’.
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1 (d) ALTERNATIVE FUEL MIXTURE CREDIT.—Section
2 6426(e)(3) is amended by striking ‘‘December 31, 2021’’
3 and inserting ‘‘December 31, 2031’’.
4 (e) PAYMENTS FOR ALTERNATIVE FUELS.—Section
5 6427(e)(6)(C) is amended by striking ‘‘December 31,
8 this section shall apply to fuel sold or used after December
9 31, 2021.
10 SEC. 136202. EXTENSION OF SECOND GENERATION
11 BIOFUEL INCENTIVES.
12 (a) IN GENERAL.—Section 40(b)(6)(J)(i) is amended

13 by striking ‘‘2022’’ and inserting ‘‘2032’’.
15 subsection (a) shall apply to qualified second generation
16 biofuel production after December 31, 2021.
17 SEC. 136203. SUSTAINABLE AVIATION FUEL CREDIT.

20 tion 40A the following new section:
21 ‘‘SEC. 40B. SUSTAINABLE AVIATION FUEL CREDIT.

23 sustainable aviation fuel credit for the taxable year is, with
24 respect to any sale or use of a qualified mixture which
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1 occurs during such taxable year, an amount equal to the
2 product of—
3 ‘‘(1) the number of gallons of sustainable avia-
4 tion fuel in such mixture, multiplied by
5 ‘‘(2) the sum of—
6 ‘‘(A) $1.25, plus
7 ‘‘(B) the applicable supplementary amount
8 with respect to such sustainable aviation fuel.
9 ‘‘(b) APPLICABLE SUPPLEMENTARY AMOUNT.—For
10 purposes of this section, the term ‘applicable supple-
11 mentary amount’ means, with respect to any sustainable
12 aviation fuel, an amount equal to $0.01 for each percent-
13 age point by which the lifecycle greehouse gas emissions
14 reduction percentage with respect to such fuel exceeds 50
15 percent. In no event shall the applicable supplementary
16 amount determined under this subsection exceed $0.50.
17 ‘‘(c) QUALIFIED MIXTURE.—For purposes of this
18 section, the term ‘qualified mixture’ means a mixture of
19 sustainable aviation fuel and kerosene if—
20 ‘‘(1) such mixture is produced by the taxpayer
21 in the United States,
22 ‘‘(2) such mixture is used by the taxpayer (or
23 sold by the taxpayer for use) in an aircraft,
24 ‘‘(3) such sale or use is in the ordinary course
25 of a trade or business of the taxpayer, and
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1 ‘‘(4) the transfer of such mixture to the fuel
2 tank of such aircraft occurs in the United States.
3 ‘‘(d) SUSTAINABLE AVIATION FUEL.—For purposes
4 of this section, the term ‘sustainable aviation fuel’ means
5 liquid fuel which—
6 ‘‘(1) meets the requirements of—
7 ‘‘(A) ASTM International Standard
8 D7566, or
9 ‘‘(B) the Fischer Tropsch provisions of
10 ASTM International Standard D1655, Annex
11 A1,
12 ‘‘(2) is not derived from palm fatty distillates or
13 petroleum, and
14 ‘‘(3) has been certified in accordance with sub-
15 section (e) as having a lifecycle greenhouse gas emis-
16 sions reduction percentage of at least 50 percent.
17 ‘‘(e) LIFECYCLE GREENHOUSE GAS EMISSIONS RE-
18 DUCTION PERCENTAGE.—For purposes of this section—
19 ‘‘(1) IN GENERAL.—The term ‘lifecycle green-
20 house gas emissions reduction percentage’ means,
21 with respect to any sustainable aviation fuel, the
22 percentage reduction in lifecycle greenhouse gas
23 emissions achieved by such fuel in comparison with
24 petroleum-based jet fuel as stated in a certification
25 which meets the requirements of paragraphs (2).
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1 ‘‘(2) CERTIFICATION METHODOLOGY.—A cer-
2 tification meets the requirements of this paragraph
3 if such certification (including the methodology and
4 process of such certification) conforms with all re-
5 quirements (including requirements related to
6 traceability and information transmission) of the
7 most recent Carbon Offsetting and Reduction
8 Scheme for International Aviation which has been
9 adopted by the International Civil Aviation Organi-
10 zation with the agreement of the United States.
11 ‘‘(3) OPTION TO OBTAIN CERTIFICATION FROM
12 SECRETARY.—Not later than 24 months after the

13 date of the enactment of this section, the Secretary,
14 after consultation with the Secretary of Energy and
16 Agency, shall establish procedures pursuant to which
17 taxpayers may obtain a certification which meets the
18 requirements of paragraph (2) from the Secretary.
19 ‘‘(f) REGISTRATION OF SUSTAINABLE AVIATION
20 FUEL PRODUCERS.—No credit shall be allowed under this
21 section with respect to any sustainable aviation fuel unless
22 the producer of such fuel has entered into an agreement
23 with the Secretary to provide the Secretary such informa-
24 tion with respect to such fuel as the Secretary may require
25 for purposes of carrying out this section.
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1 ‘‘(g) COORDINATION WITH CREDIT AGAINST EXCISE
2 TAX.—The amount of the credit determined under this
3 section with respect to any sustainable aviation fuel shall,
4 under rules prescribed by the Secretary, be properly re-
5 duced to take into account any benefit provided with re-
6 spect to such sustainable aviation fuel solely by reason of
7 the application of section 6426 or 6427(e).
8 ‘‘(h) TERMINATION.—This section shall not apply to
9 any sale or use after December 31, 2031.’’.
11 CREDIT.— Section 38(b) is amended by striking ‘‘plus’’
12 at the end of paragraph (37), by striking the period at
13 the end of paragraph (38) and inserting ‘‘, plus’’, and by
14 inserting after paragraph (38) the following new para-
15 graph:
16 ‘‘(39) the sustainable aviation fuel credit deter-
17 mined under section 40B.’’.
18 (c) COORDINATION WITH BIODIESEL INCENTIVES.—
19 (1) IN GENERAL.—Section 40A(d)(1) is amend-
20 ed by inserting ‘‘or 40B’’ after ‘‘determined under
21 section 40’’.
23 40A(f) is amended by striking paragraph (4).
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1 (d) SUSTAINABLE AVIATION FUEL ADDED TO CRED-
2 IT FOR ALCOHOL FUEL, BIODIESEL, AND ALTERNATIVE
3 FUEL MIXTURES.—
4 (1) IN GENERAL.—Section 6426 is amended by
5 adding at the end the following new subsection:
6 ‘‘(k) SUSTAINABLE AVIATION FUEL CREDIT.—
8 tion, the sustainable aviation fuel credit for the tax-
9 able year is, with respect to any sale or use of a
10 qualified mixture, an amount equal to the product
11 of—
12 ‘‘(A) the number of gallons of sustainable
13 aviation fuel in such mixture, multiplied by
14 ‘‘(B) the sum of—
15 ‘‘(i) $1.25, plus
16 ‘‘(ii) the applicable supplementary
17 amount with respect to such sustainable
18 aviation fuel.
19 ‘‘(2) APPLICABLE SUPPLEMENTARY AMOUNT.—
20 For purposes of this subsection, the term ‘applicable

21 supplementary amount’ has the meaning given such
22 term in section 40B(b).
23 ‘‘(3) OTHER DEFINITIONS.—Any term used in
24 this subsection which is also used in section 40B
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230
1 shall have the meaning given such term by section
2 40B.
3 ‘‘(4) REGISTRATION REQUIREMENT.—For pur-
4 poses of this subsection, rules similar to the rules of
5 section 40B(f) shall apply.’’.
7 (A) Section 6426 is amended—

8 (i) in subsection (a)(1), by striking
9 ‘‘and (e)’’ and inserting ‘‘(e), and (k)’’,
10 and
11 (ii) in subsection (h), by striking
12 ‘‘under section 40 or 40A’’ and inserting
13 ‘‘under section 40, 40A, or 40B’’.
14 (B) Section 6427(e)(6) is amended by
15 striking the ‘‘and’’ at the end of subparagraph
16 (C), by striking the period at the end of sub-
17 paragraph (D) and inserting ‘‘, and’’, and by
18 adding at the end the following new subpara-
19 graph:
20 ‘‘(E) any qualified mixture of sustainable
21 aviation fuel (as defined in section 6426(k)(3))
22 sold or used after December 31, 2031.’’.
23 (e) GUIDANCE.—Under rules prescribed by the Sec-
24 retary of the Treasury (or the Secretary’s delegate), the
25 amount of the credit allowed under section 40B of the In-
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1 ternal Revenue Code of 1986 (as added by this subsection)
2 shall be properly reduced to take into account any benefit
3 provided with respect to sustainable aviation fuel (as de-
4 fined in such section 40B) by reason of the application
5 of section 6426 or section 6427(e).
6 (f) AMOUNT OF CREDIT INCLUDED IN GROSS IN-
7 COME.—Section 87 is amended by striking ‘‘and’’ in para-
8 graph (1), by striking the period at the end of paragraph
9 (2) and inserting ‘‘, and’’, and by adding at the end the
11 ‘‘(3) the sustainable aviation fuel credit deter-
12 mined with respect to the taxpayer for the taxable
13 year under section 40B(a).’’.
15 this section shall apply to fuel sold or used after December
16 31, 2022.
17 SEC. 136204. CLEAN HYDROGEN.
18 (a) CREDIT FOR PRODUCTION OF CLEAN HYDRO-

19 GEN.—
20 (1) IN GENERAL.—Subpart D of part IV of

21 subchapter A of chapter 1 is amended by adding at
22 the end the following new section:
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1 ‘‘SEC. 45X. CREDIT FOR PRODUCTION OF CLEAN HYDRO-
2 GEN.
3 ‘‘(a) AMOUNT OF CREDIT.—For purposes of section

4 38, the clean hydrogen production credit for any taxable
5 year is an amount equal to the product of—
6 ‘‘(1) the applicable amount, multiplied by
7 ‘‘(2) the kilograms of qualified clean hydrogen
8 produced by the taxpayer during such taxable year
9 at a qualified clean hydrogen production facility dur-
10 ing the 10-year period beginning on the date such
11 facility was originally placed in service.
12 ‘‘(b) APPLICABLE AMOUNT.—
14 (a)(1), the applicable amount shall be an amount
15 equal to the applicable percentage of $3.00. If any
16 amount as determined under the preceding sentence
17 is not a multiple of 0.1 cent, such amount shall be
18 rounded to the nearest multiple of 0.1 cent.
20 of paragraph (1), the term ‘applicable percentage’
21 means—
22 ‘‘(A) in the case of any qualified clean hy-
23 drogen which is produced through a process
24 that, as compared to hydrogen produced by
25 steam-methane reforming, achieves a percent-
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1 age reduction in lifecycle greenhouse gas emis-
2 sions which is less than 75 percent, 20 percent,
3 ‘‘(B) in the case of any qualified clean hy-
8 sions which is not less than 75 percent and less
9 than 85 percent, 25 percent,
10 ‘‘(C) in the case of any qualified clean hy-
15 sions which is not less than 85 percent and less
16 than 95 percent, 34 percent, and
17 ‘‘(D) in the case of any qualified clean hy-
22 sions which is not less than 95 percent, 100
23 percent.
24 ‘‘(3) INFLATION ADJUSTMENT.—The $3.00
25 amount in paragraph (1) shall be adjusted by multi-
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1 plying such amount by the inflation adjustment fac-
2 tor (as determined under section 45(e)(2), deter-
3 mined by substituting ‘2020’ for ‘1992’ in subpara-
4 graph (B) thereof) for the calendar year in which
5 the qualified clean hydrogen is produced. If any
6 amount as increased under the preceding sentence is
7 not a multiple of 0.1 cent, such amount shall be
8 rounded to the nearest multiple of 0.1 cent.
9 ‘‘(c) DEFINITIONS.—For purposes of this section—
10 ‘‘(1) LIFECYCLE GREENHOUSE GAS EMIS-
11 SIONS.—For purposes of this section, the term

12 ‘lifecycle greenhouse gas emissions’ has the same
13 meaning given such term under subparagraph (H) of
14 section 211(o)(1) of the Clean Air Act (42 U.S.C.
15 7545(o)(1)), as in effect on the date of enactment of
16 this section, as related to the full fuel lifecycle
17 through the point of hydrogen production.
18 ‘‘(2) QUALIFIED CLEAN HYDROGEN.—

20 clean hydrogen’ means hydrogen which is pro-
21 duced through a process that, as compared to
22 hydrogen produced by steam-methane reform-
23 ing, achieves a percentage reduction in lifecycle
24 greenhouse gas emissions which is not less than
25 40 percent.
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1 ‘‘(B) ADDITIONAL REQUIREMENTS.—Such
2 term shall not include any hydrogen unless such

3 hydrogen is produced—
4 ‘‘(i) in the United States (as defined
5 in section 638(1) or a possession of the
6 United States (as defined in section
7 638(2)),
8 ‘‘(ii) in the ordinary course of a trade
9 or business of the taxpayer, and
10 ‘‘(iii) for sale or use.
11 ‘‘(3) QUALIFIED CLEAN HYDROGEN PRODUC-
12 TION FACILITY.—

14 clean hydrogen production facility’ means a fa-
15 cility owned by the taxpayer which produces
16 qualified clean hydrogen and which meets the
17 requirements of subparagraph (B).
18 ‘‘(B) TERMINATION.—The term ‘qualified
19 clean hydrogen production facility’ shall not in-
20 clude any facility the construction of which be-
21 gins after December 31, 2028.
22 ‘‘(4) STEAM-METHANE REFORMING.—The term
23 ‘steam-methane reforming’ means a hydrogen pro-
24 duction process in which high-temperature steam is
25 used to produce hydrogen from natural gas (other
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1 than natural gas derived from biomass (as defined
2 in section 45K(c)(3) as in effect on the date of the
3 enactment of this section), without carbon capture
4 and sequestration.
5 ‘‘(d) SPECIAL RULES.—
6 ‘‘(1) TREATMENT OF FACILITIES OWNED BY
7 MORE THAN 1 TAXPAYER.—Rules similar to the

8 rules section 45(e)(3) shall apply for purposes of
9 this section.
10 ‘‘(2) COORDINATION WITH CREDIT FOR CARBON
11 OXIDE SEQUESTRATION.—No credit shall be allowed

12 under this section with respect to any qualified clean
13 hydrogen produced at a facility which includes prop-
14 erty for which a credit is allowed under section 45Q.
15 ‘‘(e) BASE CREDIT AMOUNT AND INCREASED CREDIT
16 AMOUNT FOR QUALIFIED CLEAN HYDROGEN PRODUC-
17 TION FACILITIES.—
19 clean hydrogen production facility which does not
20 satisfy the requirements of paragraph (2)(B), the
21 amount of the credit determined under subsection
22 (a) shall be 20 percent of such amount (determined
23 without regard to this sentence).
24 ‘‘(2) INCREASED CREDIT FOR CERTAIN FACILI-
25 TIES MEETING PROJECT REQUIREMENTS.—
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2 qualified facility which meets the project re-
3 quirements of this paragraph, paragraph (1)
4 shall not apply.
5 ‘‘(B) PROJECT REQUIREMENTS.—A project
6 meets the requirements of this subparagraph if
7 it is one of the following:
8 ‘‘(i) A project with a maximum net
9 output of less than 1 megawatt.
10 ‘‘(ii) A project which commences con-
11 struction prior to the date of the enact-
12 ment of this paragraph.
13 ‘‘(iii) A project which satisfies the re-
14 quirements of paragraphs (3) and (4).

18 any qualified clean hydrogen production facility
19 are that the taxpayer shall ensure that any la-
20 borers and mechanics employed by contractors
21 and subcontractors in—
23 and
24 ‘‘(ii) for the 10-year period beginning
25 on the date the facility was originally
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1 placed in service, the alteration or repair of
2 such facility,
11 MENTS.—Rules similar to the rules of section

12 45(b)(8)(B) shall apply for purposes of this
13 subparagraph.
14 ‘‘(4) APPRENTICESHIP REQUIREMENTS.—Rules
15 similar to the rules of section 45(b)(9) shall apply

16 for purposes of this paragraph.
21 ‘‘(f) REGULATIONS.—Not later than 1 year after the
22 date of enactment of this section, the Secretary, after con-
23 sultation with the Secretary of Energy and the Adminis-
24 trator of the Environmental Protection Agency, shall issue
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1 regulations or other guidance to carry out the purposes
2 of this section, including regulations or other guidance—
3 ‘‘(1) for determining lifecycle greenhouse gas
4 emissions, and
5 ‘‘(2) which require verification by unrelated
6 third parties of the production and sale or use of
7 qualified clean hydrogen with respect to which credit
8 is otherwise allowed under this section.’’.
9 (2) ELECTIVE PAYMENT OF CREDIT.—Section
10 6417(b), as added by the preceding provisions of

11 this Act, is amended by adding at the end the fol-
12 lowing new paragraph:
13 ‘‘(9) The credit for production of clean hydro-
14 gen determined under section 45X.’’.
16 (A) Section 38(b) is amended—

17 (i) in paragraph (38), by striking
18 ‘‘plus’’ at the end,
19 (ii) in paragraph (39), by striking the
20 period at the end and inserting ‘‘, plus’’,
21 and
22 (iii) by adding at the end the fol-
24 ‘‘(40) the clean hydrogen production credit de-
25 termined under section 45X(a).’’.
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1 (B) The table of sections for subpart D of
2 part IV of subchapter A of chapter 1 amended
3 by adding at the end the following new item:
‘‘Sec. 45X. Credit for production of clean hydrogen.’’.
4 (4) EFFECTIVE DATE.—The amendments made

5 by this subsection shall apply to hydrogen placed in
6 service after December 31, 2021.
7 (b) CREDIT FOR ELECTRICITY PRODUCED FROM RE-
8 NEWABLE RESOURCES ALLOWED IF ELECTRICITY IS
9 USED TO PRODUCE CLEAN HYDROGEN.—
10 (1) IN GENERAL.—Section 45(e) is amended by
12 ‘‘(13) SPECIAL RULE FOR ELECTRICITY USED
13 AT A QUALIFIED CLEAN HYDROGEN PRODUCTION
14 FACILITY.—Electricity produced by the taxpayer

15 shall be treated as sold by such taxpayer to an unre-
16 lated person during the taxable year if such elec-
17 tricity is used during such taxable year by the tax-
18 payer or a person related to the taxpayer at a quali-
19 fied clean hydrogen production facility (as defined in
20 section 45X(d)(3)) to produce qualified clean hydro-
21 gen (as defined in section 45X(d)(2)) during the 10
22 year period after such facility is placed in service.
23 The Secretary shall issue such regulations or other
24 guidance as the Secretary determines appropriate to
25 carry out the purposes of this paragraph, including
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1 regulations or other guidance to require verification
2 by unrelated third parties of the production and use
3 of electricity to which this paragraph applies.’’.
4 (2) EFFECTIVE DATE.—The amendment made
5 by this subsection shall apply to electricity produced
7 (c) ELECTION TO TREAT CLEAN HYDROGEN PRO-
8 DUCTION FACILITIES AS ENERGY PROPERTY.—
9 (1) IN GENERAL.—Section 48(a) is amended by
11 ‘‘(8) ELECTION TO TREAT CLEAN HYDROGEN
12 PRODUCTION FACILITIES AS ENERGY PROPERTY.—

14 qualified property (as defined in paragraph
15 (5)(D)) which is part of a specified clean hydro-
16 gen production facility—
17 ‘‘(i) such property shall be treated as
18 energy property for purposes of this sec-
19 tion, and
20 ‘‘(ii) the energy percentage with re-
21 spect to such property is—
22 ‘‘(I) in the case of a facility
23 which is designed and reasonably ex-
24 pected to produce qualified clean hy-
25 drogen which is described in a sub-
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1 paragraph (A) of section 45X(b)(2), 6
2 percent,
3 ‘‘(II) in the case of a facility
7 paragraph (B) of such section, 7.5
8 percent,
9 ‘‘(III) in the case of a facility
13 paragraph (C) of such section, 10.2
14 percent, and
15 ‘‘(IV) in the case of a facility
19 paragraph (D) of such section, 30
20 percent.
21 ‘‘(B) DENIAL OF PRODUCTION CREDIT.—
22 No credit shall be allowed under section 45X

23 for any taxable year with respect to any speci-
24 fied clean hydrogen production facility.
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1 ‘‘(C) SPECIFIED CLEAN HYDROGEN PRO-
2 DUCTION FACILITY.—For purposes of this para-

3 graph, the term ‘specified clean hydrogen pro-
4 duction facility’ means any qualified clean hy-
5 drogen production facility (as defined in section
6 45X(d)(3)) or any portion of such facility—
7 ‘‘(i) which is placed in service after
8 December 31, 2021, and
9 ‘‘(ii) with respect to which—
10 ‘‘(I) no credit has been allowed
11 under section 45X or 45Q, and
12 ‘‘(II) the taxpayer makes an ir-
13 revocable election to have this para-
14 graph apply.
15 ‘‘(D) QUALIFIED CLEAN HYDROGEN.—For
16 purposes of this paragraph, the term ‘qualified

17 clean hydrogen’ has the meaning given such
18 term by section 45X(d)(2).
19 ‘‘(E) REGULATIONS.—The Secretary, after
20 consultation with the Secretary of Energy and
21 the Administrator of the Environmental Protec-
22 tion Agency, shall issue such regulations or
23 other guidance as the Secretary determines nec-
24 essary or appropriate to carry out the purposes
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1 of this section, including regulations or other
2 guidance which—
3 ‘‘(i) requires verification by one or
4 more unrelated third parties that the facil-
5 ity produces hydrogen which is consistent
6 with the hydrogen that such facility was
7 designed and expected to produce under
8 subparagraph (A)(ii), and
9 ‘‘(ii) recaptures so much of any credit
10 allowed under this section as exceeds the
11 amount of the credit which would have
12 been allowed if the expected production
13 were consistent with the actual verified
14 production (or all of the credit so allowed
15 in the absence of such verification).’’.
17 by this section shall apply to periods after December
18 31, 2021, under rules similar to the rules of section
19 48(m) of the Internal Revenue Code of 1986 (as in
20 effect on the day before the date of the enactment
21 of the Revenue Reconciliation Act of 1990).
22 (d) TERMINATION OF EXCISE TAX CREDIT FOR HY-
23 DROGEN.—
24 (1) IN GENERAL.—Section 6426(d)(2) is

25 amended by striking subparagraph (D) and by re-
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1 designating subparagraphs (E), (F), and (G) as sub-
2 paragraphs (D), (E), and (F), respectively.
4 6426(e)(2) is amended by striking ‘‘(F)’’ and insert-

5 ing ‘‘(E)’’.
7 by this subsection shall apply to fuel sold or used
9 PART 3—GREEN ENERGY AND EFFICIENCY
10 INCENTIVES FOR INDIVIDUALS
11 SEC. 136301. EXTENSION, INCREASE, AND MODIFICATIONS
12 OF NONBUSINESS ENERGY PROPERTY CRED-
13 IT.
14 (a) EXTENSION OF CREDIT.—Section 25C(g)(2) is

15 amended by striking ‘‘December 31, 2021’’ and inserting
16 ‘‘December 31, 2031’’.
17 (b) INCREASE IN CREDIT PERCENTAGE FOR QUALI-
18 FIED ENERGY EFFICIENCY IMPROVEMENTS.—Section
19 25C(a)(1) is amended by striking ‘‘10 percent’’ and insert-
20 ing ‘‘30 percent’’.
21 (c) APPLICATION OF ANNUAL LIMITATION IN LIEU
22 OF LIFETIME LIMITATION.—Section 25C(b) is amended
23 to read as follows:
24 ‘‘(b) LIMITATIONS.—
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1 ‘‘(1) IN GENERAL.—The credit allowed under
2 this section with respect to any taxpayer for any tax-
3 able year shall not exceed $1,200.
4 ‘‘(2) WINDOWS.—The credit allowed under this
5 section by reason of subsection (a)(1) with respect to
6 any taxpayer for any taxable year shall not exceed—
7 ‘‘(A) in the aggregate with respect to all
8 exterior windows and skylights which are not
9 described in subparagraph (B), $200,
10 ‘‘(B) in the aggregate with respect to all
11 exterior windows and skylights which meet the
12 standard for the most efficient certification
13 under applicable Energy Star program require-
14 ments, the excess (if any) of $600 over the
15 credit so allowed with respect to all windows
16 and skylights taken into account under sub-
17 paragraph (A).
18 ‘‘(3) DOORS.—The credit allowed under this
19 section by reason of subsection (a)(1) with respect to
20 any taxpayer for any taxable year shall not exceed—
21 ‘‘(A) $250 in the case of any exterior door,
22 and
23 ‘‘(B) $500 in the aggregate with respect to
24 all exterior doors.’’.
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1 (d) MODIFICATIONS RELATED TO QUALIFIED EN-
2 ERGY EFFICIENCY IMPROVEMENTS.—
3 (1) STANDARDS FOR ENERGY EFFICIENT
4 BUILDING ENVELOPE COMPONENTS.—Section
5 25C(c)(2) is amended by striking ‘‘meets—’’ and all

6 that follows through the period at the end and in-
7 serting the following: ‘‘meets—
8 ‘‘(A) in the case of an exterior window, a
9 skylight, or an exterior door, applicable Energy
10 Star program requirements, and
11 ‘‘(B) in the case of any other component,
12 the prescriptive criteria for such component es-
13 tablished by the most recent International En-
14 ergy Conservation Code standard in effect as of
15 the beginning of the calendar year which is 2
16 years prior to the calendar year in which such
17 component is placed in service.’’.
18 (2) ROOFS NOT TREATED AS BUILDING ENVE-
19 LOPE COMPONENTS.—Section 25C(c)(3) is amended

20 by adding ‘‘and’’ at the end of subparagraph (B), by
21 striking ‘‘, and’’ at the end of subparagraph (C) and
22 inserting a period, and by striking subparagraph
23 (D).
24 (3) AIR BARRIER INSULATION ADDED TO DEFI-
25 NITION OF BUILDING ENVELOPE COMPONENT.—Sec-
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1 tion 25C(c)(3)(A) is amended by striking ‘‘material
2 or system’’ and inserting ‘‘material or system, in-
3 cluding air sealing material or system,’’.
4 (e) MODIFICATION OF RESIDENTIAL ENERGY PROP-
5 ERTY EXPENDITURES.—Section 25C(d) is amended to
6 read as follows:
7 ‘‘(d) RESIDENTIAL ENERGY PROPERTY EXPENDI-
8 TURES.—For purposes of this section—
9 ‘‘(1) IN GENERAL.—The term ‘residential en-
10 ergy property expenditures’ means expenditures
11 made by the taxpayer for qualified energy property
12 which is—
13 ‘‘(A) installed on or in connection with a
14 dwelling unit located in the United States and
15 used as a residence by the taxpayer, and
16 ‘‘(B) originally placed in service by the tax-
17 payer.
18 Such term includes expenditures for labor costs
19 properly allocable to the onsite preparation, assem-
20 bly, or original installation of the property.
21 ‘‘(2) QUALIFIED ENERGY PROPERTY.—The
22 term ‘qualified energy property’ means any of the

23 following which meet or exceed the highest efficiency
24 tier (not including any advanced tier) established by
25 the Consortium for Energy Efficiency which is in ef-
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1 fect as of the beginning of the calendar year in
2 which the property is placed in service:
3 ‘‘(A) An electric heat pump water heater.
4 ‘‘(B) An electric heat pump.
5 ‘‘(C) A central air conditioner.
6 ‘‘(D) A natural gas, propane, or oil water
7 heater.
8 ‘‘(E) A natural gas, propane, or oil furnace
9 or hot water boiler.’’.
10 (f) HOME ENERGY AUDITS.—
11 (1) IN GENERAL.—Section 25C(a) is amended
12 by striking ‘‘and’’ at the end of paragraph (1), by
13 striking the period at the end of paragraph (2) and
14 inserting ‘‘, and’’, and by adding at the end the fol-
16 ‘‘(3) 30 percent of the amount paid or incurred
17 by the taxpayer during the taxable year for home en-
18 ergy audits.’’.
19 (2) LIMITATION.—Section 25C(b), as amended
20 by subsection (c), is amended adding at the end the
22 ‘‘(5) HOME ENERGY AUDITS.—
23 ‘‘(A) DOLLAR LIMITATION.—The amount

24 of the credit allowed under this section by rea-
25 son of subsection (a)(3) shall not exceed $150.
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1 ‘‘(B) SUBSTANTIATION REQUIREMENT.—
2 No credit shall be allowed under this section by

3 reason of subsection (a)(3) unless the taxpayer
4 includes with the taxpayer’s return of tax such
5 information or documentation as the Secretary
6 may require.’’.
7 (3) HOME ENERGY AUDITS.—
8 (A) IN GENERAL.—Section 25C, as amend-

9 ed by subsections (a), is amended by redesig-
10 nating subsections (e), (f), and (g), as sub-
11 sections (f), (g), and (h), respectively, and by
12 inserting after subsection (d) the following new
13 subsection:
14 ‘‘(e) HOME ENERGY AUDITS.—For purposes of this
15 section, the term ‘home energy audit’ means an inspection
16 and written report with respect to a dwelling unit located
17 in the United States and owned or used by the taxpayer
18 as the taxpayer’s principal residence (within the meaning
19 of section 121) which—
20 ‘‘(1) identifies the most significant and cost-ef-
21 fective energy efficiency improvements with respect
22 to such dwelling unit, including an estimate of the
23 energy and cost savings with respect to each such
24 improvement, and
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1 ‘‘(2) is conducted and prepared by a home en-
2 ergy auditor that meets the certification or other re-
3 quirements specified by the Secretary (after con-
4 sultation with the Secretary of Energy and the Ad-
5 ministrator of the Environmental Protection Agency
6 and not later than 180 days after the date of the en-
7 actment of this subsection) in regulations or other
8 guidance.’’.
9 (B) CONFORMING AMENDMENT.—Section
10 1016(a)(33) is amended by striking ‘‘section

11 25C(f)’’ and inserting ‘‘section 25C(g)’’.
12 (4) LACK OF SUBSTANTIATION TREATED AS
13 MATHEMATICAL OR CLERICAL ERROR.—Section
14 6213(g)(2) is amended—
15 (A) in subparagraph (P), by striking
16 ‘‘and’’ at the end,
17 (B) in subparagraph (Q), by striking the
18 period at the end and inserting ‘‘, and’’, and
19 (C) by adding at the end the following:
20 ‘‘(R) an omission of correct information or
21 documentation required under section
22 25C(b)(5)(B) (relating to home energy audits)
23 to be included on a return.’’.
24 (g) IDENTIFICATION NUMBER REQUIREMENT.—
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1 (1) IN GENERAL.—Section 25C, as amended by
2 subsections (a) and (f), is amended by redesignating
3 subsection (h) as subsection (i) and by inserting
5 ‘‘(h) PRODUCT IDENTIFICATION NUMBER REQUIRE-
6 MENT.—
7 ‘‘(1) IN GENERAL.—No credit shall be allowed

8 under subsection (a) with respect to any item of
9 specified property placed in service after December
10 31, 2023, unless—
11 ‘‘(A) such item is produced by a qualified
12 manufacturer, and
13 ‘‘(B) the taxpayer includes the qualified
14 product identification number of such item on
15 the return of tax for the taxable year.
16 ‘‘(2) QUALIFIED PRODUCT IDENTIFICATION
17 NUMBER.—For purposes of this section, the term

18 ‘qualified product identification number’ means, with
19 respect to any item of specified property, the prod-
20 uct identification number assigned to such item by
21 the qualified manufacturer pursuant to the method-
22 ology referred to in paragraph (3).
23 ‘‘(3) QUALIFIED MANUFACTURER.—

25 section, the term ‘qualified manufacturer’
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1 means any manufacturer of specified property
2 which enters into an agreement with the Sec-
3 retary which provides that such manufacturer
4 will—
5 ‘‘(i) assign a product identification
6 number to each item of specified property
7 produced by such manufacturer utilizing a
8 methodology that will ensure that such
9 number (including any alphanumeric) is
10 unique to each such item (by utilizing
11 numbers or letters which are unique to
12 such manufacturer or by such other meth-
13 od as the Secretary may provide),
14 ‘‘(ii) label such item with such num-
15 ber in such manner as the Secretary may
16 provide, and
17 ‘‘(iii) make periodic written reports to
18 the Secretary (at such times and in such
19 manner as the Secretary may provide) of
20 the product identification numbers so as-
21 signed and including such information as
22 the Secretary may require with respect to
23 the item of specified property to which
24 such number was so assigned.
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1 ‘‘(B) CONSULTATION WITH DOE AND
2 EPA.—The Secretary, after consultation with

3 the Secretary of Energy and the Administrator
4 of the Environmental Protection Agency, shall
5 establish procedures for manufacturers and
6 consumers to meet the requirements for product
7 identification numbers under subparagraph (A).
8 ‘‘(4) SPECIFIED PROPERTY.—For purposes of
9 this subsection, the term ‘specified property’ means
10 any qualified energy property and any property de-
11 scribed in subparagraph (B) or (C) of subsection
12 (c)(3).’’.
13 (2) OMISSION OF CORRECT PRODUCT IDENTI-
14 FICATION NUMBER TREATED AS MATHEMATICAL OR
15 CLERICAL ERROR.—Section 6213(g)(2), as amended

16 by the preceding provisions of this Act, is amend-
17 ed—
18 (A) in subparagraph (Q), by striking
20 (B) in subparagraph (R), by striking the
23 ‘‘(S) an omission of a correct product iden-
24 tification number required under section 25C(h)
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1 (relating to credit for nonbusiness energy prop-
2 erty) to be included on a return.’’.
3 (h) EFFECTIVE DATES.—
5 vided by this subsection, the amendments made by
6 this section shall apply to property placed in service
8 (2) HOME ENERGY AUDITS.—The amendments
9 made by subsection (f) shall apply to amounts paid
10 or incurred after December 31, 2021.
11 (3) IDENTIFICATION NUMBER REQUIREMENT.—
12 The amendments made subsection (g) shall apply to

13 property placed in service after December 31, 2023.
14 SEC. 136302. RESIDENTIAL ENERGY EFFICIENT PROPERTY.
15 (a) EXTENSION OF CREDIT.—

16 (1) IN GENERAL.—Section 25D(h) is amended
17 by striking ‘‘December 31, 2023’’ and inserting
18 ‘‘December 31, 2033’’.
19 (2) APPLICATION OF PHASEOUT.—Section
20 25D(g) is amended—
21 (A) by striking ‘‘before January 1, 2023’’
22 in paragraph (2) and inserting ‘‘before January
23 1, 2022’’,
24 (B) by striking ‘‘and’’ at the end of para-
25 graph (2),
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1 (C) by redesignating paragraph (3) as
2 paragraph (5) and by inserting after paragraph
3 (2) the following new paragraphs:
4 ‘‘(3) in the case of property placed in service
5 after December 31, 2021, and before January 1,
6 2032, 30 percent,
7 ‘‘(4) in the case of property placed in service
8 after December 31, 2031, and before January 1,
9 2033, 26 percent, and’’, and
10 (D) by striking ‘‘December 31, 2022, and
11 before January 1, 2024’’ in paragraph (5) (as
12 so redesignated) and inserting ‘‘December 31,
13 2032, and before January 1, 2034’’.
14 (b) RESIDENTIAL ENERGY EFFICIENT PROPERTY
15 CREDIT FOR BATTERY STORAGE TECHNOLOGY.—
16 (1) IN GENERAL.—Section 25D(a) is amended
17 by striking ‘‘and’’ at the end of paragraph (5) and
18 by inserting after paragraph (6) the following new
19 paragraph:
20 ‘‘(7) the qualified battery storage technology ex-
21 penditures,’’.
22 (2) QUALIFIED BATTERY STORAGE TECH-
23 NOLOGY EXPENDITURE.—Section 25D(d) is amend-

24 ed by adding at the end the following new para-
25 graph:
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1 ‘‘(7) QUALIFIED BATTERY STORAGE TECH-
2 NOLOGY EXPENDITURE.—The term ‘qualified bat-

3 tery storage technology expenditure’ means an ex-
4 penditure for battery storage technology which—
5 ‘‘(A) is installed in connection with a
6 dwelling unit located in the United States and
7 used as a residence by the taxpayer, and
8 ‘‘(B) has a capacity of not less than 3 kilo-
9 watt hours.’’.
11 this section shall apply to expenditures made after Decem-
12 ber 31, 2021.
13 SEC. 136303. ENERGY EFFICIENT COMMERCIAL BUILDINGS
14 DEDUCTION.
15 (a) PLACED IN SERVICE REQUIREMENT.—Section

16 179D(c)(2) is amended by striking ‘‘the date that is 2
17 years before the date that construction of such property
18 begins’’ and inserting ‘‘the date that is 2 years before the
19 date such property is placed into service’’.
20 (b) TEMPORARY INCREASE IN DEDUCTION, ETC..—
21 Section 179D is amended by adding at the end the fol-

22 lowing:
23 ‘‘(i) TEMPORARY RULES.—
24 ‘‘(1) PERIOD OF APPLICATION.—The provisions
25 of this subsection shall apply only to taxable years
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1 beginning after December 31, 2021, and before Jan-
2 uary 1, 2032.
3 ‘‘(2) MODIFICATION OF EFFICIENCY STAND-
4 ARD.—Subsection (c)(1)(D) shall be applied by sub-

5 stituting ‘25’ for ‘50’.
6 ‘‘(3) MAXIMUM AMOUNT OF DEDUCTION.—
7 ‘‘(A) IN GENERAL.—The deduction under

8 subsection (a) with respect to any building for
9 any taxable year shall not exceed the excess (if
10 any) of—
11 ‘‘(i) the product of—
12 ‘‘(I) the applicable dollar value,
13 and
14 ‘‘(II) the square footage of the
15 building, over
16 ‘‘(ii) the aggregate amount of the de-
17 ductions under subsection (a) and para-
18 graph (6) with respect to the building for
19 the 3 taxable years immediately preceding
20 such taxable year (or, in the case of any
21 such deduction allowable to a person other
22 than the taxpayer, for any taxable year
23 ending during the 4-taxable-year period
24 ending with such taxable year).
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1 ‘‘(B) APPLICABLE DOLLAR VALUE.—For
2 purposes of paragraph (3)(A)(i), the applicable

3 dollar value shall be an amount equal to $2.50
4 increased (but not above $5.00) by $0.10 for
5 each percentage point by which the total annual
6 energy and power costs for the building are cer-
7 tified to be reduced by a percentage greater
8 than 25 percent.
9 ‘‘(C) APPLICATION OF INFLATION ADJUST-
10 MENT.—Subsection (g) shall be applied—

11 ‘‘(i) by substituting ‘2022’ for ‘2020’,
12 ‘‘(ii) by substituting ‘subsection
13 (i)(3)(B)’ for ‘subsection (b) or subsection
14 (d)(1)(A)’, and
15 ‘‘(iii) by substituting ‘2021’ for
16 ‘2019’.
17 ‘‘(D) LIMITATION TO APPLY IN LIEU OF
18 CURRENT LIMITATION AND PARTIAL ALLOW-
19 ANCE.—Subsections (b) and (d)(1) shall not

20 apply.
22 CREDIT AMOUNT FOR CERTAIN PROPERTY.—

24 property which does not satisfy the require-
25 ments of subparagraph (B), paragraph (3)(B)
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1 shall be applied by substituting ‘$0.50’ for
2 ‘$2.50’, ‘$.02’ for ‘$.10’, and ‘$1.00’ for
3 ‘$5.00’.
4 ‘‘(B) INCREASED CREDIT FOR CERTAIN
5 PROPERTY MEETING PROJECT REQUIRE-
6 MENTS.—
7 ‘‘(i) PROJECT REQUIREMENTS.—A

10 ‘‘(I) A project which commences
14 construction after the date of enact-
15 ment of this paragraph and satisfies
17 and (6).
18 ‘‘(III) A project with respect to
19 which initial construction is completed
20 and building modifications are made
21 as part of a qualified retrofit plan,
22 and which satisfies paragraphs (5)
23 and (6).
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3 any project are that the taxpayer shall ensure
4 that any laborers and mechanics employed by
5 contractors and subcontractors in the construc-
6 tion of any property or with respect to building
7 modifications made as part of a qualified ret-
8 rofit plan shall be paid wages at rates not less
9 than the prevailing rates for construction, alter-
10 ation, or repair of a similar character in the lo-
11 cality as most recently determined by the Sec-
12 retary of Labor, in accordance with subchapter
13 IV of chapter 31 of title 40, United States
14 Code.
17 MENTS.—In the case of any taxpayer which

18 fails to satisfy the requirement under subpara-
19 graph (A) with respect to any project or any
20 building modifications made as part of a quali-
21 fied retrofit plan, rules similar to the rules of
22 section 45(b)(8)(B) shall apply for purposes of
23 this paragraph.
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3 spect to any property are as follows:

8 struction of a project or building modifica-
9 tions made as part of a qualified retrofit
10 plan shall, subject to subparagraph (B),
14 tices.

21 cent,
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2 and
6 percent.

18 such work.

23 taxpayer who—
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5 paragraph.
21 gram.
23 paragraph—
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3 section 45(b)(9)(E)(i).

7 45(b)(9)(E)(ii).
8 ‘‘(7) ALLOCATION OF DEDUCTION BY CERTAIN
9 TAX-EXEMPT ENTITIES.—
10 ‘‘(A) IN GENERAL.—A specified tax-ex-

11 empt entity shall be treated in the same manner
12 as a Federal, State, or local government for
13 purposes of applying subsection (d)(4).
14 ‘‘(B) SPECIFIED TAX-EXEMPT ENTITY.—
15 For purposes of this paragraph, the term ‘spec-

16 ified tax-exempt entity’ means—
17 ‘‘(i) the United States, any State or
18 political subdivision thereof, any possession
19 of the United States, or any agency or in-
20 strumentality of any of the foregoing,
21 ‘‘(ii) any Indian tribal government
22 (within the meaning of section 139E), and
23 ‘‘(iii) any organization exempt from
24 tax imposed by this chapter.
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1 ‘‘(8) ALTERNATIVE DEDUCTION FOR ENERGY
2 EFFICIENT RETROFIT BUILDING PROPERTY.—

4 payer which elects (at such time and in such
5 manner as the Secretary, after consultation
6 with the administrator of the Environmental
7 Protection Agency, may provide) the application
8 of this paragraph with respect to any qualified
9 building, there shall be allowed as a deduction
10 for the taxable year which includes the date of
11 the qualifying final certification with respect to
12 the qualified retrofit plan of such building, an
13 amount equal to the lesser of—
14 ‘‘(i) the excess described in paragraph
15 (3) (determined by substituting ‘energy
16 usage intensity’ for ‘total annual energy
17 and power costs’ in subparagraph (B)
18 thereof), or
19 ‘‘(ii) the aggregate adjusted basis (de-
20 termined after taking into account all ad-
21 justments with respect to such taxable year
22 other than the reduction under subsection
23 (e)) of energy efficient retrofit building
24 property placed in service by the taxpayer
25 pursuant to such qualified retrofit plan.
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1 ‘‘(B) QUALIFIED RETROFIT PLAN.—For

3 retrofit plan’ means a written plan prepared by
4 a qualified professional which specifies modi-
5 fications to a building which, in the aggregate,
6 are expected to reduce such building’s energy
7 usage intensity by 25 percent or more in com-
8 parison to the baseline energy usage intensity of
9 such building. Such plan shall provide for a
10 qualified professional to—
11 ‘‘(i) as of any date during the 1-year
12 period ending on the date of the first cer-
13 tification described in clause (ii), certify
14 the energy usage intensity of such building
15 as of such date,
16 ‘‘(ii) certify the status of property in-
17 stalled pursuant to such plan as meeting
18 the requirements of clauses (ii) and (iii)
19 subparagraph (C), and
20 ‘‘(iii) as of any date that is more than
21 1 year after completion of the plan, certify
22 the energy usage intensity of such building
23 as of such date.
24 ‘‘(C) ENERGY EFFICIENT RETROFIT
25 BUILDING PROPERTY.—For purposes of this
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1 paragraph, the term ‘energy efficient retrofit
2 building property’ means property—
3 ‘‘(i) with respect to which depreciation
4 (or amortization in lieu of depreciation) is
5 allowable,
6 ‘‘(ii) which is installed on or in any
7 qualified building,
8 ‘‘(iii) which is installed as part of—
9 ‘‘(I) the interior lighting systems,
10 ‘‘(II) the heating, cooling, ven-
11 tilation, and hot water systems, or
12 ‘‘(III) the building envelope, and
13 ‘‘(iv) which is certified in accordance
14 with subparagraph (B)(ii) as meeting the
15 requirements of clauses (ii) and (iii).
16 ‘‘(D) QUALIFIED BUILDING.—For pur-
17 poses of this paragraph, the term ‘qualified
18 building’ means any building which—
19 ‘‘(i) is located in the United States,
20 and
21 ‘‘(ii) was originally placed in service
22 not less than 5 years before the establish-
23 ment of the qualified retrofit plan with re-
24 spect to such building.
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1 ‘‘(E) QUALIFYING FINAL CERTIFI-
2 CATION.—For purposes of this paragraph, the

3 term ‘qualifying final certification’ means, with
4 respect to any qualified retrofit plan, the certifi-
5 cation described in subparagraph (B)(iii) if the
6 energy usage intensity certified in such certifi-
7 cation is not more than 75 percent of the base-
8 line energy usage intensity of the building.
9 ‘‘(F) BASELINE ENERGY USAGE INTEN-
10 SITY.—
11 ‘‘(i) IN GENERAL.—The term ‘baseline

12 energy usage intensity’ means the energy
13 usage intensity certified under subpara-
14 graph (B)(i), as adjusted to take into ac-
15 count weather as compared to the energy
16 usage intensity determined under subpara-
17 graph (B)(iii)(I).
18 ‘‘(ii) DETERMINATION OF ADJUST-
19 MENT.—For purposes of clause (i), the ad-

20 justments described in such clause shall be
21 determined in such manner as the Sec-
22 retary, after consultation with the Admin-
23 istrator of the Environmental Protection
24 Agency, may provide.
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1 ‘‘(G) OTHER DEFINITIONS.—For purposes
2 of this paragraph—
3 ‘‘(i) ENERGY USAGE INTENSITY.—The
4 term ‘energy usage intensity’ means the

5 site energy usage intensity determined in
6 accordance with such regulations or other
7 guidance as the Secretary, after consulta-
8 tion with the Administrator of the Envi-
9 ronmental Protection Agency, may provide
10 and measured in British thermal units.
11 ‘‘(ii) QUALIFIED PROFESSIONAL.—
12 The term ‘qualified professional’ means an

13 individual who is a licensed architect or a
14 licenced engineer and meets such other re-
15 quirements as the Secretary may provide.
16 ‘‘(H) COORDINATION WITH DEDUCTION
17 OTHERWISE ALLOWED UNDER SUBSECTION
18 (a).—
20 building with respect to which an election
21 is made under subparagraph (A), the term
22 ‘energy efficient commercial building prop-
23 erty’ shall not include any energy efficient
24 retrofit building property with respect to
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1 which a deduction is allowable under this
2 paragraph.
3 ‘‘(ii) CERTAIN RULES NOT APPLICA-
4 BLE.—
5 ‘‘(I) IN GENERAL.—Except as
6 provided in subclause (II), subsection
7 (d) shall not apply for purposes of
8 this paragraph.
9 ‘‘(II) ALLOCATION OF DEDUC-
10 TION BY CERTAIN TAX-EXEMPT ENTI-
11 TIES.—Rules similar to subsection

12 (d)(4) (determined after application of
13 paragraph (5)) shall apply for pur-
14 poses of this paragraph.’’.
15 (c) EFFECTIVE DATE.—
17 vided in this subsection, the amendment made by
18 this section shall apply to taxable years beginning
20 (2) ALTERNATIVE DEDUCTION FOR ENERGY EF-
21 FICIENT RETROFIT BUILDING PROPERTY.—Para-
22 graph (6) of section 179D(i) of the Internal Revenue

23 Code of 1986 (as added by this section), and any
24 other provision of such section solely for purposes of
25 applying such paragraph, shall apply to property
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1 placed in service after December 31, 2021 (in tax-
2 able years ending after such date) if such property
3 is placed in service pursuant to qualified retrofit
4 plan (within the meaning of such section) estab-
5 lished after such date.
6 SEC. 136304. EXTENSION, INCREASE, AND MODIFICATIONS
7 OF NEW ENERGY EFFICIENT HOME CREDIT.
8 (a) EXTENSION OF CREDIT.—Section 45L(g) is

9 amended by striking ‘‘December 31, 2021’’ and inserting
10 ‘‘December 31, 2031’’.
11 (b) INCREASE IN CREDIT AMOUNTS.—Section
12 45L(a)(2) is amended to read as follows:
13 ‘‘(2) APPLICABLE AMOUNT.—For purposes of
14 paragraph (1), the applicable amount is an amount
15 equal to—
16 ‘‘(A) in the case of a dwelling unit which
17 is eligible to participate in the Energy Star
18 Residential New Construction Program or the
19 Energy Star Manufactured New Homes pro-
20 gram—
21 ‘‘(i) that is described in subsection
22 (c)(1)(A) (and not described in subsection
23 (c)(1)(B)), $2,500, and
24 ‘‘(ii) that is described in subsection
25 (c)(1)(B), $5000, and
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1 ‘‘(B) in the case of a dwelling which are
2 part of a building eligible to participate in the
3 Energy Star Multifamily New Construction
4 Program—
5 ‘‘(i) that is described in subsection
6 (c)(1)(A) (and not described in subsection
7 (c)(1)(B)), $500, and
8 ‘‘(ii) that is described in subsection
9 (c)(1)(B), $1000.’’.
10 (c) MODIFICATION OF ENERGY SAVING REQUIRE-
11 MENTS.—Section 45L(c) is amended to read as follows:
12 ‘‘(c) ENERGY SAVING REQUIREMENTS.—
13 ‘‘(1) IN GENERAL.—A dwelling unit meets the
14 energy saving requirements of this subsection if—
15 ‘‘(A) such dwelling unit meets the require-
16 ments of paragraph (2) or (3) (whichever is ap-
17 plicable), or
18 ‘‘(B) such dwelling unit is certified as a
19 zero energy ready home under the zero energy
20 ready home program of the Department of En-
21 ergy (or any successor program determined by
22 the Secretary, after consultation with the Sec-
23 retary of Energy) as in effect on January 1,
24 2022.
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1 ‘‘(2) SINGLE-FAMILY HOME REQUIREMENTS.—
2 A dwelling unit meets the requirements of this para-

3 graph if—
4 ‘‘(A) such dwelling unit meets—
5 ‘‘(i) in the case of a dwelling unit ac-
6 quired before January 1, 2025, the Energy
7 Star Single-Family New Homes National
8 Program Requirements 3.1, and
9 ‘‘(ii) in the case of a dwelling unit ac-
10 quired after December 31, 2024, the En-
11 ergy Star Single-Family New Homes Na-
12 tional Program Requirements 3.2,
13 ‘‘(B) such dwelling unit meets the most re-
14 cent Energy Star Single-Family New Homes
15 Program Requirements applicable to the loca-
16 tion of such dwelling unit (as in effect on the
17 latter of January 1, 2022 or January 1 of two
18 calendar years prior to the date the dwelling
19 was acquired), or
20 ‘‘(C) such dwelling unit meets the most re-
21 cent Energy Star Manufactured Home National
22 program requirements as in effect on the latter
23 of January 1, 2022 or January 1 of two cal-
24 endar years prior to the date such dwelling unit
25 is acquired.
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1 ‘‘(3) MULTI-FAMILY HOME REQUIREMENTS.—A
2 dwelling unit meets the requirements of this para-

3 graph if—
4 ‘‘(A) such dwelling unit meets the most re-
5 cent Energy Star Multifamily New Construction
6 National Program Requirements (as in effect
7 on either January 1, 2022 or January 1 of
8 three calendar years prior to the date the dwell-
9 ing was acquired, whichever is later), and
10 ‘‘(B) such dwelling unit meets the most re-
11 cent Energy Star Multifamily New Construction
12 Regional Program Requirements applicable to
13 the location of such dwelling unit (as in effect
14 on either January 1, 2022 or January 1 of
15 three calendar years prior to the date the dwell-
16 ing was acquired, whichever is later).’’.
17 (d) PREVAILING WAGE REQUIREMENT.—Section
18 45L is amended by redesignating subsection (g) as sub-
19 section (h) and by inserting after subsection (f) the fol-
20 lowing new subsection:
21 ‘‘(g) PREVAILING WAGE REQUIREMENT.—
22 ‘‘(1) IN GENERAL.—In the case of a qualifying
23 residence described in subsection (b)(2)(B) meeting
24 the prevailing wage requirements of paragraph (2),
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1 the credit amount allowed with respect to such resi-
2 dence shall be—
3 ‘‘(A) $2,500 in the case of a residence de-
4 scribed in subparagraph (A) of subsection
5 (c)(1) (and not described in subparagraph (B)
6 of such subsection), and
7 ‘‘(B) $5,000 in the case of a residence de-
8 scribed in (c)(1)(B).

11 scribed in this paragraph with respect to any
12 qualified residence are that the taxpayer shall
14 ployed by contractors and subcontractors in the
15 construction of such residence shall be paid
16 wages at rates not less than the prevailing rates
17 for construction, alteration, or repair of a simi-
18 lar character in the locality as most recently de-
19 termined by the Secretary of Labor, in accord-
20 ance with subchapter IV of chapter 31 of title
21 40, United States Code.

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1 graph (A) with respect to any qualified resi-
2 dence, rules similar to the rules of section
3 45(b)(8)(B) shall apply for purposes of this
4 paragraph.
9 (e) EFFECTIVE DATES.—The amendments made by
10 this section shall apply to dwelling units acquired after
11 December 31, 2021.
12 SEC. 136305. MODIFICATIONS TO INCOME EXCLUSION FOR
13 CONSERVATION SUBSIDIES.
14 (a) IN GENERAL.—Section 136(a) is amended—

15 (1) by striking ‘‘any subsidy provided’’ and in-
16 serting ‘‘any subsidy—
17 ‘‘(1) provided’’,
18 (2) by striking the period at the end and insert-
19 ing a comma, and
20 (3) by adding at the end the following new
21 paragraphs:
22 ‘‘(2) provided (directly or indirectly) by a public
23 utility to a customer, or by a State or local govern-
24 ment to a resident of such State or locality, for the
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1 purchase or installation of any water conservation or
2 efficiency measure,
3 ‘‘(3) provided (directly or indirectly) by a storm
4 water management provider to a customer, or by a
5 State or local government to a resident of such State
6 or locality, for the purchase or installation of any
7 storm water management measure, or
8 ‘‘(4) provided (directly or indirectly) by a State
9 or local government to a resident of such State or
10 locality for the purchase or installation of any waste-
11 water management measure, but only if such meas-
12 ure is with respect to the taxpayer’s principal resi-
13 dence.’’.
15 (1) DEFINITION OF WATER CONSERVATION OR
16 EFFICIENCY MEASURE AND STORM WATER MANAGE-
17 MENT MEASURE.—Section 136(c) is amended—

18 (A) by striking ‘‘ENERGY CONSERVATION
19 MEASURE’’ in the heading thereof and inserting
20 ‘‘DEFINITIONS’’,
21 (B) by striking ‘‘IN GENERAL’’ in the
22 heading of paragraph (1) and inserting ‘‘EN-
23 ERGY CONSERVATION MEASURE’’, and
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1 (C) by redesignating paragraph (2) as
2 paragraph (5) and by inserting after paragraph
3 (1) the following:
4 ‘‘(2) WATER CONSERVATION OR EFFICIENCY
5 MEASURE.—For purposes of this section, the term

6 ‘water conservation or efficiency measure’ means any
7 evaluation of water use, or any installation or modi-
8 fication of property, the primary purpose of which is
9 to reduce consumption of water or to improve the
10 management of water demand with respect to one or
11 more dwelling units.
12 ‘‘(3) STORM WATER MANAGEMENT MEASURE.—
13 For purposes of this section, the term ‘storm water

14 management measure’ means any installation or
15 modification of property primarily designed to re-
16 duce or manage amounts of storm water with re-
17 spect to one or more dwelling units.
18 ‘‘(4) WASTEWATER MANAGEMENT MEASURE.—
19 For purposes of this section, the term ‘wastewater

20 management measure’ means any installation or
21 modification of property primarily designed to man-
22 age wastewater (including septic tanks and cess-
23 pools) with respect to one or more dwelling units.’’.
24 (2) DEFINITION OF PUBLIC UTILITY.—Section
25 136(c)(5) (as redesignated by paragraph (1)(C)) is
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1 amended by striking subparagraph (B) and inserting
2 the following:
3 ‘‘(B) PUBLIC UTILITY.—The term ‘public
4 utility’ means a person engaged in the sale of
5 electricity, natural gas, or water to residential,
6 commercial, or industrial customers for use by
7 such customers.
8 ‘‘(C) STORM WATER MANAGEMENT PRO-
9 VIDER.—The term ‘storm water management

10 provider’ means a person engaged in the provi-
11 sion of storm water management measures to
12 the public.
13 ‘‘(D) PERSON.—For purposes of subpara-
14 graphs (B) and (C), the term ‘person’ includes
15 the Federal Government, a State or local gov-
16 ernment or any political subdivision thereof, or
17 any instrumentality of any of the foregoing.’’.
18 (3) CLERICAL AMENDMENTS.—
19 (A) The heading for section 136 is amend-

20 ed—
21 (i) by inserting ‘‘AND WATER’’ after
22 ‘‘ENERGY’’, and
23 (ii) by striking ‘‘PROVIDED BY PUB-
24 LIC UTILITIES’’.
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1 (B) The item relating to section 136 in the
2 table of sections of part III of subchapter B of
3 chapter 1 is amended—
4 (i) by inserting ‘‘and water’’ after
5 ‘‘energy’’, and
6 (ii) by striking ‘‘provided by public
7 utilities’’.
9 this section shall apply to amounts received after Decem-
10 ber 31, 2018.
11 (d) NO INFERENCE.—Nothing in this Act or the
12 amendments made by this Act shall be construed to create
13 any inference with respect to the proper tax treatment of
14 any subsidy received directly or indirectly from a public
15 utility, a storm water management provider, or a State
16 or local government for any water conservation measure
17 or storm water management measure before January 1,
18 2019.
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1 PART 4—GREENING THE FLEET AND
2 ALTERNATIVE VEHICLES
3 SEC. 136401. REFUNDABLE NEW QUALIFIED PLUG-IN ELEC-
4 TRIC DRIVE MOTOR VEHICLE CREDIT FOR IN-
5 DIVIDUALS.
6 (a) IN GENERAL.—Subpart C of part IV of sub-

8 tion 36B the following new section:
9 ‘‘SEC. 36C. NEW QUALIFIED PLUG-IN ELECTRIC DRIVE
10 MOTOR VEHICLES.
11 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in-

12 dividual, there shall be allowed as a credit against the tax
13 imposed by this subtitle for the taxable year an amount
14 equal to the sum of the credit amounts determined under
15 subsection (b) with respect to each new qualified plug-in
16 electric drive motor vehicle placed in service by the tax-
17 payer during the taxable year.
18 ‘‘(b) PER VEHICLE DOLLAR LIMITATION.—
19 ‘‘(1) IN GENERAL.—The amount determined
20 under this subsection with respect to any new quali-
21 fied plug-in electric drive motor vehicle is the sum
22 of the amounts determined under paragraphs (2)
23 through (5) with respect to such vehicle (not to ex-
24 ceed 50 percent of the purchase price of such vehi-
25 cle).
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1 ‘‘(2) BASE AMOUNT.—The amount determined
2 under this paragraph is $4,000.
3 ‘‘(3) BATTERY CAPACITY.—In the case of a new
4 qualified plug-in electric drive motor vehicle, the
5 amount determined under this paragraph is $3,500
6 if—
7 ‘‘(A) in the case of a vehicle placed in serv-
8 ice before January 1, 2027, such vehicle draws
9 propulsion energy from a battery with not less
10 than 40 kilowatt hours of capacity, and
11 ‘‘(B) in the case of a vehicle placed in serv-
12 ice after December 31, 2026, such vehicle
13 draws propulsion energy from a battery with
14 not less than 50 kilowatt hours of capacity.
15 ‘‘(4) DOMESTIC ASSEMBLY.—In the case of a
16 new qualified plug-in vehicle which satisfies the do-
17 mestic assembly qualifications, the amount deter-
18 mined under this paragraph is $4,500.
19 ‘‘(5) DOMESTIC CONTENT.—In the case of a
20 new qualified plug-in vehicle which satisfies domestic
21 content qualifications, the amount determined under
22 this paragraph is $500.
23 ‘‘(c) LIMITATION BASED ON MODIFIED ADJUSTED
24 GROSS INCOME.—
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1 ‘‘(1) IN GENERAL.—The amount of the credit
2 allowable under subsection (a) shall be reduced (but
3 not below zero) by $200 for each $1,000 (or fraction
4 thereof) by which the taxpayer’s modified adjusted
5 gross income exceeds the threshold amount. For
6 purposes of the preceding sentence, the term ‘modi-
7 fied adjusted gross income’ means adjusted gross in-
8 come increased by any amount excluded from gross
9 income under section 911, 931, or 933.
10 ‘‘(2) SPECIAL RULE FOR DETERMINATION OF
11 MODIFIED ADJUSTED GROSS INCOME.—The modified

12 adjusted gross income of the taxpayer that is taken
13 into account for purposes of paragraph (1) shall be
14 the lesser of—
15 ‘‘(A) the modified adjusted gross income
16 for the taxable year in which the credit is
17 claimed, or
18 ‘‘(B) the modified adjusted gross income
19 for the immediately preceding taxable year.
20 ‘‘(3) THRESHOLD AMOUNT.—For purposes of
21 paragraph (1), the term ‘threshold amount’ means—
22 ‘‘(A) $800,000 in the case of a joint return
23 or surviving spouse (half such amount for mar-
24 ried filing separately),
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1 ‘‘(B) $600,000 in the case of a head of
2 household, and
3 ‘‘(C) $400,000 in any other case.
4 ‘‘(d) MANUFACTURER’S SUGGESTED RETAIL PRICE
5 LIMITATION.—
7 under subsection (a) for a vehicle with a manufac-
8 turer’s suggested retail price in excess of the appli-
9 cable limitation.
10 ‘‘(2) APPLICABLE LIMITATION.—For purposes
11 of paragraph (1), the applicable limitation for each
12 vehicle classification is as follows:
13 ‘‘(A) SEDANS.—In the case of a sedan,
14 $55,000.
15 ‘‘(B) VANS.—In the case of a van,
16 $64,000.
17 ‘‘(C) SPORT UTILITY VEHICLES.—In the
18 case of a sport utility vehicle, $69,000.
19 ‘‘(D) PICKUP TRUCKS.—In the case of a
20 pickup truck, $74,000.
21 ‘‘(3) REGULATIONS.—For purposes of this sub-
22 section, the Secretary shall prescribe regulations for
23 determining vehicle classifications using criteria
24 similar to that employed by the Environmental Pro-
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1 tection Agency and the Department of Energy to de-
2 termine size and class of vehicles.
3 ‘‘(e) NEW QUALIFIED PLUG-IN ELECTRIC DRIVE
4 MOTOR VEHICLE.—For purposes of this section—
5 ‘‘(1) IN GENERAL.—The term ‘new qualified
6 plug-in electric drive motor vehicle’ means a motor
7 vehicle—
8 ‘‘(A) the original use of which commences
9 with the taxpayer,
10 ‘‘(B) which is acquired for use by the tax-
11 payer and not for resale,
12 ‘‘(C) which is made by a qualified manu-
13 facturer,
14 ‘‘(D) which is treated as a motor vehicle
15 for purposes of title II of the Clean Air Act,
16 ‘‘(E) which has a gross vehicle weight rat-
17 ing of less than 14,000 pounds,
18 ‘‘(F) which is propelled to a significant ex-
19 tent by an electric motor which draws electricity
20 from a battery which—
21 ‘‘(i) has a capacity of—
22 ‘‘(I) in the case of a vehicle
23 placed in service in 2022 or 2023, not
24 less than 7 kilowatt hours, and
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1 ‘‘(II) in the case of a vehicle
2 placed in service after 2023, not less
3 than 10 kilowatt hours, and
4 ‘‘(ii) is capable of being recharged
5 from an external source of electricity,
6 ‘‘(G) for which, in the case of a vehicle
7 placed into service after December 31, 2026,
8 final assembly is within the United States, and
9 ‘‘(H) is not of a character subject to an al-
10 lowance for depreciation.
11 ‘‘(2) MOTOR VEHICLE.—The term ‘motor vehi-
12 cle’ means any vehicle which is manufactured pri-
13 marily for use on public streets, roads, and highways
14 (not including a vehicle operated exclusively on a rail
15 or rails) and which has at least 4 wheels.
16 ‘‘(3) QUALIFIED MANUFACTURER.—The term
17 ‘qualified manufacturer’ means any manufacturer
18 (within the meaning of the regulations prescribed by
20 Agency for purposes of the administration of title II
21 of the Clean Air Act (42 U.S.C. 7521 et seq.) which
22 enters into a written agreement with the Secretary
23 under which such manufacturer agrees—
24 ‘‘(A) to ensure that each vehicle manufac-
25 tured by such manufacturer after the later of
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1 the date on which such agreement takes effect
2 or December 31, 2021, and that meets the re-
3 quirements of subparagraphs (D), (E), and (F)
4 of paragraph (1) and paragraph (6) of sub-
5 section (e) is labeled with a unique vehicle iden-
6 tification number, and
7 ‘‘(B) to make periodic written reports to
8 the Secretary (at such times and in such man-
9 ner as the Secretary may provide) providing
10 such vehicle identification numbers and such
11 other information related to such vehicle as the
13 ‘‘(4) BATTERY CAPACITY.—The term ‘capacity’
14 means, with respect to any battery, the quantity of
15 electricity which the battery is capable of storing, ex-
16 pressed in kilowatt hours, as measured from a 100
17 percent state of charge to a 0 percent state of
18 charge.
19 ‘‘(f) SPECIAL RULES.—
21 subtitle, the basis of any property for which a credit
22 is allowable under subsection (a) shall be reduced by
23 the amount of such credit so allowed.
24 ‘‘(2) NO DOUBLE BENEFIT.—The amount of
25 any deduction or other credit allowable under this
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1 chapter for a vehicle for which a credit is allowable
2 under subsection (a) shall be reduced by the amount
3 of credit allowed under such subsection for such ve-
4 hicle.
5 ‘‘(3) PROPERTY USED OUTSIDE UNITED STATES
6 NOT QUALIFIED.—No credit shall be allowable under

7 subsection (a) with respect to any property referred
8 to in section 50(b)(1).
10 ulations, provide for recapturing the benefit of any
11 credit allowable under subsection (a) with respect to
12 any property which ceases to be property eligible for
13 such credit.
14 ‘‘(5) ELECTION NOT TO TAKE CREDIT.—No
15 credit shall be allowed under subsection (a) for any

16 vehicle if the taxpayer elects to not have this section
17 apply to such vehicle.
18 ‘‘(6) INTERACTION WITH AIR QUALITY AND
19 MOTOR VEHICLE SAFETY STANDARDS.—A vehicle

20 shall not be considered eligible for a credit under
21 this section unless such vehicle is in compliance
22 with—
23 ‘‘(A) the applicable provisions of the Clean
24 Air Act for the applicable make and model year
25 of the vehicle (or applicable air quality provi-
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1 sions of State law in the case of a State which
2 has adopted such provision under a waiver
3 under section 209(b) of the Clean Air Act), and
4 ‘‘(B) the motor vehicle safety provisions of
5 sections 30101 through 30169 of title 49,
6 United States Code.
7 ‘‘(g) CREDIT ALLOWED FOR 2 AND 3-WHEELED
8 PLUG-IN ELECTRIC VEHICLES.—
9 ‘‘(1) IN GENERAL.—In the case of a qualified
10 2- or 3-wheeled plug-in electric vehicle—
11 ‘‘(A) there shall be allowed as a credit
12 against the tax imposed by this subtitle for the
13 taxable year an amount equal to the sum of the
14 applicable amount with respect to each such
15 qualified 2- or 3-wheeled plug-in electric vehicle
16 placed in service by the taxpayer during the
17 taxable year, and
18 ‘‘(B) the amount of the credit allowed
19 under subparagraph (A) shall be treated as a
20 credit allowed under subsection (a).
21 ‘‘(2) APPLICABLE AMOUNT.—For purposes of
22 paragraph (1), the applicable amount is an amount
23 equal to the lesser of—
24 ‘‘(A) 10 percent of the cost of the qualified
25 2- or 3-wheeled plug-in electric vehicle, or
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1 ‘‘(B) $2,500.
2 ‘‘(3) QUALIFIED 2- OR 3-WHEELED PLUG-IN
3 ELECTRIC VEHICLE.—The term ‘qualified 2- or 3-

4 wheeled plug-in electric vehicle’ means any vehicle
5 which—
6 ‘‘(A) has 2 or 3 wheels,
7 ‘‘(B) meets the requirements of subpara-
8 graphs (A), (B), (C), (E), (F), and (G) of sub-
9 section (e)(1) (determined by substituting ‘2.5
10 kilowatt hours’ for ‘7 kilowatt hours’ in sub-
11 paragraph (F)(i)(I) and by substituting ‘2.5 kil-
12 owatt hours’ for ‘10 kilowatt hours’ in subpara-
13 graph (F)(i)(II)),
14 ‘‘(C) is manufactured primarily for use on
15 public streets, roads, and highways, and
16 ‘‘(D) is capable of achieving a speed of 45
17 miles per hour or greater.
18 ‘‘(h) VIN NUMBER REQUIREMENT.—No credit shall
19 be allowed under this section with respect to any vehicle
20 unless the taxpayer includes the vehicle identification
21 number of such vehicle on the return of tax for the taxable
22 year.
23 ‘‘(i) TREATMENT OF CERTAIN POSSESSIONS.—
24 ‘‘(1) PAYMENTS TO POSSESSIONS WITH MIRROR
25 CODE TAX SYSTEMS.—The Secretary shall pay to
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1 each possession of the United States which has a
2 mirror code tax system amounts equal to the loss (if
3 any) to that possession by reason of the application
4 of the provisions of this section (determined without
5 regard to this subsection). Such amounts shall be
6 determined by the Secretary based on information
7 provided by the government of the respective posses-
8 sion.
9 ‘‘(2) PAYMENTS TO OTHER POSSESSIONS.—The
10 Secretary shall pay to each possession of the United

11 States which does not have a mirror code tax system
12 amounts estimated by the Secretary as being equal
13 to the aggregate benefits (if any) that would have
14 been provided to residents of such possession by rea-
15 son of the provisions of this section if a mirror code
16 tax system had been in effect in such possession.
17 The preceding sentence shall not apply unless the re-
18 spective possession has a plan which has been ap-
19 proved by the Secretary under which such possession
20 will promptly distribute such payments to its resi-
21 dents.
22 ‘‘(3) MIRROR CODE TAX SYSTEM; TREATMENT
23 OF PAYMENTS.—Rules similar to the rules of para-

24 graphs (4) and (5) of section 21(h) shall apply for
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1 ‘‘(j) ASSEMBLY AND CONTENT QUALIFICATIONS.—
3 ‘‘(1) DOMESTIC ASSEMBLY QUALIFICATIONS.—
4 The term ‘domestic assembly qualifications’ means,

5 with respect to any new qualified plug-in electric ve-
6 hicle, that the final assembly of such vehicle occurs
7 at a plant, factory, or other place which is operating
8 under a collective bargaining agreement negotiated
9 by an employee organization (as defined in section
10 412(c)(4)), determined in a manner consistent with
11 section 7701(a)(46).
12 ‘‘(2) DOMESTIC CONTENT QUALIFICATIONS.—
13 The term ‘domestic content qualifications’ means,

14 with respect to any model of a new qualified plug-
15 in electric vehicle, that vehicles of that model—
16 ‘‘(A) are assembled by a manufacturer
17 which utilizes not less than 50 percent domestic
18 content in the component parts for final assem-
19 bly of such vehicles, and
20 ‘‘(B) are powered by battery cells which
21 are manufactured in the United States (with
22 suchbattery cells to be included for purposes of
23 the requirement described in subparagraph
24 (A)), as certified by the manufacturer, at such
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1 time, and in such form and manner, as the Sec-
2 retary may prescribe.
3 ‘‘(3) FINAL ASSEMBLY.—The term ‘final assem-
4 bly’ means the process by which a manufacturer pro-
5 duces a new qualified plug-in electric vehicle at, or
6 through the use of, a plant, factory, or other place
7 from which the vehicle is delivered to a dealer or im-
8 porter with all component parts necessary for the
9 mechanical operation of the vehicle included with the
10 vehicle, whether or not the component parts are per-
11 manently installed in or on the vehicle.
12 ‘‘(k) TERMINATION.—No credit shall be allowed
13 under this section with respect to any vehicle acquired
14 after December 31, 2031.’’.
15 (b) TRANSFER OF CREDIT.—Subsection (f) of section
16 36C is amended by adding at the end the following new
17 paragraphs:
18 ‘‘(7) IN GENERAL.—Subject to such regulations
19 or other guidance as the Secretary determines nec-
20 essary or appropriate, if, with respect to the credit
21 allowed under subsection (a) for any taxable year,
22 the taxpayer elects the application of this subpara-
23 graph for such taxable year with respect to such
24 credit, the eligible entity specified in such election,
25 and not the taxpayer who has purchased or leased
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1 the vehicle, shall be treated as the taxpayer for pur-
2 poses of this title with respect to such credit.
3 ‘‘(8) ELIGIBLE ENTITY.—For purposes of this
4 paragraph, the term ‘eligible entity’ means, with re-
5 spect to the vehicle for which the credit is allowed
6 under subsection (a), the dealer which sold such ve-
7 hicle to the taxpayer and has—
8 ‘‘(A) subject to paragraph (10), registered
9 with the Secretary for purposes of this para-
10 graph, at such time, and in such form and
11 manner, as the Secretary may prescribe,
12 ‘‘(B) prior to the election described in
13 paragraph (7), disclosed to the taxpayer pur-
14 chasing such vehicle—
15 ‘‘(i) the manufacturer’s suggested re-
16 tail price,
17 ‘‘(ii) the value of the credit allowed or
18 other incentive available for the purchase
19 or lease of such vehicle,
20 ‘‘(iii) all fees associated with the pur-
21 chase or lease of such vehicle, and
22 ‘‘(iv) the amount provided by the deal-
23 er to such taxpayer as a condition of the
24 election described in paragraph (7),
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1 ‘‘(C) made payment to such taxpayer
2 (whether in cash or in the form of a partial
3 payment or down payment for the purchase of
4 such vehicle) in an amount equal to the credit
5 otherwise allowable to such taxpayer, and
6 ‘‘(D) with respect to any incentive other-
7 wise available for the purchase of a vehicle for
8 which a credit is allowed under this section, in-
9 cluding any incentive in the form of a rebate or
10 discount provided by the dealer or manufac-
11 turer, ensured that—
12 ‘‘(i) the availability or use of such in-
13 centive shall not limit the ability of a tax-
14 payer to make an election described in
15 paragraph (7), and
16 ‘‘(ii) such election shall not limit the
17 value or use of such incentive.
18 ‘‘(9) TIMING.—An election described in para-
19 graph (7) shall be made by the taxpayer not later
20 than the date on which the vehicle for which the
21 credit is allowed under subsection (a) is purchased.
22 ‘‘(10) REVOCATION OF REGISTRATION.—Upon
23 determination by the Secretary that a dealer has

24 failed to comply with the requirements described in
25 paragraph (8), the Secretary may revoke the reg-
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1 istration (as described in subparagraph (A) of such
2 subparagraph) of such dealer.
3 ‘‘(11) TAX TREATMENT OF PAYMENTS.—With
4 respect to any payment described in paragraph

5 (8)(C), such payment—
6 ‘‘(A) shall not be includible in the gross in-
7 come of the taxpayer, and
8 ‘‘(B) with respect to the dealer, shall not
9 be deductible under this title.
10 ‘‘(12) ADVANCE PAYMENT TO REGISTERED
11 DEALERS.—

13 establish a program to make advance payments
14 to any eligible entity in an amount equal to the
15 cumulative amount of the credits allowed under
16 subsection (a) with respect to any vehicles sold
17 by such entity for which an election described
18 in paragraph (1) has been made.
19 ‘‘(B) EXCESSIVE PAYMENTS.—Rules simi-
20 lar to the rules of section 6417(c)(8) shall apply
21 for purposes of this subparagraph.
22 ‘‘(13) DEALER.—For purposes of this para-
23 graph, the term ‘dealer’ means a person licensed by
24 a State, the District of Columbia, the Common-
25 wealth of Puerto Rico, any other territory or posses-
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1 sion of the United States, or an Indian Tribe (as de-
2 fined in section 4 of the Indian Self-Determination
3 and Education Assistance Act (25 U.S.C. 5304)) to
4 engage in the sale of vehicles.’’.
5 (c) REPEAL OF NONREFUNDABLE NEW QUALIFIED
6 PLUG-IN ELECTRIC DRIVE MOTOR VEHICLE CREDIT.—
7 Subpart B of part IV of subchapter A of chapter 1 is
8 amended by striking section 30D (and by striking the item
9 relating to such section in the table of sections of such
10 subpart).
12 (1) Section 1016(a)(37) is amended by striking
13 ‘‘section 30D(f)(1)’’ and inserting ‘‘section
14 36C(f)(1)’’.
15 (2) Section 6211(b)(4)(A) is amended by insert-
16 ing ‘‘36C,’’ after ‘‘36B,’’.
17 (3) Section 6213(g)(2), as amended by the pre-
18 ceding provisions of this Act, is amended—
19 (A) in subparagraph (R), by striking
21 (B) in subparagraph (S), by striking the
24 ‘‘(T) an omission of a correct vehicle iden-
25 tification number required under section 36C(f)
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1 (relating to credit for new qualified plug-in elec-
2 tric drive motor vehicles) to be included on a re-
3 turn.’’.
4 (4) Section 6501(m) is amended by striking
5 ‘‘30D(e)(4)’’ and inserting ‘‘36C(f)(5)’’.
6 (5) Section 166(b)(5)(A)(ii) of title 23, United
7 States Code, is amended by striking ‘‘section
8 30D(d)(1)’’ and inserting ‘‘section 36C(e)(1)’’.
10 States Code, is amended by inserting ‘‘36C,’’ after
11 ‘‘36B,’’.
12 (7) The table of sections for subpart C of part
14 serting after the item relating to section 36B the fol-
15 lowing new item:
‘‘Sec. 36C. New qualified plug-in electric drive motor vehicles.’’.

17 (1) The amendments made by subsections (a),
18 (c), and (d) of this section shall apply to vehicles ac-
19 quired after December 31, 2021.
20 (2) The amendments made by subsection (b)
21 shall apply to vehicles purchased or leased after De-
22 cember 31, 2022.
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1 SEC. 136402. CREDIT FOR PREVIOUSLY-OWNED QUALIFIED
2 PLUG-IN ELECTRIC DRIVE MOTOR VEHICLES.

5 visions of this Act, is amended by inserting after section
6 36C the following new section:
7 ‘‘SEC. 36D. PREVIOUSLY-OWNED QUALIFIED PLUG-IN ELEC-
8 TRIC DRIVE MOTOR VEHICLES.
9 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of a

10 qualified buyer who during a taxable year places in service
11 a previously-owned qualified plug-in electric drive motor
12 vehicle, there shall be allowed as a credit against the tax
13 imposed by this subtitle for the taxable year an amount
14 equal to the sum of—
15 ‘‘(1) $1,250, plus
16 ‘‘(2) in the case of a vehicle which draws pro-
17 pulsion energy from a battery which exceeds 4 kilo-
18 watt hours of capacity (determined at the time of
19 sale), the lesser of—
20 ‘‘(A) $1,250, and
21 ‘‘(B) the product of $208.50 and such ex-
22 cess kilowatt hours.
24 ‘‘(1) SALE PRICE.—The credit allowed under
25 subsection (a) with respect to sale of a vehicle shall
26 not exceed 30 percent of the sale price.
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1 ‘‘(2) ADJUSTED GROSS INCOME.—The amount
2 which would (but for this paragraph) be allowed as
3 a credit under subsection (a) shall be reduced (but
5 thereof) by which the taxpayer’s adjusted gross in-
6 come exceeds—
7 ‘‘(A) $150,000 in the case of a joint return
8 or a surviving spouse (as defined in section
9 2(a)),
10 ‘‘(B) $112,500 in the case of a head of
11 household (as defined in section 2(b)), and
12 ‘‘(C) $75,000 in the case of a taxpayer not
13 described in paragraph (1) or (2).
15 ‘‘(1) PREVIOUSLY-OWNED QUALIFIED PLUG-IN
16 ELECTRIC DRIVE MOTOR VEHICLE.—The term ‘pre-

17 viously-owned qualified plug-in electric drive motor
18 vehicle’ means, with respect to a taxpayer, a motor
19 vehicle—
20 ‘‘(A) the model year of which is at least 2
21 earlier than the calendar year in which the tax-
22 payer acquires such vehicle,
23 ‘‘(B) the original use of which commences
24 with a person other than the taxpayer,
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1 ‘‘(C) which is acquired by the taxpayer in
2 a qualified sale,
3 ‘‘(D) registered by the taxpayer for oper-
4 ation in a State or possession of the United
5 States, and
6 ‘‘(E) which meets the requirements of sub-
7 paragraphs (C), (D), (E), (F), and (G) of sec-
8 tion 36C(e)(1).
9 ‘‘(2) QUALIFIED SALE.—The term ‘qualified
10 sale’ means a sale of a motor vehicle—
11 ‘‘(A) by a seller who holds such vehicle in
12 inventory (within the meaning of section 471)
13 for sale or lease,
14 ‘‘(B) for a sale price not to exceed
15 $25,000, and
16 ‘‘(C) which is the first transfer since the
17 date of the enactment of this section to a per-
18 son other than the person with whom the origi-
19 nal use of such vehicle commenced.
20 ‘‘(3) QUALIFIED BUYER.—The term ‘qualified
21 buyer’ means, with respect to a sale of a motor vehi-
22 cle, a taxpayer—
23 ‘‘(A) who is an individual,
24 ‘‘(B) who purchases such vehicle for use
25 and not for resale,
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1 ‘‘(C) with respect to whom no deduction is
2 allowable with respect to another taxpayer
3 under section 151,
4 ‘‘(D) who has not been allowed a credit
5 under this section for any sale during the 3-
6 year period ending on the date of the sale of
7 such vehicle, and
8 ‘‘(E) who possesses a certificate issued by
9 the seller that certifies—
10 ‘‘(i) that the vehicle is a previously-
11 owned qualified plug-in electric drive motor
12 vehicle,
13 ‘‘(ii) the vehicle identification number
14 of such vehicle,
15 ‘‘(iii) the capacity of the battery at
16 time of sale, and
17 ‘‘(iv) such other information as the
19 ‘‘(4) MOTOR VEHICLE; CAPACITY.—The terms
20 ‘motor vehicle’ and ‘capacity’ have the meaning
21 given such terms in paragraphs (2) and (4) of sec-
22 tion 36C(e), respectively.
23 ‘‘(d) VIN NUMBER REQUIREMENT.—No credit shall
24 be allowed under subsection (a) with respect to any vehicle
25 unless the taxpayer includes the vehicle identification
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1 number of such vehicle on the return of tax for the taxable
2 year.
3 ‘‘(e) APPLICATION OF CERTAIN RULES.—For pur-
4 poses of this section, rules similar to the rules of para-
5 graphs (1), (2), (4), (5), (6) and (7) of section 36C(f)
6 shall apply for purposes of this section.
7 ‘‘(f) CERTIFICATE SUBMISSION REQUIREMENT.—
8 The Secretary may require that the issuer of the certifi-
9 cate described in subsection (c)(3)(E) submit such certifi-
10 cate to the Secretary at the time and in the manner re-
11 quired by the Secretary.
12 ‘‘(g) TREATMENT OF CERTAIN POSSESSIONS.—

18 of the provisions of this section. Such amounts shall
19 be determined by the Secretary based on information
21 sion.

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9 dents.

14 ‘‘(h) TERMINATION.—No credit shall be allowed
18 (1) Section 6211(b)(4)(A), as amended by the
19 preceding provisions of this Act, is amended by in-
20 serting ‘‘36D,’’ after ‘‘36C,’’.
23 (A) in subparagraph (S), by striking
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1 (B) in subparagraph (T), by striking the
4 ‘‘(U) an omission of a correct vehicle iden-
5 tification number required under section
6 36D(d) (relating to credit for previously-owned
7 qualified plug-in electric drive motor vehicles) to
8 be included on a return.’’.
9 (3) Paragraph (2) of section 1324(b) of title
10 31, United States Code, as amended by the pre-
11 ceding provisions of this Act, is amended by insert-
12 ing ‘‘36D,’’ after ‘‘36C,’’.
14 for subpart C of part IV of subchapter A of chapter 1,
15 as amended by the preceding provisions of this Act, is
16 amended by inserting after the item relating to section
17 36C the following new item:
‘‘Sec. 36D. Previously-owned qualified plug-in electric drive motor vehicles.’’.

19 this section shall apply to vehicles acquired after Decem-
20 ber 31, 2021.
21 SEC. 136403. QUALIFIED COMMERCIAL ELECTRIC VEHI-
22 CLES.

24 chapter A of chapter 1 is amended by adding at the end
25 the following new section:
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1 ‘‘SEC. 45Y. CREDIT FOR QUALIFIED COMMERCIAL ELEC-
2 TRIC VEHICLES.

4 qualified commercial electric vehicle credit for any taxable
5 year is an amount equal to the sum of the credit amounts
6 determined under subsection (b) with respect to each
7 qualified commercial electric vehicle placed in service by
8 the taxpayer during the taxable year.
9 ‘‘(b) PER VEHICLE AMOUNT.—The amount deter-
10 mined under this subsection with respect to any qualified
11 commercial electric vehicle shall be equal to 30 percent
12 of the basis of such vehicle.
13 ‘‘(c) QUALIFIED COMMERCIAL ELECTRIC VEHI-
14 CLE.—For purposes of this section, the term ‘qualified
15 commercial electric vehicle’ means any vehicle which—
16 ‘‘(1) meets the requirements of subparagraphs
17 (A) and (C) of section 36C(e)(1) without regard to
18 any gross vehicle weight rating, and is acquired for
19 use or lease by the taxpayer and not for resale,
20 ‘‘(2) either—
21 ‘‘(A) meets the requirements of subpara-
22 graph (D) of section 36C(e)(1), or
23 ‘‘(B) is mobile machinery, as defined in
24 section 4053(8),
25 ‘‘(3) is primarily propelled by an electric motor
26 which draws electricity from a battery which—
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1 ‘‘(A) has a capacity of not less than 30 kil-
2 owatt hours,
3 ‘‘(B) is capable of being recharged from an
4 external source of electricity,
5 ‘‘(C) is not powered or charged by an in-
6 ternal combustion engine, or
7 ‘‘(D) is a new qualified fuel cell motor ve-
8 hicle described in subparagraphs (A) and (B) of
9 section 30B(b)(3), and
10 ‘‘(4) is of a character subject to the allowance
11 for depreciation.
12 ‘‘(d) SPECIAL RULES.—
13 ‘‘(1) IN GENERAL.—Rules similar to the rules
14 under subsection (f) of section 36C shall apply for
16 ‘‘(2) PROPERTY USED BY TAX-EXEMPT ENTI-
17 TY.—In the case of a vehicle the use of which is de-

18 scribed in paragraph (3) or (4) of section 50(b) and
19 which is not subject to a lease, the person who sold
20 such vehicle to the person or entity using such vehi-
21 cle shall be treated as the taxpayer that placed such
22 vehicle in service, but only if such person clearly dis-
23 closes to such person or entity in a document the
24 amount of any credit allowable under subsection (a)
25 with respect to such vehicle.
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1 ‘‘(e) VIN NUMBER REQUIREMENT.—No credit shall
2 be determined under subsection (a) with respect to any
3 vehicle unless the taxpayer includes the vehicle identifica-
4 tion number of such vehicle on the return of tax for the
5 taxable year.
6 ‘‘(f) TERMINATION.—No credit shall be determined
10 (1) Section 38(b) is amended by striking para-
11 graph (30) and inserting the following:
12 ‘‘(30) the qualified commercial electric vehicle
13 credit determined under section 45Y,’’.
16 (A) in subparagraph (T), by striking
18 (B) in subparagraph (U), by striking the
21 ‘‘(V) an omission of a correct vehicle iden-
22 tification number required under section 45Y(e)
23 (relating to commercial electric vehicle credit)
24 to be included on a return.’’.
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2 IV of subchapter A of chapter 1 is amended by add-
3 ing at the end the following new item:
‘‘Sec. 45Y. Qualified commercial electric vehicle credit.’’.

5 this section shall apply to vehicles acquired after Decem-
6 ber 31, 2021.
7 SEC. 136404. QUALIFIED FUEL CELL MOTOR VEHICLES.
8 (a) IN GENERAL.—Section 30B(k)(1) is amended by

9 striking ‘‘December 31, 2021’’ and inserting ‘‘December
10 31, 2031’’.
11 (b) NEW QUALIFIED FUEL CELL MOTOR VEHI-
12 CLE.—Section 30B(b) is amended by striking ‘‘and’’ at
13 the end of subparagraph (D), by striking the period at
14 the end of subparagraph (E) and inserting ‘‘, and’’, and
15 by adding at the end the following new subparagraph:
16 ‘‘(F) which is not property of a character
17 subject to an allowance for depreciation.’’.
20 December 31, 2021.
21 SEC. 136405. ALTERNATIVE FUEL REFUELING PROPERTY
22 CREDIT.
23 (a) IN GENERAL.—Section 30C(g) is amended by

24 striking ‘‘December 31, 2021’’ and inserting ‘‘December
25 31, 2031’’.
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1 (b) ADDITIONAL CREDIT FOR CERTAIN ELECTRIC
2 CHARGING PROPERTY.—
3 (1) IN GENERAL.—Section 30C(a) is amend-
4 ed—
5 (A) by striking ‘‘equal to 30 percent’’ and
6 inserting the following: ‘‘equal to the sum of—
7 ‘‘(1) 30 percent’’,
8 (B) by striking the period at the end and
9 inserting ‘‘, plus’’, and
11 paragraph:
12 ‘‘(2) 20 percent of so much of such cost as ex-
13 ceeds the limitation under subsection (b)(1) that
14 does not exceed the amount of cost attributable to
15 qualified alternative vehicle refueling property (de-
16 termined without regard to subsection (c)(1) and as
17 if only electricity, and fuel at least 85 percent of the
18 volume of which consists of hydrogen, were treated
19 as clean-burning fuels for purposes of section
20 179A(d)) which—
21 ‘‘(A) is intended for general public use
22 with no associated fee or payment arrangement,
23 ‘‘(B) is intended for general public use and
24 accepts payment via a credit card reader, in-
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1 cluding a credit card reader that uses
2 contactless technology, or
3 ‘‘(C) is intended for use exclusively by
4 fleets of commercial or governmental vehicles.’’.
6 30C(b) is amended—
7 (A) by striking ‘‘The credit allowed under
8 subsection (a)’’ and inserting ‘‘The amount of
9 cost taken into account under subsection
10 (a)(1)’’,
11 (B) by striking ‘‘$30,000’’ and inserting
12 ‘‘$100,000’’, and
13 (C) by striking ‘‘$1,000’’ and inserting
14 ‘‘$3,333.33’’.
15 (3) BIDIRECTIONAL CHARGING EQUIPMENT IN-
16 CLUDED AS QUALIFIED ALTERNATIVE FUEL VEHI-
17 CLE REFUELING PROPERTY.—Section 30C(c) is

18 amended—
19 (A) by striking ‘‘For purposes of this sec-
20 tion, the term’’ and inserting ‘‘For purposes of
21 this section—
22 ‘‘(1) IN GENERAL.—The term’’, and
23 (B) by adding at the end the following new
24 paragraph:
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1 ‘‘(2) BIDIRECTIONAL CHARGING EQUIPMENT.—
2 Property shall not fail to be treated as qualified al-

3 ternative vehicle refueling property solely because
4 such property—
5 ‘‘(A) is capable of charging the battery of
6 a motor vehicle propelled by electricity, and
7 ‘‘(B) allows discharging electricity from
8 such battery to an electric load external to such
9 motor vehicle.’’.
10 (c) CERTAIN ELECTRIC CHARGING STATIONS IN-
11 CLUDED AS QUALIFIED ALTERNATIVE FUEL VEHICLE
12 REFUELING PROPERTY.—Section 30C is amended by re-
13 designating subsections (f) and (g) as subsections (g) and
14 (h), respectively, and by inserting after subsection (e) the
15 following:
16 ‘‘(f) SPECIAL RULE FOR ELECTRIC CHARGING STA-
17 TIONS FOR CERTAIN VEHICLES WITH 2 OR 3 WHEELS.—
19 ‘‘(1) IN GENERAL.—The term ‘qualified alter-
20 native fuel vehicle refueling property’ includes any
21 property described in subsection (c) for the re-
22 charging of a motor vehicle described in paragraph
23 (2) that is propelled by electricity, but only if the
24 property—
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1 ‘‘(A) meets the requirements of subsection
2 (a)(2), and
3 ‘‘(B) is of a character subject to deprecia-
4 tion.
5 ‘‘(2) MOTOR VEHICLE.—A motor vehicle is de-
6 scribed in this paragraph if the motor vehicle—
7 ‘‘(A) is manufactured primarily for use on
8 public streets, roads, or highways (not including
9 a vehicle operated exclusively on a rail or rails),
10 and
11 ‘‘(B) has at least 2, but not more than 3,
12 wheels.’’.
13 (d) WAGE AND APPRENTICESHIP REQUIREMENTS.—
14 Section 30C, as amended by this section, is further
15 amended by redesignating subsections (g) and (h) as sub-
16 sections (h) and (i) and by inserting after subsection (f)
17 the following new subsection:
18 ‘‘(g) WAGE AND APPRENTICESHIP REQUIRE-
19 MENTS.—
21 CREDIT AMOUNT.—

23 qualified alternative fuel vehicle refueling prop-
24 erty which does not satisfy the requirements of
25 subparagraph (B), the amount of the credit de-
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1 termined under subsection (a) shall be 20 per-
2 cent of such amount (determined without re-
3 gard to this sentence).
4 ‘‘(B) INCREASED CREDIT FOR CERTAIN
5 QUALIFIED ALTERNATIVE FUEL VEHICLE RE-
6 FUELING PROPERTY MEETING PROJECT RE-
7 QUIREMENTS.—

9 qualified alternative fuel vehicle refueling
10 property which meets the project require-
11 ments of this subparagraph, subparagraph
12 (A) shall not apply.

16 ‘‘(I) A project which commences
19 ‘‘(II) A project which satisfies
21 and (3).

25 any qualified alternative fuel vehicle refueling
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1 property are that the taxpayer shall ensure that
2 any laborers and mechanics employed by con-
3 tractors and subcontractors in the construction
4 of such property shall be paid wages at rates
5 not less than the prevailing rates for construc-
6 tion, alteration, or repair of a similar character
7 in the locality as most recently determined by
8 the Secretary of Labor, in accordance with sub-
9 chapter IV of chapter 31 of title 40, United
10 States Code.

15 graph (A) with respect to such qualified alter-
16 native fuel vehicle refueling property, rules
17 similar to the rules of section 45(b)(8)(B) shall
18 apply for purposes of this paragraph.

21 spect to the construction of any qualified alternative
22 fuel vehicle refueling property are as follows:
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2 struction on any project shall, subject to

13 cent,
18 and
22 percent.

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9 such work.

14 taxpayer who—
21 paragraph.
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12 gram.
14 paragraph—
17 section 45(b)(9)(E)(i).

21 45(b)(9)(E)(ii).
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1 (e) EFFECTIVE DATE.—The amendment made by
4 SEC. 136406. REINSTATEMENT AND EXPANSION OF EM-
5 PLOYER-PROVIDED FRINGE BENEFITS FOR
6 BICYCLE COMMUTING.
7 (a) REPEAL OF SUSPENSION OF EXCLUSION FOR
8 QUALIFIED BICYCLE COMMUTING BENEFITS.—Section

9 132(f) is amended by striking paragraph (8).
10 (b) EXPANSION OF BICYCLE COMMUTING BENE-
11 FITS.—Section 132(f)(5)(F) is amended to read as fol-
12 lows:
13 ‘‘(F) DEFINITIONS RELATED TO BICYCLE
14 COMMUTING BENEFITS.—
15 ‘‘(i) QUALIFIED BICYCLE COMMUTING
16 BENEFIT.—The term ‘qualified bicycle

17 commuting benefit’ means, with respect to
18 any calendar year—
19 ‘‘(I) any employer reimbursement
20 during the 15-month period beginning
21 with the first day of such calendar
22 year for reasonable expenses incurred
23 by the employee during such calendar
24 year for the purchase (including asso-
25 ciated finance charges), lease, rental
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1 (including a bikeshare), improvement,
2 repair, or storage of qualified com-
3 muting property, or
4 ‘‘(II) the provision by the em-
5 ployer to the employee during such
6 calendar year of the use (including a
7 bikeshare), improvement, repair, or
8 storage of qualified commuting prop-
9 erty,
10 if the employee regularly uses such quali-
11 fied commuting property for travel between
12 the employee’s residence, place of employ-
13 ment, or a mass transit facility that con-
14 nects the employee to their residence or
15 place of employment.
16 ‘‘(ii) QUALIFIED COMMUTING PROP-
17 ERTY.—The term ‘qualified commuting

18 property’ means—
19 ‘‘(I) any bicycle (other than a bi-
20 cycle equipped with any motor),
21 ‘‘(II) any electric bicycle which
22 meets the requirements of section
23 36E(c)(5),
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1 ‘‘(III) any 2- or 3-wheel scooter
2 (other than a scooter equipped with
3 any motor), and
4 ‘‘(IV) any 2- or 3-wheel scooter
5 propelled by an electric motor if such
6 motor does not provide assistance if
7 the speed of such scooter exceeds 20
8 miler per hour (or if the speed of such
9 scooter is not capable of exceeding 20
10 miles per hour) and the weight of
11 such scooter does not exceed 100
12 pounds.
13 ‘‘(iii) BIKESHARE.—The term
14 ‘bikeshare’ means a rental operation at
15 which qualified commuting property is
16 made available to customers to pick up and
17 drop off for point-to-point use within a de-
18 fined geographic area.’’.
19 (c) LIMITATION ON EXCLUSION.—Section
20 132(f)(2)(C) is amended to read as follows:
21 ‘‘(C) 30 percent of the dollar amount in ef-
22 fect under subparagraph (B) per month in the
23 case of any qualified bicycle commuting ben-
24 efit.’’.
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1 (d) NO CONSTRUCTIVE RECEIPT.—Section 132(f)(4)
2 is amended by striking ‘‘(other than a qualified bicycle
3 commuting reimbursement)’’.
4 (e) CONFORMING AMENDMENT.—Section
5 132(f)(1)(D) is amended by striking ‘‘reimbursement’’
6 and inserting ‘‘benefit’’.
10 SEC. 136407. CREDIT FOR CERTAIN NEW ELECTRIC BICY-
11 CLES.

15 36D the following new section:
16 ‘‘SEC. 36E. ELECTRIC BICYCLES.
17 ‘‘(a) ALLOWANCE OF CREDIT.—There shall be al-

18 lowed as a credit against the tax imposed by this chapter
19 for the taxable year an amount equal to 15 percent of the
20 cost of each qualified electric bicycle placed in service by
21 the taxpayer during such taxable year.
23 ‘‘(1) LIMITATION ON COST PER ELECTRIC BICY-
24 CLE TAKEN INTO ACCOUNT.—The amount taken
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1 into account under subsection (a) as the cost of any
2 qualified electric bicycle shall not exceed $5,000.
3 ‘‘(2) BICYCLE LIMITATION WITH RESPECT TO
4 CREDIT.—
5 ‘‘(A) LIMITATION ON NUMBER OF PER-
6 SONAL-USE BICYCLES.—In the case of any tax-

7 payer for any taxable year, the number of per-
8 sonal-use bicycles taken into account under sub-
9 section (a) shall not exceed the excess (if any)
10 of—
11 ‘‘(i) 1 (2 in the case of a joint return),
12 reduced by
13 ‘‘(ii) the aggregate number of bicycles
14 taken into account by the taxpayer under
15 subsection (a) for the 2 preceding taxable
16 years.
17 ‘‘(B) PHASEOUT BASED ON MODIFIED AD-
18 JUSTED GROSS INCOME.—So much of the credit

19 allowed under subsection (a) to any taxpayer
20 for any taxable year as would (but for this sub-
21 paragraph) be treated under subsection (c)(2)
22 as a credit allowable under subpart C shall be
23 reduced by $200 for each $1,000 (or fraction
24 thereof) by which the taxpayer’s modified ad-
25 justed gross income exceeds—
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1 ‘‘(i) $150,000 in the case of a joint
2 return or a surviving spouse (as defined in
3 section 2(a)),
4 ‘‘(ii) $112,500 in the case of a head
5 of household (as defined in section 2(b)),
6 and
7 ‘‘(iii) $75,000 in the case of a tax-
8 payer not described in clause (i) or (ii).
9 ‘‘(C) MODIFIED ADJUSTED GROSS IN-
10 COME.—For purposes of subparagraph (B), the

11 term ‘modified adjusted gross income’ means
12 adjusted gross income increased by any amount
13 excluded from gross income under section 911,
14 931, or 933.
15 ‘‘(D) SPECIAL RULE FOR DETERMINATION
16 OF MODIFIED ADJUSTED GROSS INCOME.—The
17 modified adjusted gross income of the taxpayer

18 that is taken into account for purposes of this
19 paragraph shall be the lesser of—
20 ‘‘(i) the modified adjusted gross in-
21 come for the taxable year in which the
22 credit is claimed, or
23 ‘‘(ii) the modified adjusted gross in-
24 come for the immediately preceding taxable
25 year.
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1 ‘‘(c) QUALIFIED ELECTRIC BICYCLE.—For purposes
2 of this section, the term ‘qualified electric bicycle’ means
3 a bicycle—
4 ‘‘(1) the original use of which commences with
5 the taxpayer,
6 ‘‘(2) which is acquired for use by the taxpayer
7 and not for resale,
8 ‘‘(3) which is made by a qualified manufacturer
9 and is labeled with the qualified vehicle identification
10 number assigned to such bicycle by such manufac-
11 turer,
12 ‘‘(4) with respect to which the aggregate
13 amount paid for such acquisition does not exceed
14 $8,000, and
15 ‘‘(5) which is equipped with—
16 ‘‘(A) fully operable pedals,
17 ‘‘(B) a saddle or seat for the rider, and
18 ‘‘(C) an electric motor of less than 750
19 watts which is designed to provided assistance
20 in propelling the bicycle and—
21 ‘‘(i) does not provide such assistance
22 if the bicycle is moving in excess of 20
23 miler per hour, or
24 ‘‘(ii) if such motor only provides such
25 assistance when the rider is pedaling, does
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1 not provide such assistance if the bicycle is
2 moving in excess of 28 miles per hour.
3 ‘‘(d) VIN NUMBER REQUIREMENT.—
5 under subsection (a) with respect to any qualified
6 electric bicycle unless the taxpayer includes the
7 qualified vehicle identification number of such bicy-
8 cle on the return of tax for the taxable year.
9 ‘‘(2) QUALIFIED VEHICLE IDENTIFICATION
10 NUMBER.—For purposes of this section, the term

11 ‘qualified vehicle identification number’ means, with
12 respect to any bicycle, the vehicle identification num-
13 ber assigned to such bicycle by a qualified manufac-
14 turer pursuant to the methodology referred to in
15 paragraph (3).
16 ‘‘(3) QUALIFIED MANUFACTURER.—For pur-
17 poses of this section, the term ‘qualified manufac-
18 turer’ means any manufacturer of qualified electric
19 bicycles which enters into an agreement with the
20 Secretary which provides that such manufacturer
21 will—
22 ‘‘(A) assign a vehicle identification number
23 to each qualified electric bicycle produced by
24 such manufacturer utilizing a methodology that
25 will ensure that such number (including any al-
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1 phanumeric) is unique to such bicycle (by uti-
2 lizing numbers or letters which are unique to
3 such manufacturer or by such other method as
4 the Secretary may provide),
5 ‘‘(B) label such bicycle with such number
6 in such manner as the Secretary may provide,
7 and
8 ‘‘(C) make periodic written reports to the
9 Secretary (at such times and in such manner as
10 the Secretary may provide) of the vehicle identi-
11 fication numbers so assigned and including
12 such information as the Secretary may require
13 with respect to the qualified electric bicycle to
14 which such number was so assigned.
17 subtitle, the basis of any property for which a credit
18 is allowable under subsection (a) shall be reduced by
19 the amount of such credit so allowed (determined
20 without regard to subsection (c)).
21 ‘‘(2) NO DOUBLE BENEFIT.—The amount of
22 any deduction or other credit allowable under this
23 chapter for a qualified electric bicycle for which a
24 credit is allowable under subsection (a) shall be re-
25 duced by the amount of credit allowed under such
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1 subsection for such vehicle (determined without re-
2 gard to subsection (c)).
3 ‘‘(3) PROPERTY USED OUTSIDE UNITED STATES
4 NOT QUALIFIED.—No credit shall be allowable under

5 subsection (a) with respect to any property referred
6 to in section 50(b)(1).
8 ulations, provide for recapturing the benefit of any
9 credit allowable under subsection (a) with respect to
10 any property which ceases to be property eligible for
11 such credit.
12 ‘‘(5) ELECTION NOT TO TAKE CREDIT.—No
13 credit shall be allowed under subsection (a) for any

14 bicycle if the taxpayer elects to not have this section
15 apply to such bicycle.
16 ‘‘(f) TREATMENT OF CERTAIN POSSESSIONS.—

22 of the provisions of this section (determined without
23 regard to this subsection). Such amounts shall be
24 determined by the Secretary based on information
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2 sion.

15 dents.

20 ‘‘(g) TERMINATION.—This section shall not apply to
21 bicycles placed in service after December 31, 2031.’’.
23 (1) Section 38(b) is amended by striking ‘‘plus’’
24 at the end of paragraph (39), by striking the period
25 at the end of paragraph (40) and inserting ‘‘, plus’’,
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1 and by adding at the end the following new para-
2 graph:
3 ‘‘(41) the portion of the electric bicycles credit
4 to which section 36E(c)(1) applies.’’.
5 (2) Section 1016(a) is amended by striking
6 ‘‘and’’ at the end of paragraph (37), by striking the
7 period at the end of paragraph (38) and inserting ‘‘,
8 and’’, and by adding at the end the following new
9 paragraph:
10 ‘‘(39) to the extent provided in section
11 36E(f)(1).’’.
12 (3) Section 6211(b)(4)(A) of such Code is
13 amended by inserting ‘‘36E by reason of subsection
14 (c)(2) thereof,’’ before ‘‘32,’’.
17 (A) in subparagraph (U), by striking
19 (B) in subparagraph (V), by striking the
22 ‘‘(W) an omission of a correct vehicle iden-
23 tification number required under section 36E(e)
24 (relating to electric bicycles credit) to be in-
25 cluded on a return.’’.
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1 (5) Section 6501(m) is amended by inserting
2 ‘‘36E(f)(4),’’ after ‘‘35(g)(11),’’.
4 States Code, is amended by inserting ‘‘36E,’’ after
5 ‘‘36B,’’.
7 for subpart B of part IV of subchapter A of chapter 1
8 is amended by adding at the end the following new item:
‘‘Sec. 36E. Electric bicycles.’’.

11 the date of the enactment of this Act, in taxable years
12 ending after such date.
13 PART 5—INVESTMENT IN THE GREEN
14 WORKFORCE
15 SEC. 136501. EXTENSION OF THE ADVANCED ENERGY
16 PROJECT CREDIT.
17 (a) EXTENSION OF CREDIT.—Section 48C is amend-

18 ed by redesignating subsection (e) as subsection (f) and
19 by inserting after subsection (d) the following new sub-
20 section:
21 ‘‘(e) ADDITIONAL ALLOCATIONS.—
22 ‘‘(1) IN GENERAL.—Not later than 180 days
23 after the date of enactment of this subsection, the
24 Secretary, after consultation with the Secretary of
25 Energy, shall establish a program to consider and
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1 award certifications for qualified investments eligible
2 for credits under this section to qualifying advanced
3 energy project sponsors.
4 ‘‘(2) ANNUAL LIMITATION.—
5 ‘‘(A) IN GENERAL.—The amount of credits

6 that may be allocated under this subsection
7 during any calendar year shall not exceed the
8 annual credit limitation with respect to such
9 year.
10 ‘‘(B) ANNUAL CREDIT LIMITATION.—
11 ‘‘(i) IN GENERAL.—For purposes of

12 this subsection, the term ‘annual credit
13 limitation’ means $2,500,000,000 for each
14 of calendar years 2022 through 2031, and
15 zero thereafter.
16 ‘‘(ii) AMOUNT SET ASIDE FOR AUTO-
17 MOTIVE COMMUNITIES.—
18 ‘‘(I) IN GENERAL.—For purposes

19 of clause (i), $400,000,000 of the an-
20 nual credit limitation for each of cal-
21 endar years 2022 through 2031 shall
22 be allocated to qualified investments
23 located within automotive commu-
24 nities.
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1 ‘‘(II) AUTOMOTIVE COMMU-
2 NITIES.—For purposes of this clause,

3 the term ‘automotive communities’
4 means a census tract and any directly
5 adjoining census tract, including a no-
6 population census tract, that has ex-
7 perienced major job losses in the auto-
8 motive manufacturing sector since
9 January 1, 1994, as determined by
10 the Secretary after consultation with
11 the Secretary of Energy and Secretary
12 of Labor.
13 ‘‘(C) CARRYOVER OF UNUSED LIMITA-

21 ‘‘(3) CERTIFICATIONS.—
22 ‘‘(A) APPLICATION REQUIREMENT.—Each
23 applicant for certification under this subsection

24 shall submit an application at such time and
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1 containing such information as the Secretary
2 may require.
3 ‘‘(B) TIME TO MEET CRITERIA FOR CER-
4 TIFICATION.—Each applicant for certification

5 shall have 2 years from the date of acceptance
6 by the Secretary of the application during
7 which to provide to the Secretary evidence that
8 the requirements of the certification have been
9 met.
10 ‘‘(C) PERIOD OF ISSUANCE.—An applicant
11 which receives a certification shall have 2 years
12 from the date of issuance of the certification in
13 order to place the project in service and to no-
14 tify the Secretary that such project has been so
15 placed in service, and if such project is not
16 placed in service (and the Secretary so notified)
17 by that time period, then the certification shall
18 no longer be valid. If any certification is re-
19 voked under this subparagraph, the amount of
20 the annual credit limitation under paragraph
21 (2) for the calendar year in which such certifi-
22 cation is revoked shall be increased by the
23 amount of the credit with respect to such re-
24 voked certification.
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1 ‘‘(4) SELECTION CRITERIA.—Selection criteria
2 similar to those in subsection (d)(3) shall apply, ex-
3 cept that in determining designations under this
4 subsection, the Secretary, after consultation with the
5 Secretary of Energy, shall—
6 ‘‘(A) in addition to the factors described in
7 subsection (d)(3)(B), take into consideration
8 which projects—
9 ‘‘(i) will provide the greatest net im-
10 pact in avoiding or reducing anthropogenic
11 emissions of greenhouse gases, as deter-
12 mined by the Secretary after consultation
13 with the Administrator of the Environ-
14 mental Protection Agency,
15 ‘‘(ii) will provide the greatest domestic
16 job creation (both direct and indirect) dur-
17 ing the credit period,
18 ‘‘(iii) will provide the greatest job cre-
19 ation within the vicinity of the project, par-
20 ticularly with respect to—
21 ‘‘(I) low-income communities (as
22 described in section 45D(e)), and
23 ‘‘(II) dislocated workers who
24 were previously employed in manufac-
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1 turing, coal power plants, or coal min-
2 ing, and
3 ‘‘(iv) will provide the greatest job cre-
4 ation in areas with a population that is at
5 risk of experiencing higher or more adverse
6 human health or environmental effects and
7 a significant portion of such population is
8 comprised of communities of color, low-in-
9 come communities, Tribal and Indigenous
10 communities, or individuals formerly em-
11 ployed in the fossil fuel industry, and
12 ‘‘(B) give the highest priority to projects
13 which—
14 ‘‘(i) manufacture (other than pri-
15 marily assembly of components) property
16 described in a subclause of subsection
17 (c)(1)(A)(i) (or components thereof), and
18 ‘‘(ii) have the greatest potential for
19 commercial deployment of new applica-
20 tions.
21 ‘‘(5) DISCLOSURE OF ALLOCATIONS.—The Sec-
22 retary shall, upon allocating a credit under this sub-
23 section, publicly disclose the identity of the appli-
24 cant, the amount of the credit with respect to such
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1 applicant, and the project location for which such
2 credit was allocated.
3 ‘‘(6) CREDIT CONDITIONED UPON WAGE AND
4 APPRENTICESHIP REQUIREMENTS.—No credit shall

5 be allocated for a project under this subsection un-
6 less the project meets the prevailing wage require-
7 ments of paragraph (7) and the apprenticeship re-
8 quirements of paragraph (8).

11 scribed in this paragraph with respect to a
12 project are that the taxpayer shall ensure that
13 any laborers and mechanics employed by con-
14 tractors and subcontractors in the re-equipping,
15 expansion, or establishment of an industrial or
16 manufacturing facility shall be paid wages at
17 rates not less than the prevailing rates for con-
18 struction, alteration, or repair of a similar char-
19 acter in the locality as most recently determined
20 by the Secretary of Labor, in accordance with
21 subchapter IV of chapter 31 of title 40, United
22 States Code.
25 MENTS.—
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4 to any project—
5 ‘‘(I) rules similar to the rules of
6 section 45(b)(8)(B) shall apply for
7 purposes of this paragraph, and
8 ‘‘(II) if the failure to satisfy the
9 requirement under subparagraph (A)
10 is not corrected pursuant to the rules
11 described in subclause (I), the certifi-
12 cation with respect to the re-equip-
13 ping, expansion, or establishment of
14 an industrial or manufacturing facility
15 shall no longer be valid.

18 spect to a project are as follows:

24 project shall, subject to subparagraph (B),
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3 tices.

10 cent,
15 and
19 percent.

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6 such work.

11 taxpayer who—
18 paragraph.
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9 gram.
11 paragraph—
14 section 45(b)(9)(E)(i).

18 45(b)(9)(E)(ii).’’.
19 (b) MODIFICATION OF QUALIFYING ADVANCED EN-
20 ERGY PROJECTS.—
21 (1) INCLUSION OF WATER AS A RENEWABLE
22 RESOURCE.—Section 48C(c)(1)(A)(i)(I) is amended

23 by inserting ‘‘water,’’ after ‘‘sun,’’.
24 (2) ENERGY STORAGE SYSTEMS.—Section
25 48C(c)(1)(A)(i)(II) is amended by striking ‘‘an en-
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1 ergy storage system for use with electric or hybrid-
2 electric motor vehicles’’ and inserting ‘‘energy stor-
3 age systems and components’’.
4 (3) MODIFICATION OF QUALIFYING ELECTRIC
5 GRID PROPERTY.—Section 48C(c)(1)(A)(i)(III) is

6 amended to read as follows:
7 ‘‘(III) electric grid modernization
8 equipment or components,’’.
9 (4) USE OF CAPTURED CARBON.—Section
10 48C(c)(1)(A)(i)(IV) is amended by striking ‘‘seques-

11 ter’’ and insert ‘‘use or sequester’’.
12 (5) ELECTRIC AND FUEL CELL VEHICLES.—
13 Section 48C(c)(1)(A)(i)(VI) is amended—

14 (A) by striking ‘‘new qualified plug-in elec-
15 tric drive motor vehicles (as defined by section
16 30D)’’ and inserting ‘‘vehicles described in sec-
17 tion 36C, 45Y, and 36E’’, and
18 (B) and striking ‘‘and power control units’’
19 and inserting ‘‘power control units, and equip-
20 ment used for charging or refueling’’.
21 (6) PROPERTY FOR PRODUCTION OF HYDRO-
22 GEN.—Section 48C(c)(1)(A)(i) is amended by strik-

23 ing ‘‘or’’ at the end of subclause (VI), by redesig-
24 nating subclause (VII) as subclause (VIII), an by in-
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1 serting after subclause (VI) the following new sub-
2 clause:
3 ‘‘(VII) property designed to be
4 used to produce qualified clean hydro-
5 gen (as defined in section 45X), or’’.
6 (7) RECYCLING OF ADVANCED ENERGY PROP-
7 ERTY.—Section 48C(c)(1) is amended by adding at

8 the end the following new subparagraph:
9 ‘‘(C) SPECIAL RULE FOR CERTAIN RECY-
10 CLING FACILITIES.—A facility which recycles

11 batteries or similar energy storage property de-
12 scribed in subparagraph (A)(i) shall be treated
13 as part of a manufacturing facility described in
14 such subparagraph.’’.
16 this section shall take effect on the date of the enactment
17 of this Act.
18 SEC. 136502. LABOR COSTS OF INSTALLING MECHANICAL
19 INSULATION PROPERTY.

22 visions of this Act, is further amended by adding at the
23 end the following new section:
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1 ‘‘SEC. 45Z. LABOR COSTS OF INSTALLING MECHANICAL IN-
2 SULATION PROPERTY.

4 mechanical insulation labor costs credit determined under
5 this section for any taxable year is an amount equal to
6 10 percent of the mechanical insulation labor costs paid
7 or incurred by the taxpayer during such taxable year.
8 ‘‘(b) MECHANICAL INSULATION LABOR COSTS.—For
9 purposes of this section—
10 ‘‘(1) IN GENERAL.—The term ‘mechanical insu-
11 lation labor costs’ means the labor cost of installing
12 mechanical insulation property with respect to a me-
13 chanical system referred to in paragraph (2)(A)
14 which was originally placed in service not less than
15 1 year before the date on which such mechanical in-
16 sulation property is installed.
17 ‘‘(2) MECHANICAL INSULATION PROPERTY.—
18 The term ‘mechanical insulation property’ means in-

19 sulation materials, and facings and accessory prod-
20 ucts installed in connection to such insulation mate-
21 rials—
22 ‘‘(A) placed in service in connection with a
23 mechanical system which—
24 ‘‘(i) is located in the United States,
25 ‘‘(ii) is of a character subject to an al-
26 lowance for depreciation, and
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1 ‘‘(iii) meets the requirements of sec-
2 tion 434.403 of title 10, Code of Federal
3 Regulations (as in effect on the date of en-
4 actment of this section), and
5 ‘‘(B) which result in a reduction in energy
6 loss from the mechanical system which is great-
7 er than the expected reduction from the instal-
8 lation of insulation materials which meet the
9 minimum requirements of Reference Standard
10 90.1 (as defined in section 179D(c)(2)).
11 ‘‘(c) TERMINATION.—This section shall not apply to
12 mechanical insulation labor costs paid or incurred after
13 December 31, 2031.’’.
14 (b) CREDIT ALLOWED AS PART OF GENERAL BUSI-
15 NESS CREDIT.—Section 38(b), as amended by the pre-
16 ceding provisions of this Act, is further amended by strik-
17 ing ‘‘plus’’ at the end of paragraph (40), by striking the
18 period at the end of paragraph (41) and inserting ‘‘, plus’’,
19 and by adding at the end the following new paragraph:
20 ‘‘(42) the mechanical insulation labor costs
21 credit determined under section 45Z(a).’’.
23 (1) Section 280C is amended by adding at the
24 end the following new subsection:
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1 ‘‘(i) MECHANICAL INSULATION LABOR COSTS CRED-
2 IT.—
3 ‘‘(1) IN GENERAL.—No deduction shall be al-

4 lowed for that portion of the mechanical insulation
5 labor costs (as defined in section 45Z(b)) otherwise
6 allowable as deduction for the taxable year which is
7 equal to the amount of the credit determined for
8 such taxable year under section 45Z(a).
9 ‘‘(2) SIMILAR RULE WHERE TAXPAYER CAP-
10 ITALIZES RATHER THAN DEDUCTS EXPENSES.—If—
11 ‘‘(A) the amount of the credit determined

12 for the taxable year under section 45Z(a), ex-
13 ceeds
14 ‘‘(B) the amount of allowable as a deduc-
15 tion for such taxable year for mechanical insu-
16 lation labor costs (determined without regard to
17 paragraph (1)),
18 the amount chargeable to capital account for the
19 taxable year for such costs shall be reduced by the
20 amount of such excess.’’.
22 IV of subchapter A of chapter 1, as amended by the
23 preceding provisions of this Act, is further amended
24 by adding at the end the following new item:
‘‘Sec. 45Z. Labor costs of installing mechanical insulation property.’’.
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2 this section shall apply to amounts paid or incurred after
3 December 31, 2021, in taxable years ending after such
4 date.
5 PART 6—ENVIRONMENTAL JUSTICE
6 SEC. 136601. QUALIFIED ENVIRONMENTAL JUSTICE PRO-
7 GRAM CREDIT.

11 36E the following new section:
12 ‘‘SEC. 36F. QUALIFIED ENVIRONMENTAL JUSTICE PRO-
13 GRAMS.
14 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an eli-

15 gible educational institution, there shall be allowed as a
16 credit against the tax imposed by this subtitle for any tax-
17 able year an amount equal to the applicable percentage
18 of the amounts paid or incurred by such taxpayer during
19 such taxable year which are necessary for a qualified envi-
20 ronmental justice program.
21 ‘‘(b) QUALIFIED ENVIRONMENTAL JUSTICE PRO-
22 GRAM.—For purposes of this section—
23 ‘‘(1) IN GENERAL.—The term ‘qualified envi-
24 ronmental justice program’ means a program con-
25 ducted by one or more eligible educational institu-
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1 tions that is designed to address, or improve data
2 about, qualified environmental stressors for the pri-
3 mary purpose of improving, or facilitating the im-
4 provement of, health and economic outcomes of indi-
5 viduals residing in low-income areas or areas that
6 experience, or are at risk of experiencing, multiple
7 exposures to qualified environmental stressors.
8 ‘‘(2) QUALIFIED ENVIRONMENTAL STRESSOR.—
9 The term ‘qualified environmental stressor’ means,

10 with respect to an area, a contamination of the air,
11 water, soil, or food with respect to such area or a
12 change relative to historical norms of the weather
13 conditions of such area, including—
14 ‘‘(A) toxic pollutants (such as lead, pes-
15 ticides, or fine particulate matter) in air, soil,
16 food, or water,
17 ‘‘(B) high rates of asthma prevalence and
18 incidence, and
19 ‘‘(C) such other adverse human health or
20 environmental effects as are identified by the
21 Secretary.
22 ‘‘(c) ELIGIBLE EDUCATIONAL INSTITUTION.—For
23 purposes of this section, the term ‘eligible educational in-
24 stitution’ means an institution of higher education (as
25 such term is defined in section 101 or 102(c) of the High-
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1 er Education Act of 1965) that is eligible to participate
2 in a program under title IV of such Act.
3 ‘‘(d) APPLICABLE PERCENTAGE.—For purposes of
4 this section, the term ‘applicable percentage’ means—
5 ‘‘(1) in the case of a program involving material
6 participation of faculty and students of an institu-
7 tion described in section 371(a) of the Higher Edu-
8 cation Act of 1965, 30 percent, and
9 ‘‘(2) in all other cases, 20 percent.
10 ‘‘(e) CREDIT ALLOCATION.—
11 ‘‘(1) ALLOCATION.—
13 allocate credit dollar amounts under this section
14 to eligible educational institutions, for qualified
15 environmental justice programs, that—
16 ‘‘(i) submit applications at such time
17 and in such manner as the Secretary may
18 provide, and
19 ‘‘(ii) are selected by the Secretary
20 under subparagraph (B).
21 ‘‘(B) SELECTION CRITERIA.—The Sec-
22 retary, after consultation with the Secretary of
23 Energy, the Secretary of Education, the Sec-
24 retary of Health and Human Services, and the
25 Administrator of the Environmental Protection
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1 Agency, shall select applications on the basis of
2 the following criteria:
3 ‘‘(i) The extent of participation of fac-
4 ulty and students of an institution de-
5 scribed in section 371(a) of the Higher
6 Education Act of 1965.
7 ‘‘(ii) The extent of the expected effect
8 on the health or economic outcomes of in-
9 dividuals residing in areas within the
10 United States that are low-income areas or
11 areas that experience, or are at risk of ex-
12 periencing, multiple exposures to qualified
13 environmental stressors.
14 ‘‘(iii) The creation or significant ex-
15 pansion of qualified environmental justice
16 programs.
17 ‘‘(2) LIMITATIONS.—
18 ‘‘(A) IN GENERAL.—The amount of the
19 credit determined under this section for any
20 taxable year to any eligible educational institu-
21 tion for any qualified environmental justice pro-
22 gram shall not exceed the excess of—
23 ‘‘(i) the credit dollar amount allocated
24 to such institution for such program under
25 this subsection, over
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1 ‘‘(ii) the credits previously claimed by
2 such institution for such program under
3 this section.
4 ‘‘(B) FIVE-YEAR LIMITATION.—No
5 amounts paid or incurred after the 5-year pe-

6 riod beginning on the date a credit dollar
7 amount is allocated to an eligible educational
8 institution for a qualified environmental justice
9 program shall be taken into account under sub-
10 section (a) with respect to such institution for
11 such program.
12 ‘‘(C) ALLOCATION LIMITATION.—The total
13 amount of credits that may be allocated under
14 the program shall not exceed—
15 ‘‘(i) $1,000,000,000 for each of tax-
16 able years 2022 through 2031, and
17 ‘‘(ii) $0 for each subsequent year.
18 ‘‘(D) CARRYOVER OF UNUSED LIMITA-

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1 ‘‘(f) REQUIREMENTS.—
2 ‘‘(1) IN GENERAL.—An eligible educational in-
3 stitution that has been allocated credit dollar
4 amounts under this section for a qualified environ-
5 mental justice project for a taxable year shall—
6 ‘‘(A) make publicly available the applica-
7 tion submitted to the Secretary under sub-
8 section (e) with respect to such project, and
9 ‘‘(B) submit an annual report to the Sec-
10 retary that describes the amounts paid or in-
11 curred for, and expected impact of, such
12 project.
13 ‘‘(2) FAILURE TO COMPLY.—In the case of an
14 eligible educations institution that has failed to com-
15 ply with the requirements of this subsection, the
16 credit dollar amount allocated to such institution
17 under this section is deemed to be $0.
18 ‘‘(g) PUBLIC DISCLOSURE.—The Secretary, upon
19 making an allocation of credit dollar amounts under this
20 section, shall publicly disclose—
21 ‘‘(1) the identity of the eligible educational in-
22 stitution receiving the allocation, and
23 ‘‘(2) the amount of such allocation.’’.
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3 serting ‘‘36F,’’ after ‘‘36D,’’.
7 ing ‘‘36F,’’ after ‘‘36D,’’.
9 for subpart C of part IV of subchapter A of chapter 1,
11 amended by inserting after the item relating to section
12 36E the following new item:
‘‘Sec. 36F. Qualified environmental justice programs.’’.

14 this section shall take effect on the date of the enactment
15 of this Act.
16 PART 7—SUPERFUND
17 SEC. 136701. REINSTATEMENT OF SUPERFUND.
18 (a) HAZARDOUS SUBSTANCE SUPERFUND FINANC-

19 ING RATE.—
20 (1) EXTENSION.—Section 4611(e) is amended
21 to read as follows:
22 ‘‘(e) APPLICATION OF HAZARDOUS SUBSTANCE
23 SUPERFUND FINANCING RATE.—The Hazardous Sub-
24 stance Superfund financing rate under this section shall
25 apply after December 31, 2021.’’.
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1 (2) ADJUSTMENT FOR INFLATION.—
2 (A) Section 4611(c)(2)(A) is amended by

3 striking ‘‘9.7 cents’’ and inserting ‘‘16.4 cents’’.
4 (B) Section 4611(c) is amended by adding
5 at the end the following:
6 ‘‘(3) ADJUSTMENT FOR INFLATION.—
7 ‘‘(A) IN GENERAL.—In the case of a year

8 beginning after 2022, the amount in paragraph
9 (2)(A) shall be increased by an amount equal
10 to—
11 ‘‘(i) such amount, multiplied by
17 ‘‘(B) ROUNDING.—If any amount as ad-
18 justed under subparagraph (A) is not a multiple
19 of $0.01, such amount shall be rounded to the
20 next lowest multiple of $0.01.’’.
21 (b) AUTHORITY FOR ADVANCES.—Section
22 9507(d)(3)(B) is amended by striking ‘‘December 31,
25 this section shall take effect on January 1, 2022.
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1 PART 8—APPROPRIATIONS
2 SEC. 136701. APPROPRIATIONS.
3 Immediately upon the enactment of this Act, in addi-

4 tion to amounts otherwise available, there are appro-
5 priated for fiscal year 2022, out of any money in the
6 Treasury not otherwise appropriated, $3,831,000,000 to
7 remain available until September 30, 2031, for necessary
8 expenses for the Internal Revenue Service to carry out this
9 subtitle (and the amendments made by this subtitle),
10 which shall supplement and not supplant any other appro-
11 priations that may be available for this purpose.
12 Subtitle H—Social Safety Net

19 of 1986.
20 PART 1—CHILD TAX CREDIT
21 SEC. 137101. MODIFICATIONS APPLICABLE BEGINNING IN
22 2021.
23 (a) SAFE HARBOR EXCEPTION FOR FRAUD AND IN-

24 TENTIONAL DISREGARD OF RULES AND REGULATIONS.—
25 Section 24(j)(2)(B) is amended—
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1 (1) by striking ‘‘qualified’’ each place it appears
2 in clause (iv)(II) and inserting ‘‘qualifying’’, and
4 clause:
5 ‘‘(v) EXCEPTION FOR FRAUD AND IN-
6 TENTIONAL DISREGARD OF RULES AND
7 REGULATIONS.—
8 ‘‘(I) IN GENERAL.—For purposes

9 of determining the safe harbor
10 amount under clause (iv) with respect
11 to any taxpayer, an individual shall
12 not be treated as taken into account
13 in determining the annual advance
14 amount of such taxpayer if the Sec-
15 retary determines that such individual
16 was so taken into account due to
17 fraud by the taxpayer or intentional
18 disregard of rules and regulations by
19 the taxpayer.
20 ‘‘(II) ARRANGEMENTS TO TAKE
21 INDIVIDUAL INTO ACCOUNT MORE
22 THAN ONCE.—For purposes of sub-

23 clause (I), a taxpayer shall not fail to
24 be treated as intentionally dis-
25 regarding rules and regulations with
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1 respect to any individual taken into
2 account in determining the annual ad-
3 vance amount of such taxpayer if such
4 taxpayer entered into a plan or other
5 arrangement with, or expected, an-
6 other taxpayer to take such individual
7 into account in determining the credit
8 allowed under this section for the tax-
9 able year.’’.
10 (b) TREATMENT OF JOINT RETURNS.—Section 24(j)
12 graph:
13 ‘‘(3) JOINT RETURNS.—Except as otherwise
14 provided by the Secretary, in the case of an advance
15 payment made under section 7527A with respect to
16 a joint return, half of such payment shall be treated
17 as having been made to each individual filing such
18 return.’’.
19 (c) ANNUAL ADVANCE AMOUNT.—Section 7527A(b)
20 is amended—
21 (1) in paragraph (1)—
22 (A) in subparagraph (A), by inserting ‘‘or
23 based on any other information known to the
24 Secretary’’ after ‘‘reference taxable year’’,
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1 (B) in subparagraph (C), by inserting ‘‘un-
2 less determined by the Secretary based on any
3 information known to the Secretary,’’ before
4 ‘‘the only children’’, and
5 (C) in subparagraph (D), by inserting ‘‘un-
6 less determined by the Secretary based on any
7 information known to the Secretary,’’ before
8 ‘‘the ages of’’, and
9 (2) in paragraph (3)(A)(ii), by striking ‘‘ pro-
10 vided by the taxpayer’’ and inserting ‘‘provided, or
11 known,’’.
13 this section shall apply to taxable years beginning, and
14 payments made, after December 31, 2020.
15 SEC. 137102. EXTENSION AND MODIFICATION OF CHILD TAX
16 CREDIT AND ADVANCE PAYMENT FOR 2022.
17 (a) EXTENSIONS.—
18 (1) EXTENSION OF CHILD TAX CREDIT.—Sec-
19 tion 24(i) is amended—

20 (A) by striking ‘‘January 1, 2022’’ in the
21 matter preceding paragraph (1) and inserting
22 ‘‘January 1, 2023’’, and
23 (B) by inserting ‘‘AND 2022’’ after ‘‘2021’’
24 in the heading thereof.
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1 (2) EXTENSION OF PROVISIONS RELATED TO
2 POSSESSIONS OF THE UNITED STATES.—
3 (A) Section 24(k)(2)(B) is amended—

4 (i) by striking ‘‘December 31, 2021’’
5 in the matter preceding clause (i) and in-
6 serting ‘‘December 31, 2022’’, and
7 (ii) by striking ‘‘AFTER 2021’’ in the
8 heading thereof and inserting ‘‘AFTER
9 2022’’.
10 (B) Section 24(k)(3)(C)(ii) is amended—
11 (i) in subclause (I), by inserting ‘‘or
12 2022’’ after ‘‘2021’’, and
13 (ii) in subclause (II), by striking ‘‘De-
14 cember 31, 2021’’ and inserting ‘‘Decem-
15 ber 31, 2022’’.
16 (C) The heading of section 24(k)(2)(A) is
17 amended by inserting ‘‘AND 2022’’ after
18 ‘‘2021’’.
19 (3) EXTENSION OF ADVANCE PAYMENT.—Sec-
20 tion 7527A is amended—

21 (A) in subsection (b)(1), by striking ‘‘50
22 percent of’’,
23 (B) in clauses (i) and (ii) of subsection
24 (e)(4)(C), by inserting ‘‘or 2022’’ after ‘‘in
25 2021’’, and
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1 (C) in subsection (f), by striking ‘‘Decem-
2 ber 31, 2021’’ and inserting ‘‘December 31,
3 2022’’.
4 (b) REPEAL OF SOCIAL SECURITY NUMBER RE-
5 QUIREMENT.—Section 24(h) is amended by striking para-
6 graph (7).
7 (c) APPLICATION OF INCOME PHASEOUT ON BASIS
8 OF INCOME FOR PRECEDING TAXABLE YEAR.—Section
9 24(i) is amended by adding at the end the following new
10 paragraph:
11 ‘‘(5) APPLICATION OF INCOME PHASEOUT ON
12 BASIS OF INCOME FOR PRIOR TAXABLE YEAR.—If
13 the taxpayer’s modified adjusted gross income (as

14 defined in subsection (b)) for the taxable year for
15 which the credit allowed under this section is deter-
16 mined is greater than such taxpayer’s modified ad-
17 justed gross income (as so defined) for the preceding
18 taxable year, paragraph (4) and subsection (b)(1)
19 shall both be applied with respect to such taxpayer’s
20 modified adjusted gross income (as so defined) for
21 the preceding taxable year.’’.
22 (d) INFLATION ADJUSTMENT.—Section 24(i), as
23 amended by subsection (c), is amended by adding at the
24 end the following new paragraph:
25 ‘‘(6) INFLATION ADJUSTMENTS.—
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2 taxable year beginning after December 31,
3 2021, the $500 amount in subsection (h)(4)(A),
4 the $3,000 and $3,600 amounts in paragraph
5 (3) and subsection (j)(2)(B)(iv), and the dollar
6 amounts in paragraph (4)(B), shall each be in-
9 ‘‘(ii) the percentage (if any) by
10 which—
11 ‘‘(I) the CPI (as defined in sec-
12 tion 1(f)(4)) for the calendar year
13 preceding the calendar year in which
14 such taxable year begins, exceeds
15 ‘‘(II) the CPI (as so defined) for
16 calendar year 2020.
18 ‘‘(i) $500 AMOUNT.—In the case of
19 the $500 amount in subsection (h)(4)(A),
20 any increase under subparagraph (A)
21 which is not a multiple of $10 shall be
22 rounded to the nearest multiple of $10.
23 ‘‘(ii) $3,000 AND $3,600 AMOUNTS.—
24 In the case of the $3,000 and $3,600

25 amounts in paragraph (3) and subsection
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1 (j)(2)(B)(iv), any increase under subpara-
2 graph (A) which is not a multiple of $100
3 shall be rounded to the nearest multiple of
4 $100.
5 ‘‘(iii) APPLICABLE THRESHOLD
6 AMOUNTS.—In the case of the dollar

7 amounts in paragraph (4)(B), any increase
8 under subparagraph (A) which is not a
9 multiple of $5,000 shall be rounded to the
10 nearest multiple of $5,000.’’.
11 (e) MODIFICATION OF RECAPTURE SAFE HARBOR
12 FOR 2022.—Section 24(j)(2)(B)(iv), as amended by the
13 preceding provisions of this Act, is amended to read as
14 follows:
15 ‘‘(iv) SAFE HARBOR AMOUNT.—For
16 purposes of this subparagraph, the term

17 ‘safe harbor amount’ means, with respect
18 to any taxpayer for any taxable year, the
19 aggregate of $3,000 ($3,600 in the case of
20 a qualifying child who has not attained age
21 6 as of the close of the calendar year in
22 which the taxable year of the taxpayer be-
23 gins) with respect to each qualifying child
24 who is—
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1 ‘‘(I) taken into account in deter-
2 mining the annual advance amount
3 with respect to such taxpayer under
4 section 7527A with respect to months
5 beginning in such taxable year, and
6 ‘‘(II) not taken into account in
7 determining the credit allowed to such
8 taxpayer under this section for such
9 taxable year.’’.
11 this section shall apply to taxable years beginning, and
12 payments made, after December 31, 2021.
13 SEC. 137103. ESTABLISHMENT OF MONTHLY CHILD TAX
14 CREDIT WITH ADVANCE PAYMENT THROUGH
15 2025.
16 (a) IN GENERAL.—Subpart A of part IV of sub-

18 tion 24 the following new sections:
19 ‘‘SEC. 24A. MONTHLY CHILD TAX CREDIT.
20 ‘‘(a) ALLOWANCE OF CREDIT.—There shall be al-

21 lowed as a credit against the tax imposed by this chapter
22 for the taxable year the sum of the monthly specified child
23 allowances determined with respect to the taxpayer under
24 subsection (b) for each calendar month during such tax-
25 able year.
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1 ‘‘(b) MONTHLY SPECIFIED CHILD ALLOWANCE.—
3 tion, the term ‘monthly specified child allowance’
4 means, with respect to any taxpayer for any cal-
5 endar month, the sum of—
6 ‘‘(A) $300 with respect to each specified
7 child of such taxpayer who will not, as of the
8 close of the taxable year which includes such
9 month, have attained age 6, plus
10 ‘‘(B) $250 with respect to each specified
11 child of such taxpayer who will, as of the close
12 of the taxable year which includes such month,
13 have attained age 6.
14 ‘‘(2) LIMITATIONS BASED ON MODIFIED AD-
15 JUSTED GROSS INCOME.—
16 ‘‘(A) INITIAL REDUCTION.—The monthly

17 specified child allowance otherwise determined
18 under paragraph (1) with respect to any tax-
19 payer for any calendar month shall be reduced
20 (but not below zero) by 1⁄12 of 5 percent of the
21 excess (if any) of the taxpayer’s modified ad-
22 justed gross income for the applicable taxable
23 year over the initial threshold amount in effect
24 for such applicable taxable year.
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1 ‘‘(B) LIMITATION ON INITIAL REDUC-
2 TION.—The amount of the reduction under sub-

3 paragraph (A) shall not exceed the lesser of—
4 ‘‘(i) the excess (if any) of—
5 ‘‘(I) the monthly specified child
6 allowance with respect to the taxpayer
7 for the calendar month (determined
8 without regard to this paragraph),
9 over
10 ‘‘(II) the amount which would be
11 determined under subclause (I) if the
12 dollar amounts in effect under sub-
13 paragraphs (A) and (B) of paragraph
14 (1) were each equal to $166.67, or
15 ‘‘(ii) 1⁄12 of 5 percent of the excess of
16 the secondary threshold amount over the
17 initial threshold amount.
18 ‘‘(C) SECONDARY REDUCTION.—The
19 monthly specified child allowance otherwise de-

20 termined under paragraph (1) with respect to
21 any taxpayer for any calendar month (deter-
22 mined after the application of subparagraphs
23 (A) and (B)) shall be reduced (but not below
24 zero) by 1⁄12 of 5 percent of the excess (if any)
25 of the taxpayer’s modified adjusted gross in-
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1 come for the applicable taxable year over the
2 secondary threshold amount.
3 ‘‘(D) DEFINITIONS RELATED TO LIMITA-
4 TIONS BASED ON MODIFIED ADJUSTED GROSS
5 INCOME.—For purposes of this paragraph—

6 ‘‘(i) INITIAL THRESHOLD AMOUNT.—
7 The term ‘initial threshold amount’

8 means—
9 ‘‘(I) $150,000, in the case of a
10 joint return or surviving spouse (as
11 defined in section 2(a)),
12 ‘‘(II) 1⁄2 the dollar amount in ef-
13 fect under subclause (I), in the case of
14 a married individual filing a separate
15 return, and
16 ‘‘(III) $112,500, in any other
17 case.
18 ‘‘(iii) SECONDARY THRESHOLD
19 AMOUNT.—The term ‘secondary threshold

20 amount’ means—
21 ‘‘(I) $400,000, in the case of a
22 joint return or surviving spouse (as
23 defined in section 2(a)),
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1 ‘‘(II) $300,000, in the case of a
2 head of household (as defined in sec-
3 tion 2(b)), and
4 ‘‘(III) $200,000, in any other
5 case.
6 ‘‘(iv) APPLICABLE TAXABLE YEAR.—
7 The term ‘applicable taxable year’ means,

8 with respect to any taxpayer, the relevant
9 taxable year with respect to which the tax-
10 payer has the lowest modified adjusted
11 gross income. For purposes of the pre-
12 ceding sentence, the term ‘relevant taxable
13 year’ means the taxable year for which the
14 credit allowed under this section is deter-
15 mined and each of the 2 immediately pre-
16 ceding taxable years.
17 ‘‘(v) MODIFIED ADJUSTED GROSS IN-
18 COME.—The term ‘modified adjusted gross

19 income’ means adjusted gross income in-
20 creased by any amount excluded from
21 gross income under section 911, 931, or
22 933.
23 ‘‘(c) SPECIFIED CHILD.—For purposes of this sec-
24 tion—
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1 ‘‘(1) IN GENERAL.—The term ‘specified child’
2 means, with respect to any taxpayer for any cal-
3 endar month, an individual—
4 ‘‘(A) who has the same principal place of
5 abode as the taxpayer for more than one-half of
6 such month,
7 ‘‘(B) who is younger than the taxpayer and
8 will not, as of the close of the calendar year
9 which includes such month, have attained age
10 18,
11 ‘‘(C) who receives care from the taxpayer
12 during such month that is not compensated,
13 ‘‘(D) who is not the spouse of the taxpayer
14 at any time during such month,
15 ‘‘(E) who is not a taxpayer with respect to
16 whom any individual is a specified child for
17 such month, and
18 ‘‘(F) who either—
19 ‘‘(i) is a citizen, national, or resident
20 of the United States, or
21 ‘‘(ii) if the taxpayer is a citizen or na-
22 tional of the United States, such individual
23 is described in section 152(f)(1)(B) with
24 respect to such taxpayer.
25 ‘‘(2) CARE FROM THE TAXPAYER.—
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1 ‘‘(A) IN GENERAL.—Except as otherwise
2 provided by the Secretary, whether any indi-
3 vidual receives care from the taxpayer (within
4 the meaning of paragraph (1)(C)) shall be de-
5 termined on the basis of facts and cir-
6 cumstances with respect to the following fac-
7 tors:
8 ‘‘(i) The supervision provided by the
9 taxpayer regarding the daily activities and
10 needs of the individual.
11 ‘‘(ii) The maintenance by the taxpayer
12 of a secure environment at which the indi-
13 vidual resides.
14 ‘‘(iii) The provision or arrangement by
15 the taxpayer of, and transportation by the
16 taxpayer to, medical care at regular inter-
17 vals and as required for the individual.
18 ‘‘(iv) The involvement by the taxpayer
19 in, and financial and other support by the
20 taxpayer for, educational or similar activi-
21 ties of the individual.
22 ‘‘(v) Any other factor that the Sec-
23 retary determines to be appropriate to de-
24 termine whether the individual receives
25 care from the taxpayer.
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1 ‘‘(B) DETERMINATION OF WHETHER CARE
2 IS COMPENSATED.—For purposes of deter-

3 mining if care is compensated within the mean-
4 ing of paragraph (1)(C), compensation from the
5 Federal Government, a State or local govern-
6 ment, a Tribal government, or any possession of
7 the United States shall not be taken into ac-
8 count.
9 ‘‘(3) APPLICATION OF TIE-BREAKER RULES.—
10 ‘‘(A) IN GENERAL.—Except as provided in

11 subparagraph (D), if any individual would (but
12 for this paragraph) be a specified child of 2 or
13 more taxpayers for any month, such individual
14 shall be treated as the specified child only of
15 the taxpayer who is—
16 ‘‘(i) the parent of the individual (or, if
17 such individual would (but for this para-
18 graph) be a specified child of 2 or more
19 parents of the individual for such month,
20 the parent of the individual determined
21 under subparagraph (B)),
22 ‘‘(ii) if the individual is not a specified
23 child of any parent of the individual (deter-
25 the specified relative of the individual with
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1 the highest adjusted gross income for the
2 taxable year which includes such month, or
3 ‘‘(iii) if the individual is neither a
4 specified child of any parent of the indi-
5 vidual nor a specified child of any specified
6 relative of the individual (in both cases de-
7 termined without regard to this para-
8 graph), the taxpayer with the highest ad-
9 justed gross income for the taxable year
10 which includes such month.
11 ‘‘(B) TIE-BREAKER AMONG PARENTS.—If
12 any individual would (but for this paragraph)

13 be the specified child of 2 or more parents of
14 the individual for any month, such child shall
15 be treated only as the specified child of—
16 ‘‘(i) the parent with whom the child
17 resided for the longest period of time dur-
18 ing such month, or
19 ‘‘(ii) if the child resides with both par-
20 ents for the same amount of time during
21 such month, the parent with the highest
22 adjusted gross income for the taxable year
23 which includes such month.
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1 ‘‘(C) SPECIFIED RELATIVE.—For purposes
2 of this paragraph, the term ‘specified relative’
3 means an individual who is—
4 ‘‘(i) an ancestor of a parent of the
5 specified child,
6 ‘‘(ii) a brother or sister of a parent of
7 the specified child, or
8 ‘‘(iii) a brother, sister, stepbrother, or
9 stepsister of the specified child.
10 ‘‘(D) CERTAIN PARENTS OR SPECIFIED
11 RELATIVES NOT TAKEN INTO ACCOUNT.—This
12 paragraph shall be applied without regard to

13 any parent or specified relative of an individual
14 for any month if—
15 ‘‘(i) such parent or specified relative
16 elects to have such individual not be treat-
17 ed as a specified child of such parent or
18 specified relative for such month,
19 ‘‘(ii) in the case of a parent of such
20 individual, the adjusted gross income of
21 the taxpayer (with respect to whom such
22 individual would be treated as a specified
23 child after application of this subpara-
24 graph) for the taxable year which includes
25 such month is higher than the highest ad-
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1 justed gross income of any parent of the
2 individual for any taxable year which in-
3 cludes such month (determined without re-
4 gard to any parent with respect to whom
5 such individual is not a specified child, de-
6 termined without regard to subparagraphs
7 (A) and (B) and after application of this
8 subparagraph), and
9 ‘‘(iii) in the case of a specified relative
10 of such individual, the adjusted gross in-
11 come of the taxpayer (with respect to
12 whom such individual would be treated as
13 a specified child after application of this
14 subparagraph) for the taxable year which
15 includes such month is higher than the
16 highest adjusted gross income of any par-
17 ent and any specified relative of the indi-
18 vidual for any taxable year which includes
19 such month (determined without regard to
20 any parent and any specified relative with
21 respect to whom such individual is not a
22 specified child, determined without regard
23 to subparagraphs (A) and (B) and after
24 application of this subparagraph).
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1 ‘‘(E) TREATMENT OF JOINT RETURNS.—
2 For purposes of this paragraph, with respect to

3 any month, 2 individuals filing a joint return
4 for the taxable year which includes such month
5 shall be treated as 1 individual.
6 ‘‘(F) PARENT.—Except as otherwise pro-
7 vided by the Secretary, the term ‘parent’ shall
8 have the same meaning as when used in section
9 152(c)(4).
10 ‘‘(4) SPECIAL RULES WITH RESPECT TO BIRTH
11 AND DEATH.—
12 ‘‘(A) BIRTH.—
13 ‘‘(i) IN GENERAL.—In the case of the
14 birth of an individual during any calendar
15 year, such individual shall be treated as a
16 specified child of the relevant taxpayer for
17 each calendar month in such calendar year
18 which precedes the calendar month re-
19 ferred to in clause (ii).
20 ‘‘(ii) RELEVANT TAXPAYER.—For
21 purposes of clause (i), the term ‘relevant

22 taxpayer’ means the taxpayer with respect
23 to whom the individual referred to in
24 clause (i) is a specified child for the first
25 month for which such individual is a speci-
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1 fied child with respect to any taxpayer (de-
2 termined without regard to this subpara-
3 graph).
4 ‘‘(B) DEATH.—
5 ‘‘(i) IN GENERAL.—In the case of the
6 death of an individual during any calendar
7 year, such individual shall be treated as a
8 specified child of the relevant taxpayer for
9 each calendar month in such calendar year
10 which follows the calendar month referred
11 to in clause (ii).
12 ‘‘(ii) RELEVANT TAXPAYER.—For
13 purposes of clause (i), the term ‘relevant

14 taxpayer’ means the taxpayer with respect
15 to whom the individual referred to in
16 clause (i) is a specified child for the last
17 month for which such individual is alive.
18 ‘‘(5) TREATMENT OF TEMPORARY ABSENCES.—
19 For purposes of this subsection—

20 ‘‘(A) IN GENERAL.—In the case of any in-
21 dividual’s temporary absence from such individ-
22 ual’s principal place of abode, each day com-
23 posing the temporary absence shall—
24 ‘‘(i) be treated as a day at such indi-
25 vidual’s principal place of abode, and
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1 ‘‘(ii) not be treated as a day at any
2 other location.
3 ‘‘(B) TEMPORARY ABSENCE.—For pur-
4 poses of subparagraph (A), an absence shall be
5 treated as temporary if—
6 ‘‘(i) the individual would have resided
7 at the place of abode but for the absence,
8 and
9 ‘‘(ii) under the facts and cir-
10 cumstances, it is reasonable to assume that
11 the individual will return to reside at the
12 place of abode.
13 ‘‘(6) SPECIAL RULE FOR DIVORCED PARENTS,
14 ETC.—Rules similar to the rules section 152(e) shall

15 apply for purposes of this subsection.
16 ‘‘(7) ELIGIBILTY DETERMINED ON BASIS OF
17 PRESUMPTIVE ELIGIBILITY.—
18 ‘‘(A) IN GENERAL.—If a period of pre-

19 sumptive eligibility is established under section
20 7527B(c) for any individual with respect to any
21 taxpayer—
22 ‘‘(i) such individual shall be treated as
23 the specified child of such taxpayer for any
24 month in such period of presumptive eligi-
25 bility, and
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1 ‘‘(ii) such individual shall not be
2 treated as the specified child of any other
3 taxpayer with respect to whom a period of
4 presumptive eligibility has not been estab-
5 lished for any such month.
6 ‘‘(B) ABILITY OF CREDIT CLAIMANTS TO
7 ESTABLISH PRESUMPTIVE ELIGIBILITY.—Noth-
8 ing in section 7527B(c) shall be interpreted to

9 preclude a taxpayer who elects not to receive
10 monthly advance child payments under section
11 7527B from establishing a period of presump-
12 tive eligibility (including any such period de-
13 scribed in section 7527B(c)(2)(D)) with respect
14 to any specified child for purposes of this sec-
15 tion.
16 ‘‘(d) PORTION OF CREDIT REFUNDABLE.—If the tax-
17 payer (in the case of a joint return, either spouse) has
18 a principal place of abode (determined as provided in sec-
19 tion 32) in the United States or Puerto Rico for more
20 than one-half of any calendar month during the taxable
21 year, so much of the credit otherwise allowed under sub-
22 section (a) as is attributable to monthly specified child al-
23 lowances with respect to any such calendar month shall
24 be allowed under subpart C (and not allowed under this
25 subpart).
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1 ‘‘(e) IDENTIFICATION REQUIREMENTS.—Rules simi-
2 lar to the rules of section 24(e) shall apply for purposes
3 of this section.
4 ‘‘(f) RESTRICTIONS ON TAXPAYERS WHO IMPROP-
5 ERLY CLAIMED CREDIT OR IMPROPERLY RECEIVED
6 MONTHLY ADVANCE CHILD PAYMENT.—
7 ‘‘(1) TAXPAYERS MAKING PRIOR FRAUDULENT
8 OR RECKLESS CLAIMS.—
9 ‘‘(A) IN GENERAL.—No credit shall be al-

10 lowed under this section for any taxable year
11 (and no payment shall be made under section
12 7527B for any month) in the disallowance pe-
13 riod.
14 ‘‘(B) DISALLOWANCE PERIOD.—For pur-
15 poses of subparagraph (A), the disallowance pe-
16 riod is—
17 ‘‘(i) the period of 10 taxable years
18 after the most recent taxable year for
19 which there was a final determination that
20 the taxpayer’s claim of credit under this
21 section or section 24 (or payment under
22 section 7527A or 7527B) was due to
23 fraud,
24 ‘‘(ii) the period of 2 taxable years
25 after the most recent taxable year for
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1 which there was a final determination that
2 the taxpayer’s claim of credit under this
3 section or section 24 (or payment under
4 section 7527A or 7527B) was due to reck-
5 less or intentional disregard of rules and
6 regulations (but not due to fraud), and
7 ‘‘(iii) in addition to any period deter-
8 mined under clause (i) or (ii) (as the case
9 may be), the period beginning on the date
10 of the final determination described in
11 such clause and ending with the beginning
12 of the period described in such clause.
13 ‘‘(2) TAXPAYERS MAKING IMPROPER PRIOR
14 CLAIMS.—In the case of a taxpayer who is denied

15 credit under this section or section 24 for any tax-
16 able year as a result of the deficiency procedures
17 under subchapter B of chapter 63, no credit shall be
18 allowed under this section for any subsequent tax-
19 able year (and no payment shall be made under sec-
20 tion 7527B for any subsequent month) unless the
21 taxpayer provides such information as the Secretary
22 may require to demonstrate eligibility for such cred-
23 it.
24 ‘‘(3) COORDINATION WITH POSSESSIONS OF
25 THE UNITED STATES.—In carrying out this section,
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1 the Secretary shall coordinate with each possession
2 of the United States to prevent the avoidance of the
3 application of this subsection.
4 ‘‘(g) RECONCILIATION OF CREDIT AND MONTHLY
5 ADVANCE CHILD PAYMENTS.—
6 ‘‘(1) IN GENERAL.—The amount otherwise de-
7 termined under subsection (a) with respect to any
8 taxpayer for any taxable year shall be reduced (but
9 not below zero) by the aggregate amount of pay-
10 ments made under section 7527B to such taxpayer
11 for one or more calendar months in such taxable
12 year. Any failure to so reduce the credit shall be
13 treated as arising out of a mathematical or clerical
14 error and assessed according to section 6213(b)(1).
15 ‘‘(2) RECAPTURE OF EXCESS ADVANCE PAY-
16 MENTS IN CERTAIN CIRCUMSTANCES.—In the case

17 of a taxpayer described in paragraph (3) for any
18 taxable year, the tax imposed by this chapter for
19 such taxable year shall be increased by the excess (if
20 any) of—
21 ‘‘(A) the aggregate amount of payments
22 made to the taxpayer under section 7527B for
23 one or more calendar months in such taxable
24 year, over
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1 ‘‘(B) the amount determined under sub-
2 section (a) with respect to the taxpayer for such
3 taxable year (without regard to paragraph (1)
4 of this subsection).
5 ‘‘(3) TAXPAYERS SUBJECT TO RECAPTURE.—
6 ‘‘(A) FRAUD OR RECKLESS OR INTEN-
7 TIONAL DISREGARD OF RULES AND REGULA-
8 TIONS.—A taxpayer is described in this para-

9 graph with respect to any taxable year if the
10 Secretary determines that the amount described
11 in paragraph (2)(A) with respect to the tax-
12 payer for such taxable year was determined on
13 the basis of fraud or a reckless or intentional
14 disregard of rules and regulations.
15 ‘‘(B) UNDERSTATEMENT OF INCOME;
16 CHANGES IN FILING STATUS.—If the amount

17 described in paragraph (2)(A) with respect to
18 the taxpayer for the taxable year was deter-
19 mined on the basis of an amount of the tax-
20 payer’s modified adjusted gross income which
21 was less than the taxpayer’s modified adjusted
22 gross income for the applicable taxable year (as
23 defined in subsection (b))—
24 ‘‘(i) such taxpayer shall be treated as
25 described in this paragraph, and
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1 ‘‘(ii) the increase determined under
2 paragraph (2) by reason of this subpara-
3 graph shall not exceed the excess of—
4 ‘‘(I) the amount described in
5 paragraph (2)(A), over
6 ‘‘(II) the amount which would be
7 so described if the payments described
8 therein had been determined on the
9 basis of the taxpayer’s modified ad-
10 justed gross income for the applicable
11 taxable year (as defined in subsection
12 (b)).
13 A rule similar to the rule of the preceding
14 sentence shall apply if the amount de-
15 scribed in paragraph (2)(A) with respect to
16 the taxpayer for the taxable year was de-
17 termined on the basis of a filing status of
18 the taxpayer which differs from the tax-
19 payer’s filing status for the applicable tax-
20 able year (as so defined).
21 ‘‘(C) PAYMENTS MADE OUTSIDE OF PE-
22 RIOD OF PRESUMPTIVE ELIGIBILITY.—If any

23 payment described in paragraph (2)(A) with re-
24 spect to the taxpayer for the taxable year was
25 made with respect to a child for a month which
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1 was not part of a period of presumptive eligi-
2 bility established under section 7527B(c) for
3 such child with respect to such taxpayer—
8 graph shall not exceed the portion of such
9 payment so made.
10 ‘‘(D) CERTAIN PAYMENTS MADE AFTER
11 NOTICE FROM SECRETARY.—If the Secretary

12 notifies a taxpayer under section 7527B(j)(2)
13 that such taxpayer is subject to recapture with
14 respect to any payments—
19 graph shall not exceed the aggregate
20 amount of such payments.
21 ‘‘(E) TAXPAYERS MOVING TO ANOTHER
22 JURISDICTION.—To minimize the amount of ad-

23 vance payments made under section 7527B to
24 ineligible individuals, the Secretary shall issue
25 regulations or other guidance for purposes of
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1 this paragraph which apply with respect to tax-
2 payers who are described in section
3 7527B(b)(4) with respect to the reference
4 month but are not so described with respect to
5 one or more months during the taxable year for
6 which advance payments under section 7527B
7 are made.
8 ‘‘(F) OTHER CIRCUMSTANCES TO PREVENT
9 ABUSE.—A taxpayer is described in this para-

10 graph with respect to any taxable year pursuant
11 to regulations or other guidance of the Sec-
12 retary describing other recapture circumstances
13 to facilitate the administration and enforcement
14 by the Secretary of section 7527B to minimize
15 the amount of advance payments made under
16 section 7527B to ineligible individuals and to
17 prevent abuse.
18 ‘‘(4) JOINT RETURNS.—Except as otherwise
19 provided by the Secretary, in the case of an advance
20 payment made under section 7527B with respect to
21 a joint return, half of such payment shall be treated
22 as having been made to each individual filing such
23 return.
24 ‘‘(h) INFLATION ADJUSTMENTS.—
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1 ‘‘(1) MONTHLY SPECIFIED CHILD ALLOW-
2 ANCE.—

4 month beginning after December 31, 2022,
5 each of the dollar amounts in subsection (b)(1)
6 shall be increased by an amount equal to—
9 which—
13 such month begins, exceeds
16 ‘‘(B) ROUNDING.—Any increase under
17 subparagraph (A) which is not a multiple of
18 $10 shall be rounded to the nearest multiple of
19 $10.
20 ‘‘(2) INITIAL THRESHOLD AMOUNT.—

23 2022, the dollar amounts in subclauses (I) and
24 (III) of subsection (b)(2)(D)(i) shall each be in-
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3 which—
7 such taxable year begins, exceeds
10 ‘‘(B) ROUNDING.—Any increase under
11 subparagraph (A) which is not a multiple of
12 $5,000 shall be rounded to the nearest multiple
13 of $5,000.
14 ‘‘(i) APPLICATION OF CREDIT IN POSSESSIONS.—
15 ‘‘(1) MIRROR CODE POSSESSIONS.—

17 pay to each possession of the United States
18 with a mirror code tax system amounts equal to
19 the loss (if any) to that possession by reason of
20 the application of this section (determined with-
21 out regard to this subsection) with respect to
22 taxable years beginning after 2022 and before
23 2026. Such amounts shall be determined by the
24 Secretary based on information provided by the
25 government of the respective possession.
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1 ‘‘(B) COORDINATION WITH CREDIT AL-
2 LOWED AGAINST UNITED STATES INCOME
3 TAXES.—No credit shall be allowed under this

4 section for any taxable year to any individual to
5 whom a credit is allowable against taxes im-
6 posed by a possession of the United States with
7 a mirror code tax system by reason of the appli-
8 cation of this section in such possession for
9 such taxable year.
10 ‘‘(C) MIRROR CODE TAX SYSTEM.—For
11 purposes of this paragraph, the term ‘mirror

12 code tax system’ means, with respect to any
13 possession of the United States, the income tax
14 system of such possession if the income tax li-
15 ability of the residents of such possession under
16 such system is determined by reference to the
17 income tax laws of the United States as if such
18 possession were the United States.
19 ‘‘(2) CROSS REFERENCES RELATED TO APPLI-
20 CATION OF CREDIT TO RESIDENTS OF PUERTO
21 RICO.—
22 ‘‘(A) For application of refundable credit

23 to residents of Puerto Rico, see subsection (d).
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1 ‘‘(B) For application of advance payment
2 to residents of Puerto Rico, see section
3 7527B(b)(4).
4 ‘‘(3) AMERICAN SAMOA.—

6 pay to American Samoa amounts estimated by
7 the Secretary as being equal to the aggregate
8 benefits that would have been provided to resi-
9 dents of American Samoa by reason of the ap-
10 plication of this section for taxable years begin-
11 ning after 2022 and before 2026 if the provi-
12 sions of this section had been in effect in Amer-
13 ican Samoa (applied as if American Samoa
14 were the United States and without regard to
15 the application of this section to residents of
16 Puerto Rico under subsection (d)).
17 ‘‘(B) DISTRIBUTION REQUIREMENT.—Sub-
18 paragraph (A) shall not apply unless American

19 Samoa has a plan, which has been approved by
20 the Secretary, under which American Samoa
21 will promptly distribute such payments to its
22 residents.
23 ‘‘(C) COORDINATION WITH CREDIT AL-
24 LOWED AGAINST UNITED STATES INCOME
25 TAXES.—
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2 taxable year with respect to which a plan
3 is approved under subparagraph (B), this
4 section (other than this subsection) shall
5 not apply to any individual eligible for a
6 distribution under such plan.
7 ‘‘(ii) APPLICATION OF SECTION IN
8 EVENT OF ABSENCE OF APPROVED
9 PLAN.—In the case of a taxable year with

10 respect to which a plan is not approved
11 under subparagraph (B), subsection (d)
12 shall be applied by substituting ‘, Puerto
13 Rico, or American Samoa’ for ‘or Puerto
14 Rico’.
15 ‘‘(4) TREATMENT OF PAYMENTS.—For pur-
16 poses of section 1324 of title 31, United States
17 Code, the payments under this subsection shall be
18 treated in the same manner as a refund due from
19 a credit provision referred to in subsection (b)(2) of
20 such section.
21 ‘‘(j) REGULATIONS.—The Secretary shall issue such
22 regulations or other guidance as the Secretary determines
23 necessary or appropriate to carry out the purposes of this
24 section, including regulations or other guidance—
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1 ‘‘(1) for determining whether an individual re-
2 ceives care from a taxpayer for purposes of sub-
3 section (c)(1), and
4 ‘‘(2) to coordinate or modify the application of
5 this section and section 24, 7527A, and 7527B in
6 the case of any taxpayer—
7 ‘‘(A) whose taxable year is other than a
8 calendar year,
9 ‘‘(B) whose filing status for a taxable year
10 is different from the status used for deter-
11 mining one or more monthly payments under
12 section 7527B during such taxable year, or
13 ‘‘(C) whose principal place of abode for
14 any month is different from the principal place
15 of abode used for determining the monthly pay-
16 ment under section 7527B for such month.
17 ‘‘(k) TERMINATION.—This section shall not apply to
18 taxable years beginning after December 31, 2025.
19 ‘‘SEC. 24B. CREDIT FOR CERTAIN OTHER DEPENDENTS.
20 ‘‘(a) IN GENERAL.—There shall be allowed as a cred-

21 it against the tax imposed by this chapter for the taxable
22 year an amount equal to $500 with respect to each speci-
23 fied dependent of such taxpayer for such taxable year.
24 ‘‘(b) LIMITATION BASED ON MODIFIED ADJUSTED
25 GROSS INCOME.—
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1 ‘‘(1) IN GENERAL.—The amount of the credit
2 allowable under subsection (a) shall be reduced (but
4 thereof) by which the taxpayer’s modified adjusted
5 gross income exceeds the threshold amount.
6 ‘‘(2) THRESHOLD AMOUNT.—For purposes of
7 this subsection, the term ‘threshold amount’
8 means—
9 ‘‘(A) $400,000, in the case of a joint re-
10 turn or surviving spouse (as defined in section
11 2(a)),
12 ‘‘(B) $300,000, in the case of a head of
13 household (as defined in section 2(b)), and
14 ‘‘(C) $200,000, in any other case.
15 ‘‘(3) MODIFIED ADJUSTED GROSS INCOME.—
16 For purposes of this subsection, the term ‘modified

17 adjusted gross income’ means adjusted gross income
18 increased by any amount excluded from gross in-
19 come under section 911, 931, or 933.
20 ‘‘(c) SPECIFIED DEPENDENT.—For purposes of this
21 section, the term ‘specified dependent’ means, with respect
22 to any taxpayer for any taxable year, any dependent of
23 such taxpayer for such taxable year unless such depend-
24 ent—
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1 ‘‘(1) is a specified child of the taxpayer, or any
2 other taxpayer, for any month during such taxable
3 year, or
4 ‘‘(2) would not be a dependent if subparagraph
5 (A) of section 152(b)(3) were applied without regard
6 to all that follows ‘resident of the United States’.
7 ‘‘(d) IDENTIFICATION REQUIREMENTS.—Rules simi-
8 lar to the rules of section 24(e) shall apply for purposes
9 of this section.
10 ‘‘(e) TAXABLE YEAR MUST BE FULL TAXABLE
11 YEAR.—Except in the case of a taxable year closed by rea-
12 son of the death of the taxpayer, no credit shall be allow-
13 able under this section in the case of a taxable year cov-
14 ering a period of less than 12 months.
15 ‘‘(f) INFLATION ADJUSTMENT.—
16 ‘‘(1) IN GENERAL.—In the case of any taxable
17 year beginning after December 31, 2022, the $500
18 amount in subsection (a) shall be increased by an
20 ‘‘(A) such dollar amount, multiplied by
21 ‘‘(B) the percentage (if any) by which—
22 ‘‘(i) the CPI (as defined in section
23 1(f)(4)) for the calendar year preceding
24 the calendar year in which such taxable
25 year begins, exceeds
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1 ‘‘(ii) the CPI (as so defined) for cal-
2 endar year 2020.
3 ‘‘(2) ROUNDING.—If the increase determined
4 under paragraph (1) is not a multiple of $10, such
5 increase shall be rounded to the nearest multiple of
6 $10.
7 ‘‘(g) REGULATIONS.—The Secretary shall issue such
10 section.
11 ‘‘(h) TERMINATION.—This section shall not apply to
12 taxable years beginning after December 31, 2025.’’.
13 (b) MONTHLY PAYMENT OF CHILD TAX CREDIT.—
14 Chapter 77 is amended by inserting after section 7527A
16 ‘‘SEC. 7527B. MONTHLY PAYMENTS OF CHILD TAX CREDIT.
17 ‘‘(a) IN GENERAL.—The Secretary shall establish a

18 program for making payments to taxpayers with respect
19 to each calendar month equal to the monthly advance child
20 payment determined with respect to such taxpayer for
21 such month.
22 ‘‘(b) MONTHLY ADVANCE CHILD PAYMENT.—For
23 purposes of this section and except as otherwise provided
24 in this section, the term ‘monthly advance child payment’
25 means, with respect to any taxpayer for any calendar
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1 month, the amount (if any) which is estimated by the Sec-
2 retary as being equal to the monthly specified child allow-
3 ance which would be determined under section 24A(b)
4 with respect to such taxpayer for such calendar month if—
5 ‘‘(1) unless determined by the Secretary based
6 on any information known to the Secretary, the only
7 specified children of such taxpayer for such calendar
8 month are the specified children of such taxpayer for
9 the reference month,
11 on any information known to the Secretary, the ages
12 of such children (and the status of such children as
13 specified children) are determined for such calendar
14 month by taking into account the passage of time
15 since such reference month,
16 ‘‘(3) the limitations of section 24A(b)(2) were
17 applied with respect to the reference taxable year
18 rather than with respect to the applicable taxable
19 year, and
21 on any information known to the Secretary, no
22 monthly specified child allowance were determined
23 with respect to such taxpayer for such calendar
24 month unless the taxpayer (in the case of a joint re-
25 turn, either spouse) has a principal place of abode
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1 (determined as provided in section 32) in the United
2 States or Puerto Rico for more than one-half of the
3 reference month.
4 ‘‘(c) PRESUMPTIVE ELIGIBILITY.—
5 ‘‘(1) IN GENERAL.—An individual shall be
6 treated as a specified child of a taxpayer for pur-
7 poses of determining any monthly advance child pay-
8 ment under this section only if such month is part
9 of the period of presumptive eligibility determined by
10 the Secretary under this subsection with respect to
11 such specified child and such taxpayer (determined
12 by treating the month described in subclause (I) of
13 paragraph (2)(A)(ii) as being the first month begin-
14 ning after the determination described in such sub-
15 clause).
16 ‘‘(2) PERIOD OF PRESUMPTIVE ELIGIBILITY.—

18 ‘‘(A) IN GENERAL.—Except as otherwise
19 provided by the Secretary, the term ‘period of
20 presumptive eligibility’ means the period—
21 ‘‘(i) beginning with the month for
22 which presumptive eligibility is established,
23 and
24 ‘‘(ii) ending with the earliest of—
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1 ‘‘(I) the beginning of the month
2 described in clause (i) if the Secretary
3 determines that the taxpayer com-
4 mitted fraud or intentionally dis-
5 regarded rules or regulations in estab-
6 lishing or maintaining presumptive
7 eligibility,
8 ‘‘(II) in the case of any notifica-
9 tion from the Secretary that the pe-
10 riod of presumptive eligibility has
11 been terminated or suspended by rea-
12 son of any question regarding eligi-
13 bility of the taxpayer for monthly ad-
14 vance child payments with respect to
15 such child, the month specified in
16 such notice as the month on which
17 such termination or suspension be-
18 gins, and
19 ‘‘(III) the month following any
20 failure of the taxpayer to make the re-
21 quired annual renewal of presumptive
22 eligibility by such date as the Sec-
23 retary may provide.
24 ‘‘(B) ESTABLISHING PRESUMPTIVE ELIGI-
25 BILITY.—A taxpayer shall establish presumptive
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1 eligibility with respect to any specified child for
2 any month at such time and in such manner as
3 the Secretary may provide. Except as otherwise
4 provided by the Secretary, in order to establish
5 a period of presumptive eligibility the taxpayer
6 must express a reasonable expectation and in-
7 tent that the taxpayer will continue to be eligi-
8 ble with respect to such specified child for at
9 least the two months following the month for
10 which presumptive eligibility is to be estab-
11 lished.
12 ‘‘(C) METHOD OF ESTABLISHING PRE-
13 SUMPTIVE ELIGIBILITY.—The Secretary shall

14 ensure information to establish presumptive eli-
15 gibility under this paragraph may be provided
16 on the return of tax for the taxable year ending
17 before the calendar year which includes the
18 month for which such eligibility is to be estab-
19 lished, through the on-line portal described in
20 subsection (c), or in such other manner as the
21 Secretary may provide.
22 ‘‘(D) INCLUSION OF AUTOMATIC GRACE
23 PERIODS AND PERIODS OF HARDSHIP.—The pe-

24 riod of presumptive eligibility shall include any
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1 period to which paragraph (1) or (2) of sub-
2 section (g) applies.
3 ‘‘(E) AUTOMATIC ELIGIBILITY FOR BIRTH
4 OF CHILD.—The Secretary shall issue regula-

5 tions or other guidance to establish procedures
6 pursuant to which, to the maximum extent ad-
7 ministratively practicable—
8 ‘‘(i) a parent of a child born during a
9 calendar month shall be treated as auto-
10 matically establishing presumptive eligi-
11 bility with respect to such child,
12 ‘‘(ii) the period of such automatic pre-
13 sumptive eligibility is determined, and
14 ‘‘(iii) the first monthly advance child
15 payment with respect to such child is ad-
16 justed to properly take into account each
17 month in the taxable year preceding such
18 birth.
19 ‘‘(F) PRESUMPTIVE ELIGIBILITY BASED
20 ON CERTAIN GOVERNMENT PROGRAMS.—The
21 Secretary shall issue regulations or other guid-

22 ance to establish procedures under which—
23 ‘‘(i) based on information provided to
24 the Secretary by one or more government
25 entities, a parent or specified relative of a
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1 child is treated as automatically estab-
2 lishing presumptive eligibility with respect
3 to such child, and
4 ‘‘(ii) the period for which such auto-
5 matic presumptive eligibility is determined
6 (including any additional circumstances
7 under which such period will terminate).
8 ‘‘(G) COORDINATION WITH PRESUMP-
9 TION.—For purposes of determining the status

10 of any individual as a specified child for pur-
11 poses of determining presumptive eligibility
12 with respect to any period, section 24A(c) shall
13 be applied without regard to paragraph (7)
14 thereof.
15 ‘‘(3) NOTICE OF TERMINATION OF PRESUMP-
16 TIVE ELIGIBILITY BY REASON OF FAILURE TO MAKE
17 ANNUAL RENEWAL.—If a taxpayer’s period of pre-

18 sumptive eligibility with respect to any specified
19 child terminates by reason of paragraph
20 (2)(A)(ii)(IV), the Secretary shall provide the tax-
21 payer a written notice of such termination.
22 ‘‘(d) DETERMINATION OF REFERENCE MONTH AND
23 REFERENCE TAXABLE YEAR.—For purposes of this sec-

24 tion—
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1 ‘‘(1) REFERENCE MONTH.—The term ‘reference
2 month’ means, with respect to any taxpayer for any
3 calendar month, the most recent of—
4 ‘‘(A) in the case of a taxpayer who filed a
5 return of tax for the last taxable year ending
6 before such calendar month, the last month of
7 such taxable year,
8 ‘‘(B) in the case of a taxpayer who filed a
9 return of tax for the taxable year preceding the
10 taxable year described in subparagraph (A), the
11 last month of such preceding taxable year, and
12 ‘‘(C) in the case of a taxpayer who pro-
13 vides, through a specified alternative mecha-
14 nism, information which is sufficient to esti-
15 mate the taxpayer’s monthly advance child pay-
16 ment for such month, such month.
17 ‘‘(2) REFERENCE TAXABLE YEAR.—The term
18 ‘reference taxable year’ means, with respect to any
19 taxpayer for any calendar month, the most recent
20 of—
21 ‘‘(A) the taxable year described in subpara-
22 graph (A) or (B) of paragraph (1), or
23 ‘‘(B) in the case of a taxpayer who pro-
24 vides, through a specified alternative mecha-
25 nism, information which is sufficient to esti-
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1 mate the taxpayer’s modified adjusted gross in-
2 come for the taxable year which includes such
3 month, such taxable year.
4 ‘‘(3) AVAILABILITY OF INFORMATION.—Any
5 month or year referred to in subparagraphs (A),

6 (B), or (C) of paragraph (1) or subparagraph (A) or
7 (B) of paragraph (2) shall not be taken into account
8 in determining the reference month or reference tax-
9 able year with respect to any calendar month unless
10 all relevant information with respect to such month
11 or year is available to the Secretary and the Sec-
12 retary has adequate time to make estimates under
13 this section on the basis of such information before
14 the beginning of such calendar month.
15 ‘‘(4) TREATMENT OF INSUFFICIENT INFORMA-
16 TION.—Except as otherwise provided by the Sec-

17 retary—
18 ‘‘(A) if a taxpayer is not described in sub-
19 paragraph (A), (B), or (C) of paragraph (1)
20 with respect to any calendar month, the month-
21 ly advance child payment with respect to such
22 taxpayer for such calendar month shall be
23 treated as zero unless the Secretary determines
24 that the Secretary can make the estimate de-
25 scribed in subsection (b) on the basis of infor-
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1 mation known to the Secretary which the Sec-
2 retary determines is reasonably reliable, and
3 ‘‘(B) if the taxpayer is not described in
4 paragraph (1)(C) and the information on the
5 return of tax referred to in subparagraph (A)
6 or (B) of paragraph (1) does not establish the
7 status of the taxpayer (in the case of a joint re-
8 turn, either spouse) as having a principal place
9 of abode (determined as provided in section 32)
10 in the United States or Puerto Rico for more
11 than one-half of the reference month, the Sec-
12 retary shall determine such status based on in-
13 formation known to the Secretary.
14 ‘‘(5) TRANSITION RULE.—In any case with re-
15 spect to which section 24A was not in effect for the
16 taxable year described in subparagraph (A), (B), or
17 (C) of paragraph (1) (whichever is applicable), sub-
18 section (b)(1) shall be applied by substituting ‘the
19 qualifying children of such taxpayer for the taxable
20 year which includes the reference month’ for ‘the
21 specified children of such taxpayer for the reference
22 month’.
23 ‘‘(e) ON-LINE INFORMATION PORTAL; SPECIFIED AL-
24 TERNATIVE MECHANISMS.—
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1 ‘‘(1) ON-LINE INFORMATION PORTAL.—The
2 Secretary shall establish an on-line portal which al-

3 lows taxpayers to—
4 ‘‘(A) subject to such restrictions as the
5 Secretary may provide, elect to begin or cease
6 receiving payments under this section, and
7 ‘‘(B) provide information to the Secretary
8 which is relevant in determining the monthly
9 advance child payment and the taxpayer’s eligi-
10 bility for such payment, including information
11 regarding—
12 ‘‘(i) the number of the taxpayer’s
13 specified children, including by reason of
14 the birth of a child,
15 ‘‘(ii) the taxpayer’s marital status,
16 ‘‘(iii) the taxpayer’s modified adjusted
17 gross income,
18 ‘‘(iv) the taxpayer’s principal place of
19 abode, and
20 ‘‘(v) any other factor which the Sec-
21 retary may provide.
22 ‘‘(2) SPECIFIED ALTERNATIVE MECHANISM.—
23 For purposes of this section, the term ‘specified al-

24 ternative mechanism’ means the on-line portal estab-
25 lished under paragraph (1), the on-line portal estab-
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1 lished under section 7527A, and any other mecha-
2 nism or method established by the Secretary to allow
3 taxpayer’s to provide the information described in
4 paragraph (1) (including in connection with the fil-
5 ing of any return of tax).
6 ‘‘(f) SPECIFIED CHILD OF MORE THAN 1 TAX-
7 PAYER.—
8 ‘‘(1) IN GENERAL.—In the event that (without

9 regard to this paragraph and determined without re-
10 gard to any election under subsection (e)(1)) any
11 specified child would be taken into account in deter-
12 mining the monthly advance child payment of more
13 than one taxpayer for the same calendar month—
14 ‘‘(A) except as provided in subparagraph
15 (B), such child shall be so taken into account
16 only with respect to the taxpayer with the most
17 recent reference month, and
18 ‘‘(B) if any such taxpayer is described in
19 subsection (d)(1)(C) (or more than 1 taxpayer
20 is described in subparagraph (A) of this para-
21 graph), the Secretary shall establish procedures
22 under which the Secretary expeditiously adju-
23 dicates the taxpayer’s competing claims of pre-
24 sumptive eligibility with respect to the same
25 child.
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1 ‘‘(2) PROVISIONS RELATED TO ADJUDICA-
2 TION.—
3 ‘‘(A) EXPEDITED PROCESS; APPEALS.—
4 The procedures established under paragraph

5 (1)(B) shall include—
6 ‘‘(i) an expedited process for tax-
7 payers who meet such requirements as the
8 Secretary may establish for such expedited
9 process, and
10 ‘‘(ii) procedures for adjudicating an
11 appeal of an adverse decision.
12 ‘‘(B) INFORMATION RECEIPT AND COORDI-
13 NATION.—The Secretary may enter into agree-

14 ments to receive information from, and other-
15 wise coordinate with—
16 ‘‘(i) Federal agencies (including the
17 Social Security Administration and the De-
18 partment of Agriculture),
19 ‘‘(ii) any State, local government,
20 Tribal government, or possession of the
21 United States, and
22 ‘‘(iii) any other individual or entity
23 that the Secretary determines to be appro-
24 priate for purposes of adjudicating a com-
25 peting claim described in paragraph (1).
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1 ‘‘(C) ADJUDICATION NOT TREATED AS AS-
2 SESSMENT.—An adjudication under the proce-

3 dures established under paragraph (1)(B) (in-
4 cluding the adjudication of any appeal) shall
5 not be treated as an assessment described in
6 section 6201.
7 ‘‘(D) ADJUDICATION NOT TREATED AS IN-
8 SPECTION OF TAXPAYER’S BOOKS OF AC-
9 COUNT.—The inspection of a taxpayer’s books

10 of account in connection with any adjudication
11 under the procedures established under para-
12 graph (1)(B) (including the adjudication of any
13 appeal) shall not be treated as an examination
14 or inspection of a taxpayer’s books of account
15 for purposes of section 7605(b).
16 ‘‘(3) RETROACTIVE PAYMENTS.—If, pursuant to
17 the procedures established under paragraph (1)(B),
18 the Secretary determines that a child is a specified
19 child of a taxpayer and the Secretary did not make
20 payments to such taxpayer with respect to such child
21 for any portion of the period during which the deter-
22 mination was made, the Secretary may make a one-
23 time payment to the taxpayer with respect to which
24 such child is the specified child in an amount equal
25 to the aggregate amount by which the monthly ad-
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1 vance child payments to such taxpayer would have
2 increased during such period if such determination
3 had been made immediately.
4 ‘‘(4) RECAPTURE OF PAYMENTS.—If, pursuant
5 to the procedures established under paragraph
6 (1)(B), the Secretary makes payments with respect
7 to the child during the period during which the de-
8 termination is made—
9 ‘‘(A) the Secretary shall provide each tax-
10 payer which receives such payments notice that
11 such payments may be subject to recapture,
12 and
13 ‘‘(B) upon making such determination, the
14 Secretary shall determine on the basis of the
15 facts and circumstances of each such taxpayer
16 whether any such payments should be subject
17 to recapture and shall so notify each such tax-
18 payer.
19 ‘‘(g) RULES RELATED TO GRACE PERIODS AND
20 HARDSHIPS.—
21 ‘‘(1) AUTOMATIC GRACE PERIOD.—
22 ‘‘(A) IN GENERAL.—Notwithstanding sub-

23 section (f), in the case of any failure or delay
24 in establishing a period of presumptive eligi-
25 bility with respect to which the taxpayer elects
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1 the application of this subparagraph, credit
2 under section 24A or retroactive payment under
3 this section (similar to the payment described in
4 subsection (f)(3)) shall be allowed or made with
5 respect to so much of the period of such failure
6 or delay as does not exceed 3 months. The pre-
7 ceding sentence shall not apply if the Secretary
8 determines that such failure or delay was due
9 to fraud or reckless or intentional disregard of
10 rules and regulations.
11 ‘‘(B) LIMITATION.—Subparagraph (A)
12 shall not apply with respect to any taxpayer
13 more than once during any 36-month period.
14 ‘‘(2) HARDSHIP.—Notwithstanding subsection
15 (f), if the Secretary determines that a failure or
16 delay in establishing a period of presumptive eligi-
17 bility with respect to any specified child was due to
18 domestic violence, serious illness, natural disaster, or
19 any other hardship, credit under section 24A or ret-
20 roactive payment under this section (similar to the
21 payment described in subsection (f)(3)) shall be al-
22 lowed or made with respect to so much of the period
23 of such failure or delay as does not exceed 6 months.
24 ‘‘(h) PROVISIONS RELATED TO FORM, MANNER, AND
25 TREATMENT OF PAYMENTS.—
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1 ‘‘(1) APPLICATION OF ELECTRONIC FUNDS PAY-
2 MENT REQUIREMENT.—The payments made by the

3 Secretary under subsection (a) shall be made by
4 electronic funds transfer to the same extent and in
5 the same manner as if such payments were Federal
6 payments not made under this title.
7 ‘‘(2) APPLICATION OF CERTAIN RULES.—Rules
8 similar to the rules of subparagraphs (B) and (C) of

9 section 6428A(f)(3) shall apply for purposes of this
10 section, applied by substituting ‘January 1, 2022’
11 for ‘January 1, 2019’ in clauses (i) and (ii) of such
12 subparagraph (B).
13 ‘‘(3) EXCEPTION FROM REDUCTION OR OFF-
14 SET.—Any payment made to any individual under

15 this section shall not be—
16 ‘‘(A) subject to reduction or offset pursu-
17 ant to subsection (c), (d), (e), or (f) of section
18 6402 or any similar authority permitting offset,
19 or
20 ‘‘(B) reduced or offset by other assessed
21 Federal taxes that would otherwise be subject
22 to levy or collection.
23 ‘‘(4) APPLICATION OF ADVANCE PAYMENTS IN
24 THE POSSESSIONS OF THE UNITED STATES.—
25 ‘‘(A) PUERTO RICO.—
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1 ‘‘(i) For application of child tax credit
2 to residents of Puerto Rico, see section
3 24A(d).
4 ‘‘(ii) For application of monthly ad-
5 vance child payments to residents of Puer-
6 to Rico, see subsection (b)(4).
7 ‘‘(B) MIRROR CODE POSSESSIONS.—In the
8 case of any possession of the United States with
9 a mirror code tax system (as defined in section
10 24A(i)(1)(C)), this section shall not be treated
11 as part of the income tax laws of the United
12 States for purposes of determining the income
13 tax law of such possession unless such posses-
14 sion elects to have this section be so treated.
15 ‘‘(C) ADMINISTRATIVE EXPENSES OF AD-
16 VANCE PAYMENTS.—
17 ‘‘(i) MIRROR CODE POSSESSIONS.—In
18 the case of any possession described in

19 subparagraph (B) which makes the elec-
20 tion described in such subparagraph, the
21 amount otherwise paid by the Secretary to
22 such possession under section 24A(i)(1)(A)
23 with respect to taxable years beginning in
24 2023, 2024, and 2025 shall each be in-
25 creased by $300,000 if such possession has
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1 a plan, which has been approved by the
2 Secretary, for making monthly advance
3 child payments consistent with such elec-
4 tion.
5 ‘‘(ii) AMERICAN SAMOA.— The
6 amount otherwise paid by the Secretary to
7 American Samoa under subparagraph (A)
8 of section 24A(i)(3) with respect to taxable
9 years beginning in 2023, 2024, and 2025
10 shall each be increased by $300,000 if the
11 plan described in subparagraph (B) of
12 such section includes a program, which has
13 been approved by the Secretary, for mak-
14 ing monthly advance child payments under
15 rules similar to the rules of this section.
16 ‘‘(iii) TIMING OF PAYMENT.—The
17 Secretary may pay, upon the request of the

18 possession of the United States to which
19 the payment is to be made, the amount of
20 the increase determined under clause (i) or
21 (ii), respectively, immediately upon ap-
22 proval of the plan with respect to which
23 such payment relates.
24 ‘‘(i) APPLICATION OF CERTAIN DEFINITIONS AND
25 RULES APPLICABLE TO CHILD TAX CREDIT.—
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1 ‘‘(1) DEFINITIONS.—Except as otherwise pro-
2 vided in this section, terms used in this section
3 which are also used in section 24A shall have the
4 same respective meanings as when used in section
5 24A.
6 ‘‘(2) TREATMENT OF CERTAIN DEATHS.—A
7 child shall not be taken into account in determining

8 the monthly advance child payment for any calendar
9 month if the death of such child before the begin-
10 ning of the calendar year which includes such month
11 is known to the Secretary as of date on which the
12 Secretary estimates such payment.
13 ‘‘(3) IDENTIFICATION REQUIREMENTS.—Rules
14 similar to the rules which apply under section

15 24A(e) shall apply for purposes of this section ex-
16 cept that such rules shall apply with respect to the
17 return of tax for the reference taxable year or, in the
18 case of information provided through a specified al-
19 ternative mechanism, with respect to the information
20 provided through such mechanism.
21 ‘‘(4) RESTRICTIONS ON TAXPAYERS WHO IM-
22 PROPERLY CLAIMED CREDIT OR MONTHLY ADVANCE
23 CHILD PAYMENTS.—For restrictions on taxpayers

24 who improperly claimed credit or monthly advance
25 child payments, see section 24A(f).
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1 ‘‘(j) NOTICE OF PAYMENTS.—
2 ‘‘(1) IN GENERAL.—Not later than January 31
3 of the calendar year following any calendar year dur-
4 ing which the Secretary makes one or more pay-
5 ments to any taxpayer under this section, the Sec-
6 retary shall provide such taxpayer with a written no-
7 tice which includes—
8 ‘‘(A) the taxpayer’s taxpayer identity (as
9 defined in section 6103(b)(6)),
10 ‘‘(B) the aggregate amount of such pay-
11 ments made to such taxpayer during such cal-
12 endar year, and
13 ‘‘(C) such other information as the Sec-
14 retary determines appropriate.
15 ‘‘(2) CERTAIN PAYMENTS SUBJECT TO RECAP-
16 TURE.—In the case of any payments made to a tax-

17 payer which the Secretary has determined are sub-
18 ject to recapture, the notice provided under para-
19 graph (1) to such taxpayer shall include the amount
20 of such payments.
21 ‘‘(k) REGULATIONS.—The Secretary shall issue such
24 section.
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1 ‘‘(l) TERMINATION.—No payments shall be made
2 under the program established under subsection (a) with
3 respect to any month beginning after December 31,
4 2025.’’.
5 (c) SUSPENSION OF CHILD TAX CREDIT DURING PE-
6 RIOD THAT MONTHLY CHILD TAX CREDIT IS IN EF-
7 FECT.—Section 24 is amended by adding at the end the
8 following new subsection:
9 ‘‘(l) COORDINATION WITH MONTHLY CHILD TAX
10 CREDIT.—This section shall not apply to (and no payment
11 shall be made under subsection (k) with respect to) any
12 taxable year beginning after December 31, 2022, and be-
13 fore January 1, 2026.’’.
15 (1) Section 26(b)(2) is amended by striking
16 ‘‘and’’ at the end of subparagraph (Y), by striking
17 the period at the end of subparagraph (Z) and in-
18 serting ‘‘, and’’, and by adding at the end the fol-
19 lowing new subparagraph:
20 ‘‘(AA) section 24A(g)(2) (relating to recap-
21 ture of certain monthly advance child pay-
22 ments).’’.
23 (2) Section 152(f)(6)(B)(ii) is amended to read
24 as follows:
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1 ‘‘(ii) the credits under sections 24,
2 24A, and 24B and the payments under
3 sections 7527A and 7527B,’’.
4 (3) Section 3402(f)(1)(C) is amended by insert-
5 ing ‘‘or section 24A (determined after application of
6 subsection (g) thereof)’’ after ‘‘section 24 (deter-
7 mined after application of subsection (j) thereof)’’.
8 (4) Section 6103(l)(13)(A)(v) is amended by in-
9 sert ‘‘or section 24A, as the case may be’’ after
10 ‘‘section 24’’.
11 (5) Section 6211(b)(4)(A) is amended by insert-
12 ing ‘‘24A by reason of subsection (d) thereof,’’ after
13 ‘‘24 by reason of subsections (d) and (i)(1) there-
14 of,’’.
15 (6) Section 6213(g)(2)(I) is amended by insert-
16 ing ‘‘or section 24A(e) (relating to monthly child tax
17 credit)’’ after ‘‘section 24(e) (relating to child tax
18 credit)’’.
19 (7) Section 6213(g)(2)(L) is amended by insert-
20 ing ‘‘24A,’’ after ‘‘24,’’.
21 (8) Section 6213(g)(2)(P) is amended—
22 (A) by inserting ‘‘or 24A(f)(2)’’ after ‘‘sec-
23 tion 24(g)(2)’’,
24 (B) by inserting ‘‘or 24A’’ after ‘‘under
25 section 24’’, and
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1 (C) by striking ‘‘subsection (g)(1) thereof’’
2 and inserting ‘‘section 24(g)(1) or section
3 24A(f)(1), respectively’’.
4 (9) Section 6695(g)(2) is amended by inserting
5 ‘‘24A,’’ after ‘‘24,’’.
9 (A) by inserting ‘‘24A,’’ after ‘‘24,’’, and
10 (B) by inserting ‘‘7527B,’’ after ‘‘7527A,’’.
11 (11) The table of sections for subpart A of part
14 lowing new items:
‘‘Sec. 24A. Monthly child tax credit.
‘‘Sec. 24B. Credit for certain other dependents.’’.
15 (12) The table of sections for chapter 77 is

16 amended by inserting after the item relating to sec-
17 tion 7527A the following new item:
‘‘Sec. 7527B. Monthly payments of child tax credit.’’.

20 vided in this subsection, the amendments made by
21 this section shall apply to taxable years beginning
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1 (2) MONTHLY ADVANCE CHILD PAYMENTS.—
2 The amendments made by subsection (b) shall apply

3 to payments made for calendar months beginning
5 SEC. 137104. REFUNDABLE CHILD TAX CREDIT AFTER 2025.
6 (a) IN GENERAL.—Section 24, as amended by the

7 preceding provisions of this Act, is amended by adding at
8 the end the following new subsection:
9 ‘‘(m) REFUNDABLE CREDIT AFTER 2025.—In the
10 case of any taxable year beginning after December 31,
11 2025, if the taxpayer (in the case of a joint return, either
12 spouse) has a principal place of abode in the United States
13 (determined as provided in section 32) for more than one-
14 half of the taxable year or is a bona fide resident of Puerto
15 Rico (within the meaning of section 937(a)) for such tax-
16 able year—
17 ‘‘(1) subsection (d) shall not apply, and
18 ‘‘(2) the credit determined under subsection (a)
19 (after application of paragraph (1)) shall be allowed
20 under subpart C (and not allowed under this sub-
21 part).’’.
22 (b) CONFORMING AMENDMENTS RELATED TO POS-
23 SESSIONS OF THE UNITED STATES.—
24 (1) PUERTO RICO.—Section 24(k)(2) is amend-
25 ed—
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1 (A) in subparagraph (B) (as amended by
2 the preceding provisions of this Act)—
3 (i) by inserting ‘‘and before January
4 1, 2026,’’ after ‘‘December 31, 2022,’’,
5 and
6 (ii) by inserting ‘‘AND BEFORE 2026’’
7 after ‘‘AFTER 2022’’, and
9 subparagraph:
10 ‘‘(C) APPLICATION TO TAXABLE YEARS
11 AFTER 2025.—For application of refundable

12 credit to residents of Puerto Rico for taxable
13 years after 2025, see subsection (m).’’.
14 (2) AMERICAN SAMOA.—Section 24(k)(3)(C)(ii),
15 as amended by the preceding provisions of this Act,
16 is amended—
17 (A) in subclause (I), by striking ‘‘and’’ at
18 the end,
19 (B) in subclause (II)—
20 (i) by inserting ‘‘and before January
21 1, 2026,’’ after ‘‘after December 31,
22 2022,’’, and
23 (ii) by striking the period at the end
24 and inserting ‘‘, and’’, and
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2 subclause:
3 ‘‘(III) if such taxable year begins
4 after December 31, 2025, subsection
5 (m) shall be applied by substituting
6 ‘Puerto Rico or American Samoa’ for
7 ‘Puerto Rico’.’’.
10 December 31, 2025.
11 SEC. 137105. APPROPRIATIONS.
12 Immediately upon the enactment of this Act, in addi-

13 tion to amounts otherwise available, there are appro-
14 priated out of any money in the Treasury not otherwise
15 appropriated:
16 (1) $9,000,000,000 to remain available until
17 September 30, 2026, for necessary expenses for the
18 Internal Revenue Service to administer the Child
19 Tax Credit, and advance payments of the Child Tax
20 Credit, including the costs of disbursing such pay-
21 ments, which shall supplement and not supplant any
22 other appropriations that may be available for this
23 purpose, and
24 (2) $1,000,000,000 is appropriated to the De-
25 partment of the Treasury, to remain available until
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1 September 30, 2026, to support efforts to increase
2 enrollment of eligible families in the Child Tax Cred-
3 it, for advance payments of the Child Tax Credit,
4 and for other tax benefits, including but not limited
5 to program outreach, costs of data sharing arrange-
6 ments, systems changes, forms changes, and related
7 efforts, and efforts by federal agencies to facilitate
8 the cross-enrollment of beneficiaries of other pro-
9 grams in the Child Tax Credit, and for advance pay-
10 ments of the Child Tax Credit, including by estab-
11 lishing intergovernmental cooperative agreements
12 with states and local governments, tribal govern-
13 ments, and possessions of the United States: Pro-
14 vided, that such amount shall be available in addi-
15 tion to any amounts otherwise available: Provided
16 further, that these funds may be awarded by federal
17 agencies to state and local governments, tribal gov-
18 ernments, and possessions of the United States, and
19 private entities, including organizations dedicated to
20 free tax return preparation.
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1 PART 2—CHILD AND DEPENDENT CARE TAX
2 CREDIT
3 SEC. 137201. CERTAIN IMPROVEMENTS TO THE CHILD AND
4 DEPENDENT CARE CREDIT MADE PERMA-
5 NENT.
6 (a) CREDIT REFUNDABLE FOR TAXPAYERS WITH

7 PRINCIPAL PLACE OF ABODE IN THE UNITED STATES.—
8 Section 21(g) is amended to read as follows;
9 ‘‘(g) CREDIT REFUNDABLE FOR TAXPAYERS WITH
10 PRINCIPAL PLACE OF ABODE IN THE UNITED STATES.—
11 If the taxpayer (in the case of a joint return, either
12 spouse) has a principal place of abode in the United States
13 (determined as provided in section 32) for more than one-
14 half of the taxable year, the credit allowed under sub-
15 section (a) shall be treated as a credit allowed under sub-
16 part C (and not allowed under this subpart).’’.
17 (b) INCREASE IN DOLLAR LIMIT ON AMOUNT CRED-
18 ITABLE.—Section 21(c) is amended—
19 (1) by striking ‘‘$3,000’’ in paragraph (1) and
20 inserting ‘‘$8,000’’, and
21 (2) by striking ‘‘$6,000’’ in paragraph (2) and
22 inserting ‘‘$16,000’’.
23 (c) INCREASE IN APPLICABLE PERCENTAGE.—Sec-
24 tion 21(a)(2) is amended—
25 (1) by striking ‘‘35 percent’’ and inserting ‘‘50
26 percent’’, and
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1 (2) by striking ‘‘$15,000’’ and inserting
2 ‘‘$125,000’’.
3 (d) APPLICATION OF INCREASED DOLLAR LIMITA-
4 TION TO SPOUSES WHO ARE STUDENTS OR INCAPABLE
5 OF CARING FOR THEMSELVES.—Section 21(d)(2) is
6 amended by striking ‘‘of not less than—’’ and all that fol-
7 lows through ‘‘In the case of’’ and inserting ‘‘of not less
8 than 1⁄12 of the dollar amount in effect under paragraph
9 (1) or (2) of subsection (c) (whichever is applicable to the
10 taxpayer for the taxable year). In the case of’’.
11 (e) INFLATION ADJUSTMENT.—Section 21(e) is
13 graph:

17 2021, the $125,000 amount in subsection
18 (a)(2), the $8,000 amount in subsection (c)(1),
19 and the $16,000 amount in subsection (c)(2)
20 shall each be increased by an amount equal
21 to—
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5 ‘‘(i) LIMITATION BASED ON ADJUSTED
6 GROSS INCOME.—If any increase deter-

7 mined under subparagraph (A) of the
8 $125,000 dollar amount in subsection
9 (a)(2) is not a multiple of $5,000, such
10 amount shall be rounded to the nearest
11 multiple of $5,000.
12 ‘‘(i) DOLLAR LIMITATIONS.—If any
13 increase determined under subparagraph
14 (A) of any dollar amount in subsection (c)
15 is not a multiple of $100, such amount
16 shall be rounded to the nearest multiple of
17 $100.’’.
18 (f) APPLICATION OF PHASEOUT TO HIGH INCOME
19 INDIVIDUALS.—
20 (1) IN GENERAL.—Section 21(a)(2) is amended
21 by striking ‘‘20 percent’’ and inserting ‘‘the phase-
22 out percentage’’.
23 (2) PHASEOUT PERCENTAGE.—Section 21(a) is
25 paragraph:
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1 ‘‘(3) PHASEOUT PERCENTAGE.—For purposes
2 of paragraph (2), the term ‘phaseout percentage’
3 means 20 percent reduced (but not below zero) by
4 1 percentage point for each $2,000 (or fraction
5 thereof) by which the taxpayer’s adjusted gross in-
6 come for the taxable year exceeds $400,000.’’.
7 (g) APPLICATION OF CREDIT IN POSSESSIONS.—Sec-
8 tion 21(h) is amended—
10 (A) by striking ‘‘The Secretary’’ and in-
11 serting ‘‘With respect to taxable years begin-
12 ning in or with calendar years after 2020, the
13 Secretary’’, and
14 (B) by striking ‘‘with respect to taxable
15 years beginning in or with 2021’’,
17 (A) by striking ‘‘The Secretary’’ and in-
18 serting ‘‘With respect to taxable years begin-
19 ning in or with calendar years after 2020, the
20 Secretary’’, and
21 (B) by striking ‘‘with respect to taxable
22 years beginning in or with 2021’’, and
23 (3) in paragraph (3), by striking ‘‘in or with
24 2021’’ and inserting ‘‘after December 31, 2020’’.
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1 (h) EFFECTIVE DATE.—The amendments made by
4 SEC. 137202. INCREASE IN EXCLUSION FOR EMPLOYER-
5 PROVIDED DEPENDENT CARE ASSISTANCE
6 MADE PERMANENT.
7 (a) IN GENERAL.—Section 129(a)(2)(A) is amended

8 by striking ‘‘$5,000 ($2,500’’ and inserting ‘‘$10,500
9 (half such dollar amount’’.
10 (b) INFLATION ADJUSTMENT.—Section 129(e) is
12 graph:

16 2021, the $10,500 amount in subsection
17 (a)(2)(A) shall be increased by an amount equal
18 to—
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1 ‘‘(B) ROUNDING.—If any increase deter-
2 mined under subparagraph (A) is not a multiple
3 of $100, such amount shall be rounded to the
4 nearest multiple of $100.’’.
5 (c) CONFORMING AMENDMENT.—Section 129(a)(2)
6 is amended by striking subparagraph (D).
10 (e) RETROACTIVE PLAN AMENDMENTS.—A plan that
11 otherwise satisfies all applicable requirements of sections
12 125 and 129 of the Internal Revenue Code of 1986 (in-
13 cluding any rules or regulations thereunder) shall not fail
14 to be treated as a cafeteria plan or dependent care assist-
15 ance program merely because such plan is amended pursu-
16 ant to a provision under this subsection and such amend-
17 ment is retroactive, if—
18 (1) such amendment is adopted no later than
19 the last day of the plan year in which the amend-
20 ment is effective, and
21 (2) the plan is operated consistent with the
22 terms of such amendment during the period begin-
23 ning on the effective date of the amendment and
24 ending on the date the amendment is adopted.
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1 PART 3—SUPPORTING CAREGIVERS
2 SEC. 137301. PAYROLL TAX CREDIT FOR CHILD CARE
3 WORKERS.
4 (a) IN GENERAL.—Subchapter D of chapter 21 is

5 amended by adding at the end the following:
6 ‘‘SEC. 3135. PAYROLL CREDIT FOR CERTAIN WAGES PAID
7 TO CHILD CARE WORKERS.
8 ‘‘(a) IN GENERAL.—In the case of an eligible child

9 care employer, there shall be allowed as a credit against
10 applicable employment taxes for each calendar quarter an
11 amount equal to 50 percent of the qualified child care
12 wages paid with respect to each eligible employee of such
13 employer for such calendar quarter.
14 ‘‘(b) LIMITATIONS AND REFUNDABILITY.—
15 ‘‘(1) LIMITATION ON WAGES TAKEN INTO AC-
16 COUNT.—The amount of qualified child care wages

17 with respect to any eligible employee which may be
18 taken into account under subsection (a) by the eligi-
19 ble child care employer for any calendar quarter
20 shall not exceed $2,500.
21 ‘‘(2) CREDIT LIMITED TO CERTAIN EMPLOY-
22 MENT TAXES.—The credit allowed by subsection (a)

23 with respect to any calendar quarter shall not exceed
24 the applicable employment taxes (reduced by any
25 credits allowed under sections 3131, 3132, 3134,
26 and 6432) on the wages paid with respect to the em-
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1 ployment of all the employees of the eligible child
2 care employer for such calendar quarter.
3 ‘‘(3) REFUNDABILITY OF EXCESS CREDIT.—
4 ‘‘(A) CREDIT IS REFUNDABLE.—If the

5 amount of the credit under subsection (a) ex-
6 ceeds the limitation of paragraph (2) for any
7 calendar quarter, such excess shall be treated
8 as an overpayment that shall be refunded under
9 sections 6402(a) and 6413(b).
10 ‘‘(B) ADVANCING CREDIT.—In anticipation
11 of the credit, including the refundable portion
12 under subparagraph (A), the credit shall be ad-
13 vanced, according to forms and instructions
14 provided by the Secretary, up to an amount cal-
15 culated under subsection (a), subject to the lim-
16 its under paragraph (1), all calculated through
17 the end of the most recent payroll period in the
18 quarter.
19 ‘‘(c) ELIGIBLE CHILD CARE EMPLOYER.—For pur-
20 poses of this section, the term ‘eligible child care employer’
21 means any employer which operates one or more qualified
22 child care facilities.
23 ‘‘(d) QUALIFIED CHILD CARE FACILITY.—For pur-
24 poses of this section, the term ‘qualified child care facility’
25 means any facility which is certified as an HHS Partici-
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1 pating Child Care Provider by the Secretary of Health and
2 Human Services under section 418A(c) of the Social Secu-
3 rity Act.
4 ‘‘(e) ELIGIBLE EMPLOYEE.—For purposes of this
5 section, the term ‘eligible employee’ means, with respect
6 to any eligible child care employer for any calendar quar-
7 ter, any employee of such employer if—
8 ‘‘(1) the aggregate wages paid to such employee
9 for such quarter do not exceed 25 percent of the dol-
10 lar amount in effect for such quarter under section
11 414(q)(1)(B)(i) (relating to highly compensated em-
12 ployees), and
13 ‘‘(2) the aggregate wages paid to such employee
14 for the 1-year period ending with the close of such
15 quarter do not exceed 100 percent of such dollar
16 amount.
17 ‘‘(f) QUALIFIED CHILD CARE WAGES.—For purposes
18 of this section—
19 ‘‘(1) IN GENERAL.—The term ‘qualified child
20 care wages’ means, with respect to any eligible em-
21 ployee for any calendar quarter, so much of the child
22 care wages paid by the eligible child care employer
23 to such employee during such quarter as are paid at
24 a rate in excess of the applicable minimum rate.
25 Such term shall not include any wages paid by an
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1 eligible child care employer during any period during
2 which the certification described in subsection (d) is
3 not in effect.
4 ‘‘(2) APPLICABLE MINIMUM RATE.—The term
5 ‘applicable minimum rate’ means, with respect to
6 wages paid to any eligible employee, the rate of basic
7 pay which is payable for GS-3, step 1 of the General
8 Schedule under subchapter III of chapter 53 of title
9 5, United States Code (including any applicable lo-
10 cality-based comparability payment under section
11 5304 of such title, or similar authority) at the time
12 such wages are paid and determined with respect to
13 the locality in which the services are provided.
14 ‘‘(3) CHILD CARE WAGES.—The term ‘child
15 care wages’ means wages paid for the services of the
16 employee to provide child care at a qualified child
17 care facility or to provide support services for such
18 a facility.
19 ‘‘(4) EXCEPTION.—The term ‘child care wages’
20 shall not include any wages taken into account
21 under section 41, 45A, 45P, 45R, 51, 1396, 3131,
22 3132, 3134, or 6432.
23 ‘‘(g) OTHER DEFINITIONS AND SPECIAL RULES.—
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1 ‘‘(1) APPLICABLE EMPLOYMENT TAXES.—The
2 term ‘applicable employment taxes’ means the fol-

3 lowing:
4 ‘‘(A) The taxes imposed under section
5 3111(b).
6 ‘‘(B) So much of the taxes imposed under
7 section 3221(a) as are attributable to the rate
8 in effect under section 3111(b).
9 ‘‘(2) WAGES.—
10 ‘‘(A) IN GENERAL.—The term ‘wages’
11 means wages (as defined in section 3121(a)),
12 determined without regard to paragraphs (1)
13 through (22) of section 3121(b)) and compensa-
14 tion (as defined in section 3231(e), determined
15 without regard to the sentence in paragraph (1)
16 thereof which begins ‘Such term does not in-
17 clude remuneration’).
18 ‘‘(B) ALLOWANCE FOR CERTAIN HEALTH
19 PLAN EXPENSES.—
20 ‘‘(i) IN GENERAL.—Such term shall

21 include amounts paid by the eligible child
22 care employer to provide and maintain a
23 group health plan (as defined in section
24 5000(b)(1)), but only to the extent that
25 such amounts are excluded from the gross
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1 income of employees by reason of section
2 106(a).
3 ‘‘(ii) ALLOCATION RULES.—For pur-
4 poses of this section, amounts treated as
5 wages under clause (i) shall be treated as
6 paid with respect to any eligible employee
7 (and with respect to any period) to the ex-
8 tent that such amounts are properly allo-
9 cable to such employee (and to such pe-
10 riod) in such manner as the Secretary may
11 prescribe. Except as otherwise provided by
12 the Secretary, such allocation shall be
13 treated as properly made if made on the
14 basis of being pro rata among periods of
15 coverage.
16 ‘‘(3) OTHER TERMS.—Any term used in this
17 section which is also used in this chapter or chapter
18 22 shall have the same meaning as when used in
19 such chapter.
20 ‘‘(4) DENIAL OF DOUBLE BENEFIT.—For pur-
21 poses of chapter 1, the gross income of the em-
22 ployer, for the taxable year which includes the last
23 day of any calendar quarter with respect to which a
24 credit is allowed under this section, shall be in-
25 creased by the amount of such credit.
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1 ‘‘(5) ELECTION TO NOT TAKE CERTAIN WAGES
2 INTO ACCOUNT.—This section shall not apply to so

3 much of the qualified child care wages paid by an
4 eligible child care employer as such employer elects
5 (at such time and in such manner as the Secretary
6 may prescribe) to not take into account for purposes
7 of this section.
8 ‘‘(6) CERTAIN GOVERNMENTAL EMPLOYERS.—
9 No credit shall be allowed under this section to the

10 Government of the United States or to any agency
11 or instrumentality thereof. The preceding sentence
12 shall not apply to any organization described in sec-
13 tion 501(c)(1) and exempt from tax under section
14 501(a).
15 ‘‘(7) COORDINATION WITH CERTAIN PRO-
16 GRAMS.—
17 ‘‘(A) IN GENERAL.—This section shall not

18 apply to so much of the qualified child care
19 wages paid by an eligible child care employer as
20 are taken into account as payroll costs in con-
21 nection with—
22 ‘‘(i) a covered loan under section
23 7(a)(37) or 7A of the Small Business Act,
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1 ‘‘(ii) a grant under section 324 of the
2 Economic Aid to Hard-Hit Small Busi-
3 nesses, Non-Profits, and Venues Act, or
4 ‘‘(iii) a restaurant revitalization grant
5 under section 5003 of the American Res-
6 cue Plan Act of 2021.
7 ‘‘(B) APPLICATION WHERE PPP LOANS
8 NOT FORGIVEN.—The Secretary shall issue

9 guidance providing that payroll costs paid dur-
10 ing the covered period shall not fail to be treat-
11 ed as qualified child care wages under this sec-
12 tion by reason of subparagraph (A)(i) to the ex-
13 tent that—
14 ‘‘(i) a covered loan of the taxpayer
15 under section 7(a)(37) of the Small Busi-
16 ness Act is not forgiven by reason of a de-
17 cision under section 7(a)(37)(J) of such
18 Act, or
19 ‘‘(ii) a covered loan of the taxpayer
20 under section 7A of the Small Business
21 Act is not forgiven by reason of a decision
22 under section 7A(g) of such Act.
23 Terms used in the preceding sentence which are
24 also used in section 7A(g) or 7(a)(37)(J) of the
25 Small Business Act shall, when applied in con-
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1 nection with either such section, have the same
2 meaning as when used in such section, respec-
3 tively.
4 ‘‘(8) AGGREGATION RULE.—All persons treated
5 as a single employer under subsection (a) or (b) of
6 section 52, or subsection (m) or (o) of section 414,
7 shall be treated as one employer for purposes of this
8 section.
9 ‘‘(9) THIRD PARTY PAYORS.—Any credit al-
10 lowed under this section shall be treated as a credit
11 described in section 3511(d)(2).
12 ‘‘(10) INFLATION ADJUSTMENT.—In the case of
13 any taxable year beginning after December 31,
14 2022, the $2,500 amount in subsection (b)(1) shall
17 ‘‘(B) the cost-of-living adjustment deter-
18 mined under section 1(f)(3) for the calendar
19 year in which the taxable year begins, deter-
20 mined by substituting ‘calendar year 2021’ for
21 ‘calendar year 2016’ in subparagraph (A)(ii)
22 thereof.
23 If any amount as adjusted under the preceding sen-
24 tence is not a multiple of $100, such amount shall
25 be rounded to the nearest multiple of $100.
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1 ‘‘(h) REGULATIONS.—The Secretary shall prescribe
2 such regulations or other guidance as may be necessary
3 to carry out the purposes of this section, including—
4 ‘‘(1) regulations or other guidance to prevent
5 the avoidance of the purposes of the limitations
6 under this section,
7 ‘‘(2) regulations or other guidance to minimize
8 compliance and record-keeping burdens under this
9 section,
10 ‘‘(3) regulations or other guidance providing for
11 waiver of penalties for failure to deposit amounts in
12 anticipation of the allowance of the credit allowed
13 under this section,
14 ‘‘(4) regulations or other guidance for recap-
15 turing the benefit of credits determined under this
16 section in cases where there is a subsequent adjust-
17 ment to the credit determined under subsection (a),
18 ‘‘(5) regulations or other guidance to permit the
19 advancement of the credit determined under sub-
20 section (a), and
21 ‘‘(6) regulations or other guidance for applying
22 subsection (f) with respect to eligible employees not
23 paid at a single rate of pay.’’.
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1 (b) REFUNDS.—Paragraph (2) of section 1324(b) of
2 title 31, United States Code, is amended by inserting
3 ‘‘3135,’’ after ‘‘3134,’’.
5 for subchapter D of chapter 21 is amended by adding at
6 the end the following:
‘‘Sec. 3135. Payroll credit for certain wages paid to child care workers.’’.

8 this section shall apply to calendar quarters beginning
10 SEC. 137302. CREDIT FOR CAREGIVER EXPENSES.
11 (a) IN GENERAL.—Subpart A of part IV of sub-

13 tion 25D the following new section:
14 ‘‘SEC. 25E. CREDIT FOR CAREGIVER EXPENSES.
15 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in-

16 dividual for whom there are 1 or more qualified care re-
17 cipients, there shall be allowed as a credit against the tax
18 imposed by this chapter for the taxable year an amount
19 equal to 50 percent of the qualified expenses paid or in-
20 curred by such individual during the taxable year (and not
21 compensated for by insurance or otherwise).
22 ‘‘(b) QUALIFIED CARE RECIPIENT.—For purposes of
23 this section—
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1 ‘‘(1) IN GENERAL.—The term ‘qualified care re-
2 cipient’ means, with respect to any taxable year, any
3 individual who—
4 ‘‘(A) is the spouse of the taxpayer, or any
5 other person who bears a relationship to the
6 taxpayer described in any of subparagraphs (A)
7 through (H) of section 152(d)(2),
8 ‘‘(B) has been certified, before the due
9 date for filing the return of tax for the taxable
10 year, by a licensed health care practitioner (as
11 defined in section 7702B(c)(4)) as being an in-
12 dividual with long-term care needs (as defined
13 in paragraph (3)) for a period—
14 ‘‘(i) which is expected to be at least
15 180 consecutive days, and
16 ‘‘(ii) a portion of which occurs within
17 the taxable year, and
18 ‘‘(C) resides in a personal residence and
19 not an institutional care facility.
20 ‘‘(2) PERIOD FOR MAKING CERTIFICATION.—
21 Notwithstanding paragraph (1)(B), a certification

22 shall not be treated as valid unless it is made within
23 the 18-month period ending on such due date (or
24 such other period as the Secretary prescribes).
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1 ‘‘(3) INDIVIDUALS WITH LONG-TERM CARE
2 NEEDS.—For purposes of this subsection, the term

3 ‘individual with long-term care needs’ means any in-
4 dividual who meets the requirements of any of the
5 following subparagraphs:
6 ‘‘(A) The individual is at least 6 years of
7 age and—
8 ‘‘(i) is unable to perform (without
9 substantial assistance from another indi-
10 vidual) at least 2 activities of daily living
11 (as defined in section 7702B(c)(2)(B)) due
12 to a loss of functional capacity, or
13 ‘‘(ii) requires substantial supervision
14 to protect such individual from threats to
15 health and safety due to severe cognitive
16 impairment and is unable to perform, with-
17 out reminding or cuing assistance, at least
18 1 activity of daily living (as so defined) or,
19 to the extent provided in regulations pre-
20 scribed by the Secretary (in consultation
21 with the Secretary of Health and Human
22 Services), is unable to engage in age ap-
23 propriate activities.
24 ‘‘(B) The individual is at least 2 but not
25 6 years of age and is unable, due to a loss of
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1 functional capacity, to perform (without sub-
2 stantial assistance from another individual) at
3 least 2 of the following activities:
4 ‘‘(i) Eating.
5 ‘‘(ii) Transferring.
6 ‘‘(iii) Mobility.
7 ‘‘(C) The individual is under 2 years of age
8 and requires specific durable medical equipment
9 by reason of a severe health condition or re-
10 quires a skilled practitioner trained to address
11 the individual’s condition to be available if the
12 individual’s parents or guardians are absent.
13 ‘‘(4) INSTITUTIONAL CARE FACILITY.—For pur-
14 poses of paragraph (1)(C), an institutional care fa-
15 cility (including two or more places, establishments,
16 or institutions owned by the same legal entity) in-
17 cludes any congregate, protected living residential
18 arrangement that provides or coordinates personal
19 or health care services, including assistance with the
20 activities of daily living and social care, for two or
21 more adults who are aged, infirm, or disabled
22 ‘‘(c) QUALIFIED EXPENSES.—For purposes of this
23 section—
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1 ‘‘(1) IN GENERAL.—The term ‘qualified ex-
2 penses’ means expenses for goods, services, and sup-
3 ports described in paragraph (2) which—
4 ‘‘(A) assist a qualified care recipient with
5 accomplishing activities of daily living (as de-
6 fined in section 7702B(c)(2)(B)) and instru-
7 mental activities of daily living (as defined in
8 section 1915(k)(6)(F) of the Social Security
9 Act), and
10 ‘‘(B) are provided solely for use by such
11 qualified care recipient.
12 ‘‘(2) ITEMS DESCRIBED.—The goods, services,
13 and supports described in this paragraph are—
14 ‘‘(A) human assistance, supervision, cuing,
15 and standby assistance,
16 ‘‘(B) health maintenance tasks (such as
17 medication management),
18 ‘‘(C) respite care,
19 ‘‘(D) assistive technologies and devices (in-
20 cluding remote health monitoring),
21 ‘‘(E) accessibility modifications of the
22 qualified care recipient’s residence,
23 ‘‘(F) counseling, support groups, or train-
24 ing relating to caring for a qualified care recipi-
25 ent, and
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1 ‘‘(G) any other items which directly relate
2 to the health and safety of a qualified care re-
3 cipient, as determined by the Secretary after
4 consultation with the Secretary of Health and
5 Human Services.
6 ‘‘(3) DOLLAR LIMITATION.—The amount taken
7 into account as qualified expenses for any taxable
8 year shall not exceed $4,000.
9 ‘‘(4) DENIAL OF DOUBLE BENEFIT.—Amounts
10 taken into account for purposes of section 21, 129,

11 213, or 223(f), or such other circumstances as may
12 be provided by the Secretary, shall not be taken into
13 account as qualified expenses.
14 ‘‘(5) DOCUMENTATION REQUIREMENT.—An ex-
15 pense shall not be treated as a qualified expense un-
16 less the taxpayer substantiates such expense under
17 such regulations or guidance as the Secretary shall
18 provide.
19 ‘‘(d) CREDIT PHASEOUT.—The 50 percent rate under
20 subsection (a) shall be reduced by 1 percentage point for
21 every $2,500 or fraction thereof by which the taxpayer’s
22 adjusted gross income exceeds $75,000.
23 ‘‘(e) SPECIAL RULES.—For purposes of this sec-
24 tion—
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1 ‘‘(1) PAYMENTS TO RELATED INDIVIDUALS.—
2 Rules similar to the rules of section 21(e)(6) shall

3 apply.
4 ‘‘(2) LICENSED HEALTH CARE PRACTI-
5 TIONER.—
6 ‘‘(A) IN GENERAL.—The licensed health

7 care practitioner making the certification for
8 purposes of subsection (b)(1)(B)—
9 ‘‘(i) shall not be related (within the
10 meaning of section 51(i)(1)) to the tax-
11 payer or the qualified care recipient, or
12 have a conflict of interest (as determined
13 under regulations provided by the Sec-
14 retary) with respect to the taxpayer or the
15 qualified care recipient,
16 ‘‘(ii) shall be licensed and eligible
17 under applicable State law to certify limi-
18 tations in performing activities of daily liv-
19 ing, and
20 ‘‘(iii) shall be a participant in the
21 Medicaid program, pursuant to sections
22 1902(a)(77) and 1932(d)(6) of the Social
23 Security Act, or the State Children’s
24 Health Insurance Program under section
25 2107(e)(1)(G) of such Act.
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1 ‘‘(B) IDENTIFICATION REQUIREMENT.—
2 ‘‘(i) IN GENERAL.—No credit shall be

3 allowed with respect to any qualified care
4 recipient unless the taxpayer includes the
5 name and specified provider identification
6 number of such licensed health care practi-
7 tioner on the return of tax for the taxable
8 year.
9 ‘‘(ii) SPECIFIED PROVIDER IDENTI-
10 FICATION NUMBER.—The term ‘specified

11 provider identification number’ means a
12 valid National Provider Identifier as au-
13 thorized in section 1173 of the Social Se-
14 curity Act.
15 ‘‘(3) INDIVIDUAL MAY NOT BE CLAIMED BY
16 MORE THAN 1 TAXPAYER.—An individual shall be

17 treated as a qualified care recipient with respect to
18 only 1 taxpayer, as determined by the Secretary, for
19 any taxable year.
20 ‘‘(4) IDENTIFICATION REQUIREMENT.—No
21 credit shall be allowed with respect to any qualified

22 care recipient unless the taxpayer includes the name
23 and taxpayer identification number of the qualified
24 care recipient on the return of tax for the taxable
25 year.
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1 ‘‘(f) TERMINATION.—No credit shall be allowed
3 cember 31, 2025.’’.
4 (b) MATH ERROR AUTHORITY.—Section 6213(g)(2),
6 amended by striking ‘‘and’’ at the end of subparagraph
7 (T), by striking the period at the end of subparagraph
8 (U) and inserting ‘‘, and’’, and by inserting after subpara-
9 graph (U) the following new subparagraph:
10 ‘‘(V) an omission of a correct TIN re-
11 quired under section 25E(e)(4) or a correct
12 specified provider identification number re-
13 quired under section 25E(e)(2)(B).’’.
15 for subpart A of part IV of subchapter A of chapter 1
16 is amended by inserting after the item relating to section
17 25D the following new item:
‘‘Sec. 25E. Credit for caregiver expenses.’’.

20 December 31, 2021.
21 PART 4—EARNED INCOME TAX CREDIT
22 SEC. 137401. CERTAIN IMPROVEMENTS TO THE EARNED IN-
23 COME TAX CREDIT MADE PERMANENT.
24 (a) DECREASE IN MINIMUM AGE REQUIREMENT.—
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1 (1) IN GENERAL.—Section 32(c)(1)(A)(ii)(II) is
2 amended by striking ‘‘age 25’’ and inserting ‘‘the
3 applicable minimum age’’.
4 (2) APPLICABLE MINIMUM AGE.—Section 32(c)
5 is amended by adding at the end the following new
6 paragraph:
7 ‘‘(5) APPLICABLE MINIMUM AGE.—
8 ‘‘(A) IN GENERAL.—The term ‘applicable

9 minimum age’ means—
10 ‘‘(i) except as otherwise provided in
11 this subparagraph, age 19,
12 ‘‘(ii) in the case of a specified student
13 (other than a qualified former foster youth
14 or a qualified homeless youth), age 24, and
15 ‘‘(iii) in the case of a qualified former
16 foster youth or a qualified homeless youth,
17 age 18.
18 ‘‘(B) SPECIFIED STUDENT.—For purposes
19 of this paragraph, the term ‘specified student’
20 means, with respect to any taxable year, an in-
21 dividual who is an eligible student (as defined
22 in section 25A(b)(3)) during at least 5 calendar
23 months during the taxable year.
24 ‘‘(C) QUALIFIED FORMER FOSTER
25 YOUTH.—For purposes of this paragraph, the
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1 term ‘qualified former foster youth’ means an
2 individual who—
3 ‘‘(i) on or after the date that such in-
4 dividual attained age 14, was in foster care
5 provided under the supervision or adminis-
6 tration of an entity administering (or eligi-
7 ble to administer) a plan under part B or
8 part E of title IV of the Social Security
9 Act (without regard to whether Federal as-
10 sistance was provided with respect to such
11 child under such part E), and
12 ‘‘(ii) provides (in such manner as the
13 Secretary may provide) consent for entities
14 which administer a plan under part B or
15 part E of title IV of the Social Security
16 Act to disclose to the Secretary informa-
17 tion related to the status of such individual
18 as a qualified former foster youth.
19 ‘‘(D) QUALIFIED HOMELESS YOUTH.—For

21 homeless youth’ means, with respect to any tax-
22 able year, an individual who certifies, in a man-
23 ner as provided by the Secretary, that such in-
24 dividual is either an unaccompanied youth who
25 is a homeless child or youth, or is unaccom-
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1 panied, at risk of homelessness, and self-sup-
2 porting.’’.
3 (b) ELIMINATION OF MAXIMUM AGE FOR CREDIT.—
4 Section 32(c)(1)(A)(ii)(II) is amended by striking ‘‘but
5 not attained age 65’’.
6 (c) INCREASE IN CREDIT AND PHASEOUT PERCENT-
7 AGES.—The table contained in section 32(b)(1) is amend-
8 ed by striking ‘‘7.65’’ each place it appears therein and
9 inserting ‘‘15.3’’.
10 (d) INCREASE IN EARNED INCOME AND PHASEOUT
11 AMOUNTS.—
12 (1) IN GENERAL.—The table contained in sec-
13 tion 32(b)(2)(A) is amended—
14 (A) by striking ‘‘$4,220’’ and inserting
15 ‘‘$9,820’’, and
16 (B) by striking ‘‘$5,280’’ and inserting
17 ‘‘$11,610’’.
18 (2) APPLICATION OF INFLATION ADJUST-
19 MENT.—Section 32(j)(1) is amended—

20 (A) by striking ‘‘(2021 in the case of the
21 dollar amount in subsection (i)(1))’’ and insert-
22 ing ‘‘(2021 in the case of the $9,820 and
23 $11,610 amounts in subsection (b)(2)(A) and
24 the $10,000 amount in subsection (i)(1))’’,
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1 (B) in subparagraph (B)(i), by inserting
2 ‘‘(other than the $9,820 and $11,610
3 amounts)’’ after ‘‘subsection (b)(2)(A)’’, and
4 (C) in subparagraph (B)(iii), by inserting
5 ‘‘the $9,820 and $11,610 amounts in sub-
6 section (b)(2)(A) and’’ before ‘‘the $10,000
7 amount in subsection (i)(1)’’.
8 (e) Section 32, as amended by subsection (f), is
9 amended by adding at the end the following new sub-
10 section:
11 ‘‘(n) ELECTION TO DETERMINE EARNED INCOME
12 BASED ON PRIOR TAXABLE YEAR.—
13 ‘‘(1) IN GENERAL.—In the case of a taxpayer
14 whose earned income for any taxable year is less
15 than the earned income of such taxpayer for the pre-
16 ceding taxable year, if such taxpayer elects (at such
17 time and in such manner as the Secretary may pro-
18 vide) the application of this subsection for such tax-
19 able year, the earned income of such taxpayer for
20 such taxable year shall be treated for purposes of
21 this section as being equal to the earned income of
22 such taxpayer for such preceding taxable year.
23 ‘‘(2) JOINT RETURNS.—For purposes of this
24 subsection, in the case of a joint return, the earned
25 income of the taxpayer for the preceding taxable
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1 year shall be the sum of the earned income of each
2 spouse for the preceding taxable year.
3 ‘‘(3) TREATMENT AS MATHEMATICAL OR CLER-
4 ICAL ERROR.—In the case of a taxpayer described in

5 paragraph (1) who makes the election described in
6 such paragraph, the use on the return for purposes
7 of this section of an amount of earned income for
8 the preceding taxable year which differs from the
9 amount of such earned income as shown in the elec-
10 tronic files of the Internal Revenue Service shall be
11 treated as a mathematical or clerical error for pur-
12 poses of section 6213.
13 ‘‘(4) TREATMENT OF REFERENCES.—Any pro-
14 vision of this title which defines or determines
15 earned income by reference to this section shall be
16 applied without regard to this subsection unless such
17 provision specifically provides otherwise.’’.
18 (f) REPEAL OF TEMPORARY PROVISIONS.—Section
19 32 is amended by striking subsection (n).
22 December 31, 2021.
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1 SEC. 137402. FUNDS FOR ADMINISTRATION OF EARNED IN-
2 COME TAX CREDITS IN THE TERRITORIES.
3 (a) PUERTO RICO.—Section 7530(a)(1) is amended

4 by striking ‘‘plus’’ at the end of subparagraph (A), by
5 striking the period at the end of subparagraph (B) and
6 inserting ‘‘, plus’’, and by adding at the end the following
7 new subparagraph:
8 ‘‘(C) reasonable administrative costs asso-
9 ciated with the provision of the earned income
10 tax credit not in excess of $4,000,000.’’.
11 (b) POSSESSIONS WITH MIRROR CODE TAX SYS-
12 TEMS.—Section 7530(b)(1) is amended by striking ‘‘plus’’
13 at the end of subparagraph (A), by striking the period
14 at the end of subparagraph (B) and inserting ‘‘, plus’’,
15 and by adding at the end the following new subparagraph:
18 tax credit not in excess of $200,000.’’.
19 (c) AMERICAN SAMOA.—Section 7530(c)(1) is
20 amended by striking ‘‘plus’’ at the end of subparagraph
21 (A), by striking the period at the end of subparagraph
22 (B) and inserting ‘‘, plus’’, and by adding at the end the
23 following new subparagraph:
26 tax credit not in excess of $200,000.’’.
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2 this section shall apply to payments made for calendar
3 years beginning after December 31, 2021.
4 PART 5—EXPANDING ACCESS TO HEALTH
5 COVERAGE AND LOWERING COSTS
6 SEC. 137501. IMPROVE AFFORDABILITY AND REDUCE PRE-
7 MIUM COSTS OF HEALTH INSURANCE FOR
8 CONSUMERS.
9 (a) INCREASE IN APPLICABLE PERCENTAGE MADE

10 PERMANENT.—Section 36B(b)(3)(A) is amended to read
11 as follows:
12 ‘‘(A) APPLICABLE PERCENTAGE.—The ap-
13 plicable percentage for any taxable year shall be
14 the percentage such that the applicable percent-
15 age for any taxpayer whose household income is
16 within an income tier specified in the following
17 table shall increase, on a sliding scale in a lin-
18 ear manner, from the initial premium percent-
19 age to the final premium percentage specified in
20 such table for such income tier:
‘‘In the case of household The initial The final

income (expressed as premium premium
a percent of poverty line) percentage is— percentage is—
within the following income tier:
Up to 150.0 percent ................................... 0 0

150.0 percent up to 200.0 percent ............. 0 2
300.0 percent up to 400.0 percent ............. 6 8.5
400.0 percent and higher ........................... 8.5 8.5’’.
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1 (b) CREDIT ALLOWED TO TAXPAYERS WHOSE
2 HOUSEHOLD INCOME EXCEEDS 400 PERCENT OF THE
3 POVERTY LINE.—
4 (1) IN GENERAL.—Section 36B(c)(1)(A) is
5 amended by striking ‘‘but does not exceed 400 per-
6 cent’’.
8 36B(c)(1) is amended by striking subparagraph (E).

11 December 31, 2021.
12 SEC. 137502. MODIFICATION OF EMPLOYER-SPONSORED
13 COVERAGE AFFORDABILITY TEST IN HEALTH
14 INSURANCE PREMIUM TAX CREDIT.
15 (a) IN GENERAL.—Section 36B(c)(2)(C) is amend-

16 ed—
17 (1) in clause (i)(II), by striking ‘‘9.5 percent’’
18 and inserting ‘‘8.5 percent’’, and
19 (2) by striking clause (iv).
20 (b) QUALIFIED SMALL EMPLOYER HEALTH REIM-
21 BURSEMENT ARRANGEMENTS.—Section 36B(c)(4) is
22 amended—
23 (1) in subparagraph (C)(ii), by striking ‘‘9.5
24 percent’’ and inserting ‘‘8.5 percent’’, and
25 (2) by striking subparagraph (F).
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4 SEC. 137503. TREATMENT OF LUMP-SUM SOCIAL SECURITY
5 BENEFITS IN DETERMINING HOUSEHOLD IN-
6 COME.
7 (a) IN GENERAL.—Section 36B(d)(2) is amended by

8 adding at the end the following new subparagraph:
9 ‘‘(C) EXCLUSION OF PORTION OF LUMP-
10 SUM SOCIAL SECURITY BENEFITS.—
11 ‘‘(i) IN GENERAL.—The term ‘modi-

12 fied adjusted gross income’ shall not in-
13 clude so much of any lump-sum social se-
14 curity benefit payment as is attributable to
15 months ending before the beginning of the
16 taxable year.
17 ‘‘(ii) LUMP-SUM SOCIAL SECURITY
18 BENEFIT PAYMENT.—For purposes of this

19 subparagraph, the term ‘lump-sum social
20 security benefit payment’ means any pay-
21 ment of social security benefits (as defined
22 in section 86(d)(1)) which constitutes more
23 than 1 month of such benefits.
24 ‘‘(iii) ELECTION TO INCLUDE EX-
25 CLUDABLE AMOUNT.—With respect to any
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1 taxable year beginning on or after the ter-
2 mination date (as defined in subsection
3 (h)(2)), a taxpayer may elect (at such time
4 and in such manner as the Secretary may
5 provide) to have this subparagraph not
6 apply for such taxable year.’’.
10 SEC. 137504. TEMPORARY EXPANSION OF HEALTH INSUR-
11 ANCE PREMIUM TAX CREDITS FOR CERTAIN
12 LOW-INCOME POPULATIONS.
13 (a) IN GENERAL.—Section 36B is amended by redes-

14 ignating subsection (h) as subsection (i) and by inserting
16 ‘‘(h) CERTAIN TEMPORARY RULES BEGINNING IN
17 2022.—
18 ‘‘(1) IN GENERAL.—With respect to any taxable
19 year beginning after December 31, 2021, and before
20 the termination date—
21 ‘‘(A) ELIGIBILITY FOR CREDIT NOT LIM-
22 ITED BASED ON INCOME.—Section
23 36B(c)(1)(A) shall be disregarded in deter-

24 mining whether a taxpayer is an applicable tax-
25 payer.
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1 ‘‘(B) CREDIT ALLOWED TO CERTAIN LOW-
2 INCOME EMPLOYEES OFFERED EMPLOYER-PRO-
3 VIDED COVERAGE.—Subclause (II) of sub-

4 section (c)(2)(C)(i) shall not apply if the tax-
5 payer’s household income does not exceed 138
6 percent of the poverty line for a family of the
7 size involved. Subclause (II) of subsection
8 (c)(2)(C)(i) shall also not apply to an individual
9 described in the last sentence of such subsection
10 if the taxpayer’s household income does not ex-
11 ceed 138 percent of the poverty line for a fam-
12 ily of the size involved.
13 ‘‘(C) CREDIT ALLOWED TO CERTAIN LOW-
14 INCOME EMPLOYEES OFFERED QUALIFIED
15 SMALL EMPLOYER HEALTH REIMBURSEMENT
16 ARRANGEMENTS.—A qualified small employer

17 health reimbursement arrangement shall not be
18 treated as constituting affordable coverage for
19 an employee (or any spouse or dependent of
20 such employee) for any months of a taxable
21 year if the employee’s household income for
22 such taxable year does not exceed 138 percent
23 of the poverty line for a family of the size in-
24 volved.
25 ‘‘(D) LIMITATIONS ON RECAPTURE.—
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2 taxpayer whose household income is less
3 than 200 percent of the poverty line for
4 the size of the family involved for the tax-
5 able year, the amount of the increase
6 under subsection (f)(2)(A) shall in no
7 event exceed $300 (one-half of such
8 amount in the case of a taxpayer whose
9 tax is determined under section 1(c) for
10 the taxable year).
11 ‘‘(ii) LIMITATION ON INCREASE FOR
12 CERTAIN NON-FILERS.—In the case of any

13 taxpayer who would not be required to file
14 a return of tax for the taxable year but for
15 any requirement to reconcile advance cred-
16 it payments under subsection (f), if an Ex-
17 change established under title I of the Pa-
18 tient Protection and Affordable Care Act
19 has determined that—
20 ‘‘(I) such taxpayer is eligible for
21 advance payments under section 1412
22 of such Act for any portion of such
23 taxable year, and
24 ‘‘(II) such taxpayer’s household
25 income for such taxable year is pro-
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1 jected to not exceed 138 percent of
2 the poverty line for a family of the
3 size involved,
4 subsection (f)(2)(A) shall not apply to such
5 taxpayer for such taxable year and such
6 taxpayer shall not be required to file such
7 return of tax.
8 ‘‘(iii) INFORMATION PROVIDED BY EX-
9 CHANGE.—The information required to be

10 provided by an Exchange to the Secretary
11 and to the taxpayer under subsection (f)(3)
12 shall include such information as is nec-
13 essary to determine whether such Ex-
14 change has made the determinations de-
15 scribed in subclauses (I) and (II) of clause
16 (ii) with respect to such taxpayer.
17 ‘‘(2) TERMINATION DATE.—For purposes of
18 this subsection, the term ‘termination date’ means
19 the later of—
20 ‘‘(A) January 1, 2025, or
21 ‘‘(B) the date on which the Secretary of
22 Health and Human Services makes a written
23 certification to the Secretary that the Secretary
24 of Health and Human Services has fully imple-
25 mented the program described in section 1948
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1 of the Social Security Act (relating to Federal
2 Medicaid program to close coverage gap in non-
3 expansion States).’’.
4 (b) EMPLOYER SHARED RESPONSIBILITY PROVISION
5 NOT APPLICABLE WITH RESPECT TO CERTAIN LOW-IN-
6 COME TAXPAYERS RECEIVING PREMIUM ASSISTANCE.—
7 Section 4980H(c)(3) is amended to read as follows:
8 ‘‘(3) APPLICABLE PREMIUM TAX CREDIT AND
9 COST-SHARING REDUCTION.—
10 ‘‘(A) IN GENERAL.—The term ‘applicable

11 premium tax credit and cost-sharing reduction’
12 means—
13 ‘‘(i) any premium tax credit allowed
14 under section 36B,
15 ‘‘(ii) any cost-sharing reduction under
16 section 1402 of the Patient Protection and
17 Affordable Care Act, and
18 ‘‘(iii) any advance payment of such
19 credit or reduction under section 1412 of
20 such Act.
21 ‘‘(B) EXCEPTION WITH RESPECT TO CER-
22 TAIN LOW-INCOME TAXPAYERS.—Such term

23 shall not include any premium tax credit, cost-
24 sharing reduction, or advance payment other-
25 wise described in subparagraph (A) if such
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1 credit, reduction, or payment is allowed or paid
2 for a taxable year of an employee (beginning
3 after December 31, 2021, and before the termi-
4 nation date, as defined in section 36B(h)(2))
5 with respect to which—
6 ‘‘(i) an Exchange established under
7 title I of the Patient Protection and Af-
8 fordable Care Act has determined that
9 such employee’s household income for such
10 taxable year is projected to not exceed 138
11 percent of the poverty line for a family of
12 the size involved, or
13 ‘‘(ii) such employee’s household in-
14 come for such taxable year does not exceed
15 138 percent of the poverty line for a family
16 of the size involved.’’.
19 December 31, 2021.
20 SEC. 137505. ENSURING AFFORDABILITY OF COVERAGE
21 FOR CERTAIN LOW-INCOME POPULATIONS.
22 (a) REDUCING COST SHARING UNDER QUALIFIED

23 HEALTH PLANS.—Section 1402 of the Patient Protection
24 and Affordable Care Act (42 U.S.C. 18071) is amended—
25 (1) in subsection (b)—
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1 (A) in paragraph (2), by inserting ‘‘(or,
2 with respect to plan years 2023 and 2024,
3 whose household income does not exceed 400
4 percent of the poverty line for a family of the
5 size involved)’’ before the period; and
6 (B) in the matter following paragraph (2),
7 by adding at the end the following new sen-
8 tence: ‘‘In the case of an individual with a
9 household income of less than 138 percent of
10 the poverty line for a family of the size involved
11 for any month occurring during the period be-
12 ginning on January 1, 2022, and ending on De-
13 cember 31, 2022, such individual shall, for such
14 month and for each succeeding month during
15 such period, be treated as having household in-
16 come equal to 100 percent for purposes of ap-
17 plying this section.’’; and
18 (2) in subsection (c)—
19 (A) in paragraph (1)(A), in the matter
20 preceding clause (i), by inserting ‘‘, with respect
21 to eligible insureds (other than, with respect to
22 plan years 2023 and 2024, specified enrollees
23 (as defined in paragraph (6)(C))),’’ after ‘‘first
24 be achieved’’;
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1 (B) in paragraph (2), in the matter pre-
2 ceding subparagraph (A), by inserting ‘‘with re-
3 spect to eligible insureds (other than, with re-
4 spect to plan years 2023 and 2024, specified
5 enrollees)’’ after ‘‘under the plan’’;
6 (C) in paragraph (3)—
7 (i) in subparagraph (A), by striking
8 ‘‘this subsection’’ and inserting ‘‘paragraph
9 (1) or (2)’’; and
10 (ii) in subparagraph (B), by striking
11 ‘‘this section’’ and inserting ‘‘paragraphs
12 (1) and (2)’’; and
13 (D) by adding at the end the following new
14 paragraph:
15 ‘‘(6) SPECIAL RULE FOR SPECIFIED ENROLL-
16 EES.—

18 establish procedures under which the issuer of
19 a qualified health plan to which this section ap-
20 plies shall reduce cost-sharing under the plan
21 with respect to months occurring during plan
22 years 2023 and 2024 for enrollees who are
23 specified enrollees (as defined in subparagraph
24 (C)) in a manner sufficient to increase the
25 plan’s share of the total allowed costs of bene-
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1 fits provided under the plan to 99 percent of
2 such costs.
3 ‘‘(B) METHODS FOR REDUCING COST
4 SHARING.—
5 ‘‘(i) IN GENERAL.—An issuer of a

6 qualified health plan making reductions
7 under this paragraph shall notify the Sec-
8 retary of such reductions and the Sec-
9 retary shall, out of funds made available
10 under clause (ii), make periodic and timely
11 payments to the issuer equal to 12 percent
12 of the total allowed costs of benefits pro-
13 vided under each such plan to specified en-
14 rollees during plan years 2023 and 2024.
15 ‘‘(ii) APPROPRIATION.—There are ap-
16 propriated, out of any monies in the Treas-
17 ury not otherwise appropriated, such sums
18 as may be necessary to the Secretary for
19 purposes of making payments under clause
20 (i).
21 ‘‘(C) SPECIFIED ENROLLEE DEFINED.—
22 For purposes of this section, the term ‘specified

23 enrollee’ means, with respect to a month occur-
24 ring during a plan year, an eligible insured with
25 a household income of less than 138 percent of
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1 the poverty line for a family of the size involved
2 during such month. Such insured shall be
3 deemed to be a specified enrollee for each suc-
4 ceeding month in such plan year.’’.
5 (b) OPEN ENROLLMENTS APPLICABLE TO CERTAIN
6 LOWER-INCOME POPULATIONS.—Section 1311(c) of the
7 Patient Protection and Affordable Care Act (42 U.S.C.
8 18031(c)) is amended—
10 (A) in subparagraph (C), by striking at the
11 end ‘‘and’’;
12 (B) in subparagraph (D), by striking the
13 period at the end and inserting ‘‘; and’’; and
15 subparagraph:
16 ‘‘(E) with respect to a qualified health plan
17 with respect to which section 1402 applies, for
18 months occurring during the period beginning
19 on January 1, 2022, and ending on December
20 31, 2024, enrollment periods described in sub-
21 paragraph (A) of paragraph (8) for individuals
22 described in subparagraph (B) of such para-
23 graph.’’; and
25 paragraph:
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1 ‘‘(8) SPECIAL ENROLLMENT PERIOD FOR CER-
2 TAIN LOW-INCOME POPULATIONS.—
3 ‘‘(A) IN GENERAL.—The enrollment period

4 described in this paragraph is, in the case of an
5 individual described in subparagraph (B), the
6 continuous period beginning on the first day
7 that such individual is so described.
8 ‘‘(B) INDIVIDUAL DESCRIBED.—For pur-
9 poses of subparagraph (A), an individual de-
10 scribed in this subparagraph is an individual—
11 ‘‘(i) with a household income of less
12 than 138 percent of the poverty line for a
13 family of the size involved; and
14 ‘‘(ii) who is not eligible for minimum
15 essential coverage (as defined in section
16 5000A(f) of the Internal Revenue Code of
17 1986), other than for coverage described in
18 any of subparagraphs (B) through (E) of
19 paragraph (1) of such section.’’.
20 (c) ADDITIONAL BENEFITS FOR CERTAIN LOW-IN-
21 COME INDIVIDUALS FOR PLAN YEAR 2024.—Section
22 1301(a) of the Patient Protection and Affordable Care Act
23 (42 U.S.C. 18021(a)) is amended—
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1 (A) in subparagraph (B), by striking
2 ‘‘and’’ at the end;
3 (B) in subparagraph (C)(iv), by striking
4 the period and inserting ‘‘; and’’; and
6 subparagraph:
7 ‘‘(D) provides, with respect to a plan of-
8 fered in the silver level of coverage to which sec-
9 tion 1402 applies during plan year 2024, for
10 benefits described in paragraph (5) in the case
11 of an individual who, for a month during such
12 plan year, has a household income of less than
13 138 percent of the poverty line for a family of
14 the size involved, and who is eligible to receive
15 cost-sharing reductions under section 1402.’’;
16 and
18 paragraph:
19 ‘‘(5) ADDITIONAL BENEFITS FOR CERTAIN
20 LOW-INCOME INDIVIDUALS FOR PLAN YEAR 2024.—
21 ‘‘(A) IN GENERAL.—For purposes of para-

22 graph (1)(D), the benefits described in this
23 paragraph to be provided by a qualified health
24 plan are benefits consisting of non-emergency
25 medical transportation services and services de-
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1 scribed in subsection (a)(4)(C) of section 1905
2 of the Social Security Act, without any restric-
3 tion on the choice of a qualified provider from
4 whom such an individual so enrolled in such
5 plan may receive such services described in such
6 subsection, and without any imposition of cost
7 sharing, which are not otherwise provided under
8 such plan as part of the essential health bene-
9 fits package described in section 1302(a).
10 ‘‘(B) PAYMENTS FOR ADDITIONAL BENE-
11 FITS.—
12 ‘‘(i) IN GENERAL.—An issuer of a

13 qualified health plan making payments for
14 services described in subparagraph (A) fur-
15 nished to individuals described in para-
16 graph (1)(D) during plan year 2024 shall
17 notify the Secretary of such payments and
18 the Secretary shall, out of funds made
19 available under clause (ii), make periodic
20 and timely payments to the issuer equal to
21 payments for such services so furnished.
22 ‘‘(ii) APPROPRIATION.—There is ap-
23 propriated, out of any monies in the Treas-
24 ury not otherwise appropriated, such sums
25 as may be necessary to the Secretary for
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1 purposes of making payments under clause
2 (i).’’.
3 (d) EDUCATION AND OUTREACH ACTIVITIES.——
4 (1) IN GENERAL.—Section 1321(c) of the Pa-
5 tient Protection and Affordable Care Act (42 U.S.C.
6 18041(c)) is amended by adding at the end the fol-
8 ‘‘(3) OUTREACH AND EDUCATIONAL ACTIVI-
9 TIES.—
10 ‘‘(A) IN GENERAL.—In the case of an Ex-

11 change established or operated by the Secretary
12 within a State pursuant to this subsection, the
13 Secretary shall carry out outreach and edu-
14 cational activities for purposes of informing in-
15 dividuals described in section
16 1902(a)(10)(A)(i)(VIII) of the Social Security
17 Act who reside in States that have not ex-
18 pended amounts under a State plan (or waiver
19 of such plan) under title XIX of such Act for
20 all such individuals about qualified health plans
21 offered through the Exchange, including by in-
22 forming such individuals of the availability of
23 coverage under such plans and financial assist-
24 ance for coverage under such plans. Such out-
25 reach and educational activities shall be pro-
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1 vided in a manner that is culturally and linguis-
2 tically appropriate to the needs of the popu-
3 lations being served by the Exchange (including
4 hard-to-reach populations, such as racial and
5 sexual minorities, limited English proficient
6 populations, individuals residing in areas where
7 the unemployment rates exceeds the national
8 average unemployment rate, individuals in rural
9 areas, veterans, and young adults).
10 ‘‘(B) LIMITATION ON USE OF FUNDS.—No
11 funds appropriated under this paragraph shall

12 be used for expenditures for promoting non-
13 ACA compliant health insurance coverage.
14 ‘‘(C) NON-ACA COMPLIANT HEALTH INSUR-
15 ANCE COVERAGE.—For purposes of subpara-

16 graph (B):
17 ‘‘(i) The term ‘non-ACA compliant
18 health insurance coverage’ means health
19 insurance coverage, or a group health plan,
20 that is not a qualified health plan.
21 ‘‘(ii) Such term includes the following:
22 ‘‘(I) An association health plan.
23 ‘‘(II) Short-term limited duration
24 insurance.
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1 ‘‘(D) FUNDING.—There are appropriated,
2 out of any monies in the Treasury not other-
3 wise appropriated, $15,000,000 for fiscal year
4 2022, and $30,000,000 for each of fiscal years
5 2023 and 2024, to carry out this paragraph.
6 Funds appropriated under this subparagraph
7 shall remain available until expended.’’.
8 (2) NAVIGATOR PROGRAM.—Section 1311(i)(6)
9 of the Patient Protection and Affordable Care Act
10 (42 U.S.C. 18031(i)(6)) is amended—
11 (A) by striking ‘‘FUNDING.—Grants
12 under’’ and inserting ‘‘FUNDING.—
13 ‘‘(A) STATE EXCHANGES.—Grants under’’;
14 and
16 subparagraph:
17 ‘‘(B) FEDERAL EXCHANGES.—For pur-
18 poses of carrying out this subsection, with re-
19 spect to an Exchange established and operated
20 by the Secretary within a State pursuant to sec-
21 tion 1321(c), the Secretary shall obligate
22 $10,000,000 out of amounts collected through
23 the user fees on participating health insurance
24 issuers pursuant to section 156.50 of title 45,
25 Code of Federal Regulations (or any successor
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1 regulations) for fiscal year 2022, and
2 $20,000,000 for each of fiscal years 2023 and
3 2024. Such amount so obligated for a fiscal
4 year shall remain available until expended.’’.
5 SEC. 137506. ESTABLISHING A HEALTH INSURANCE AF-
6 FORDABILITY FUND.
7 (a) IN GENERAL.—Subtitle D of title I of the Patient

8 Protection and Affordable Care Act is amended by insert-
9 ing after part 5 (42 U.S.C. 18061 et seq.) the following
10 new part:
11 ‘‘PART 6—IMPROVE HEALTH INSURANCE
12 AFFORDABILITY FUND
13 ‘‘SEC. 1351. ESTABLISHMENT OF PROGRAM.
14 ‘‘There is hereby established the ‘Improve Health In-

15 surance Affordability Fund’ to be administered by the Sec-
16 retary of Health and Human Services, acting through the
17 Administrator of the Centers for Medicare & Medicaid
18 Services (in this section referred to as the ‘Adminis-
19 trator’), to provide funding, in accordance with this part,
20 to the 50 States and the District of Columbia (each re-
21 ferred to in this section as a ‘State’) beginning on January
22 1, 2023, for the purposes described in section 1352.
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1 ‘‘SEC. 1352. USE OF FUNDS.
2 ‘‘(a) IN GENERAL.—A State shall use the funds allo-

3 cated to the State under this part for one of the following
4 purposes:
5 ‘‘(1) To provide reinsurance payments to health
6 insurance issuers with respect to individuals enrolled
7 under individual health insurance coverage (other
8 than through a plan described in subsection (b)) of-
9 fered by such issuers.
10 ‘‘(2) To provide assistance (other than through
11 payments described in paragraph (1)) to reduce out-
12 of-pocket costs, such as copayments, coinsurance,
13 premiums, and deductibles, of individuals enrolled
14 under qualified health plans offered on the indi-
15 vidual market through an Exchange and of individ-
16 uals enrolled under standard health plans offered
17 through a basic health program established under
18 section 1331.
19 ‘‘(b) EXCLUSION OF CERTAIN GRANDFATHERED
20 PLANS, TRANSITIONAL PLANS, STUDENT HEALTH
21 PLANS, AND EXCEPTED BENEFITS.—For purposes of
22 subsection (a), a plan described in this subsection is the
23 following:
24 ‘‘(1) A grandfathered health plan (as defined in
25 section 1251).
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1 ‘‘(2) A plan (commonly referred to as a ‘transi-
2 tional plan’) continued under the letter issued by the
3 Centers for Medicare & Medicaid Services on No-
4 vember 14, 2013, to the State Insurance Commis-
5 sioners outlining a transitional policy for coverage in
6 the individual and small group markets to which sec-
7 tion 1251 does not apply, and under the extension
8 of the transitional policy for such coverage set forth
9 in the Insurance Standards Bulletin Series guidance
10 issued by the Centers for Medicare & Medicaid Serv-
11 ices on March 5, 2014, February 29, 2016, Feb-
12 ruary 13, 2017, April 9, 2018, March 25, 2019,
13 January 31, 2020, and January 19, 2021, or under
14 any subsequent extensions thereof.
15 ‘‘(3) Student health insurance coverage (as de-
16 fined in section 147.145 of title 45, Code of Federal
17 Regulations, or any successor regulation).
18 ‘‘(4) Excepted benefits (as defined in section
19 2791(c) of the Public Health Service Act).
20 ‘‘SEC. 1353. STATE ELIGIBILITY AND APPROVAL; DEFAULT
21 SAFEGUARD.
22 ‘‘(a) ENCOURAGING STATE OPTIONS FOR ALLOCA-

23 TIONS.—
24 ‘‘(1) IN GENERAL.—Subject to subsection (b),

25 to be eligible for an allocation of funds under this
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1 part for a year (beginning with 2023), a State shall
2 submit to the Administrator an application at such
3 time (but, in the case of allocations for 2023, not
4 later than 120 days after the date of the enactment
5 of this part and, in the case of allocations for a sub-
6 sequent year, not later than January 1 of the pre-
7 vious year) and in such form and manner as speci-
8 fied by the Administrator containing—
9 ‘‘(A) a description of how the funds will be
10 used; and
11 ‘‘(B) such other information as the Admin-
12 istrator may require.
13 ‘‘(2) AUTOMATIC APPROVAL.—An application so
14 submitted is approved (as outlined in the terms of
15 the plan) unless the Administrator notifies the State
16 submitting the application, not later than 90 days
17 after the date of the submission of such application,
18 that the application has been denied for not being in
19 compliance with any requirement of this part and of
20 the reason for such denial.
21 ‘‘(3) 5-YEAR APPLICATION APPROVAL.—If an
22 application of a State is approved for a purpose de-
23 scribed in section 1352 for a year, such application
24 shall be treated as approved for such purpose for
25 each of the subsequent 4 years.
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1 ‘‘(4) OVERSIGHT AUTHORITY AND AUTHORITY
2 TO REVOKE APPROVAL.—
3 ‘‘(A) OVERSIGHT.—The Secretary may

4 conduct periodic reviews of the use of funds
5 provided to a State under this section, with re-
6 spect to a purpose described in section 1352, to
7 ensure the State uses such funds for such pur-
8 pose and otherwise complies with the require-
9 ments of this section.
10 ‘‘(B) REVOCATION OF APPROVAL.—The
11 approval of an application of a State, with re-

12 spect to a purpose described in section 1352,
13 may be revoked if the State fails to use funds
14 provided to the State under this section for
15 such purpose or otherwise fails to comply with
16 the requirements of this section.
17 ‘‘(b) DEFAULT FEDERAL SAFEGUARD FOR 2023 AND
18 2024 FOR CERTAIN STATES.—
19 ‘‘(1) IN GENERAL.—For 2023 and 2024, in the
20 case of a State described in paragraph (5), with re-
21 spect to such year, the State shall not be eligible to
22 submit an application under subsection (a), and the
23 Administrator, in consultation with the applicable
24 State authority, shall from the amount calculated
25 under paragraph (3) for such year, carry out the
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1 purpose described in paragraph (2) in such State for
2 such year.
3 ‘‘(2) SPECIFIED USE.—The amount described
4 in paragraph (3), with respect to a State described
5 in paragraph (5) for 2023 or 2024, shall be used to
6 carry out the purpose described in section
7 1352(a)(1) in such State for such year, as applica-
8 ble, by providing reinsurance payments to health in-
9 surance issuers with respect to attachment range
10 claims (as defined in section 1354(b)(2), using the
11 dollar amounts specified in subparagraph (B) of
12 such section for such year) in an amount equal to,
13 subject to paragraph (4), the percentage (specified
14 for such year by the Secretary under such subpara-
15 graph) of the amount of such claims.
16 ‘‘(3) AMOUNT DESCRIBED.—The amount de-
17 scribed in this paragraph, with respect to 2023 or
18 2024, is the amount equal to the total sum of
19 amounts that the Secretary would otherwise esti-
20 mate under section 1354(b)(2)(A)(i) for such year
21 for each State described in paragraph (5) for such
22 year, as applicable, if each such State were not so
23 described for such year.
24 ‘‘(4) ADJUSTMENT.—For purposes of this sub-
25 section, the Secretary may apply a percentage under
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1 paragraph (3) with respect to a year that is less
2 than the percentage otherwise specified in section
3 1354(b)(2)(B) for such year, if the cost of paying
4 the total eligible attachment range claims for States
5 described in paragraph (5) for such year at such
6 percentage otherwise specified would exceed the
7 amount calculated under paragraph (3) for such
8 year.
9 ‘‘(5) STATE DESCRIBED.—A State described in
10 this paragraph, with respect to years 2023 and
11 2024, is a State that, as of January 1 of 2022 or
12 2023, respectively, was not expending amounts
13 under the State plan (or waiver of such plan) for all
14 individuals described in section
15 1902(a)(10)(A)(i)(VIII) during such year.
16 ‘‘SEC. 1354. ALLOCATIONS.
17 ‘‘(a) APPROPRIATION.—For the purpose of providing

18 allocations for States under subsection (b) and payments
19 under section 1353(b) there is appropriated, out of any
20 money in the Treasury not otherwise appropriated,
21 $10,000,000,000 for 2023 and each subsequent year.
22 ‘‘(b) ALLOCATIONS.—
23 ‘‘(1) PAYMENT.—
24 ‘‘(A) IN GENERAL.—From amounts appro-
25 priated under subsection (a) for a year, the
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1 Secretary shall, with respect to a State not de-
2 scribed in section 1353(b) for such year and
3 not later than the date specified under subpara-
4 graph (B) for such year, allocate for such State
5 the amount determined for such State and year
6 under paragraph (2).
7 ‘‘(B) SPECIFIED DATE.—For purposes of
8 subparagraph (A), the date specified in this
9 subparagraph is—
10 ‘‘(i) for 2023, the date that is 90 days
11 after the date of the enactment of this
12 part; and
13 ‘‘(ii) for 2024 or a subsequent year,
14 January 1 of the previous year.
15 ‘‘(C) NOTIFICATIONS OF ALLOCATION
16 AMOUNTS.—For 2024 and each subsequent

17 year, the Secretary shall notify each State of
18 the amount determined for such State under
19 paragraph (2) for such year by not later than
20 January 1 of the previous year.
21 ‘‘(2) ALLOCATION AMOUNT DETERMINA-
22 TIONS.—

24 graph (1), the amount determined under this
25 paragraph for a year for a State described in
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1 paragraph (1)(A) for such year is the amount
2 equal to—
3 ‘‘(i) the amount that the Secretary es-
4 timates would be expended under this part
5 for such year on attachment range claims
6 of individuals residing in such State if such
7 State used such funds only for the purpose
8 described in paragraph (1) of section
9 1352(a) at the dollar amounts and per-
10 centage specified under subparagraph (B)
11 for such year; minus
12 ‘‘(ii) the amount, if any, by which the
13 Secretary determines—
14 ‘‘(I) the estimated amount of
15 premium tax credits under section
16 36B of the Internal Revenue Code of
17 1986 that would be attributable to in-
18 dividuals residing in such State for
19 such year without application of this
20 part; exceeds
21 ‘‘(II) the estimated amount of
22 premium tax credits under section
23 36B of the Internal Revenue Code of
24 1986 that would be attributable to in-
25 dividuals residing in such State for
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1 such year if section 1353(b) applied
2 for such year and applied with respect
3 to such State for such year.
4 For purposes of the previous sentence and sec-
5 tion 1353(b)(3), the term ‘attachment range
6 claims’ means, with respect to an individual, the
7 claims for such individual that exceed a dollar
8 amount specified by the Secretary for a year,
9 but do not exceed a ceiling dollar amount speci-
10 fied by the Secretary for such year, under sub-
11 paragraph (B).
12 ‘‘(B) SPECIFICATIONS.—For purposes of
13 subparagraph (A) and section 1353(b)(3), the
14 Secretary shall determine the dollar amounts
15 and the percentage to be specified under this
16 subparagraph for a year in a manner to ensure
17 that the total amount of expenditures under
18 this part for such year is estimated to equal the
19 total amount appropriated for such year under
20 subsection (a) if such expenditures were used
21 solely for the purpose described in paragraph
22 (1) of section 1352(a) for attachment range
23 claims at the dollar amounts and percentage so
24 specified for such year.
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1 ‘‘(3) AVAILABILITY.—Funds allocated to a
2 State under this subsection for a year shall remain
3 available through the end of the subsequent year.’’.
4 (b) BASIC HEALTH PROGRAM FUNDING ADJUST-
5 MENTS.—Section 1331 of the Patient Protection and Af-
6 fordable Care Act (42 U.S.C. 18051) is amended—
7 (1) in subsection (a), by adding at the end the
9 ‘‘(3) PROVISION OF INFORMATION ON QUALI-
10 FIED HEALTH PLAN PREMIUMS.—
11 ‘‘(A) IN GENERAL.—For plan years begin-

12 ning on or after January 1, 2023, the program
13 described in paragraph (1) shall provide that a
14 State may not establish a basic health program
15 unless such State furnishes to the Secretary,
16 with respect to each qualified health plan of-
17 fered in such State during a year that receives
18 any reinsurance payment from funds made
19 available under part 6 for such year, the ad-
20 justed premium amount (as defined in subpara-
21 graph (B)) for each such plan and year.
22 ‘‘(B) ADJUSTED PREMIUM AMOUNT DE-
23 FINED.—For purposes of subparagraph (A), the

24 term ‘adjusted premium amount’ means, with
25 respect to a qualified health plan and a year,
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1 the monthly premium for such plan and year
2 that would have applied had such plan not re-
3 ceived any payments described in subparagraph
4 (A) for such year.’’; and
5 (2) in subsection (d)(3)(A)(ii), by adding at the
6 end the following new sentence: ‘‘In making such de-
7 termination, the Secretary shall calculate the value
8 of such premium tax credits that would have been
9 provided to such individuals enrolled through a basic
10 health program established by a State during a year
11 using the adjusted premium amounts (as defined in
12 subsection (a)(3)(B)) for qualified health plans of-
13 fered in such State during such year.’’.
14 SEC. 137507. SPECIAL RULE FOR INDIVIDUALS RECEIVING
15 UNEMPLOYMENT COMPENSATION.
16 (a) EXTENSION.—Section 36B(g)(1) is amended by

17 striking ‘‘during 2021,’’ and inserting ‘‘after December
18 31, 2020, and before January 1, 2026,’’.
19 (b) MODIFICATION OF INCOME NOT TAKEN INTO AC-
20 COUNT.—Section 36B(g)(1)(B) is amended by striking
21 ‘‘133 percent’’ and inserting ‘‘150 percent’’.
22 (c) CONFORMING AMENDMENT.—Section 36B(g) by
23 inserting ‘‘THROUGH 2025’’ after ‘‘2021’’ in the heading
24 thereof.
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4 SEC. 137508. PERMANENT CREDIT FOR HEALTH INSURANCE
5 COSTS.
6 (a) IN GENERAL.—Subparagraph (B) of section

7 35(b)(1) of the Internal Revenue Code of 1986 is amended
8 by striking ‘‘, and before January 1, 2022’’ and inserting
9 a period.
10 (b) INCREASE IN CREDIT PERCENTAGE.—Subsection
11 (a) of section 35 of the Internal Revenue Code of 1986
12 is amended by striking ‘‘72.5 percent’’ and inserting ‘‘80
13 percent’’.
14 (c) CONFORMING AMENDMENTS.—Subsections (b)
15 and (e)(1) of section 7527 of the Internal Revenue Code
16 of 1986 are each amended by striking ‘‘72.5 percent’’ and
17 inserting ‘‘80 percent’’.
19 this section shall apply to coverage months beginning after
20 December 31, 2021.
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1 PART 6—PATHWAY TO PRACTICE TRAINING
2 PROGRAMS
3 SEC. 137601. ESTABLISHING RURAL AND UNDERSERVED
4 PATHWAY TO PRACTICE TRAINING PRO-
5 GRAMS FOR POST-BACCALAUREATE STU-
6 DENTS AND MEDICAL STUDENTS.
7 (a) PROGRAM.—
8 (1) IN GENERAL.—Title XVIII of the Social Se-
9 curity Act (42 U.S.C. 1395 et seq.) is amended by
10 adding at the end the following new section:
11 ‘‘SEC. 1899C. RURAL AND UNDERSERVED PATHWAY TO
12 PRACTICE TRAINING PROGRAM FOR POST-
13 BACCALAUREATE AND MEDICAL STUDENTS.
14 ‘‘(a) IN GENERAL.—Not later than October 1, 2023,

15 the Secretary shall, subject to the succeeding provisions
16 of this section, carry out the ‘Rural and Underserved
17 Pathway to Practice Training Program for Post-Bacca-
18 laureate and Medical Students’ (in this section, referred
19 to as the ‘Program’) under which the Secretary awards
20 Pathway to Practice medical scholarship vouchers to quali-
21 fying students described in subsection (b) for the purpose
22 of increasing the number of physicians practicing in rural
23 and underserved communities.
24 ‘‘(b) QUALIFYING STUDENT DESCRIBED.—For pur-
25 poses of this section, a qualifying student described in this
26 subsection is an individual who—
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1 ‘‘(1) attests he or she—
2 ‘‘(A) is or will be a first-generation student
3 of a 4-year college, graduate school, or profes-
4 sional school;
5 ‘‘(B) was a Pell Grant recipient; or
6 ‘‘(C) lived in a medically underserved area,
7 rural area, or health professional shortage area
8 for a period of 4 or more years prior to attend-
9 ing an undergraduate program;
10 ‘‘(2) has accepted enrollment in—
11 ‘‘(A) a post-baccalaureate program that is
12 not more than 2 years and intends to enroll in
13 a qualifying medical school within 2 years after
14 completion of such program; or
15 ‘‘(B) a qualifying medical school;
16 ‘‘(3) will practice medicine in a health profes-
17 sional shortage area, medically underserved area,
18 public hospital, rural area, or as required under sub-
19 section (d)(5); and
20 ‘‘(4) submits an application and a signed copy
21 of the agreement described under subsection (c).
22 ‘‘(c) APPLICATIONS.—
23 ‘‘(1) IN GENERAL.—To be eligible to receive a
24 Pathway to Practice medical scholarship voucher
25 under this section, a qualifying student described in
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1 subsection (b) shall submit to the Secretary an ap-
2 plication at such time, in such manner, and con-
3 taining such information as the Secretary may re-
4 quire.
5 ‘‘(2) INFORMATION TO BE INCLUDED.—As a
6 part of the application described in paragraph (1),
7 the Secretary shall include a notice of the items
8 which are required to be agreed to under subsection
9 (d)(4) for the purpose of notifying the qualifying
10 student of the terms of the Rural and Underserved
11 Pathway to Practice Training Program.
12 ‘‘(d) PATHWAY TO PRACTICE MEDICAL SCHOLAR-
13 SHIP VOUCHER DETAILS.—
14 ‘‘(1) NUMBER.—On an annual basis, the Sec-
15 retary may award a Pathway to Practice medical
16 scholarship voucher under the Program to not more
17 than 1,000 qualifying students described in sub-
18 section (b).
19 ‘‘(2) PRIORITIZATION CRITERIA.—In deter-
20 mining whether to award a Pathway to Practice
21 medical scholarship voucher under the Program to
22 qualifying students described in subsection (b), the
23 Secretary shall prioritize applications from any such
24 student who attests that he or she—
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1 ‘‘(A) was a participant in the Health Re-
2 sources and Services Administration Health Ca-
3 reers Opportunity Program or an Area Health
4 Education Center scholar;
5 ‘‘(B) is a disadvantaged student (as de-
6 fined by the National Health Service Corps of
7 the Health Resources & Services Administration
8 of the Department of Health and Human Serv-
9 ices); or
10 ‘‘(C) attended a historically black college
11 or other minority serving institution (as defined
12 in section 1067q of title 20, United States
13 Code).
14 ‘‘(3) DURATION.—Each Pathway to Practice
15 medical scholarship voucher awarded to a qualifying
16 student pursuant to paragraph (1) shall be so
17 awarded to such a student on an annual basis for
18 each year of enrollment in a post-baccalaureate pro-
19 gram and a qualifying medical school (as appro-
20 priate).
21 ‘‘(4) AMOUNT.—Subject to paragraph (5), each
22 Pathway to Practice medical scholarship voucher
23 awarded under the Program shall include amounts
24 for—
25 ‘‘(A) tuition;
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1 ‘‘(B) academic fees (as determined by the
2 qualifying medical school);
3 ‘‘(C) required textbooks and equipment;
4 ‘‘(D) a monthly stipend equal to the
5 amount provided for individuals under the
6 health professions scholarship and financial as-
7 sistance program described in section 2121(c)
8 of title 10, United States Code; and
9 ‘‘(E) any other educational expenses nor-
10 mally incurred by students at the post-bacca-
11 laureate program or qualifying medical school
12 (as appropriate).
13 ‘‘(5) REQUIRED AGREEMENT.—No amounts
14 under paragraph (4) may be provided a qualifying
15 student awarded a Pathway to Practice medical
16 scholarship voucher under the Program, unless the
17 qualifying student submits to the Secretary an
18 agreement to—
19 ‘‘(A) complete a post-baccalaureate pro-
20 gram that is not more than 2 years (if applica-
21 ble pursuant to the option under subsection
22 (b)(2)(A));
23 ‘‘(B) graduate from a qualifying medical
24 school;
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1 ‘‘(C) complete a residency program in an
2 approved residency training program (as de-
3 fined in section 1886(h)(5)(A));
4 ‘‘(D) complete an initial residency period
5 or the period of board eligibility;
6 ‘‘(E) practice medicine for at least the
7 number of years of the Pathway to Practice
8 medical scholarship voucher awarded under
9 paragraph (2) after a residency program in a
10 health professional shortage area, a medically
11 underserved area, a public hospital, or a rural
12 area, and during such period annually submit
13 documentation with respect to whether the
14 qualifying student practices medicine in such an
15 area and where;
16 ‘‘(F) for the purpose of determining com-
17 pliance with subparagraph (E), not later than
18 180 days after the date on which qualifying stu-
19 dent completes a residency program, provide to
20 the Secretary information with respect to where
21 the qualifying student is practicing medicine
22 following the period described in such subpara-
23 graph;
24 ‘‘(G) except in the case of a waiver for
25 hardship pursuant to section 1892(f)(3), be lia-
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1 ble to the United States pursuant to section
2 1892 for any amounts received under this Pro-
3 gram that is determined a past-due obligation
4 under subsection (b)(3) of such section in the
5 case qualifying student fails to complete all of
6 the requirements of this agreement under this
7 subsection; and
8 ‘‘(H) for the purpose of determining the
9 amount of Pathway to Practice medical scholar-
10 ship vouchers paid or incurred by a qualifying
11 medical school or any provider of a post-bacca-
12 laureate program referred to in subsection
13 (b)(2)(A) for the costs of tuition under para-
14 graph (4)(A), consent to any personally identi-
15 fying information being shared with the Sec-
16 retary of the Treasury.
17 ‘‘(6) RESPONSIBILITIES OF PARTICIPATING
18 EDUCATIONAL INSTITUTIONS.—Each annual award

19 of an amount of Pathway to Practice medical schol-
20 arship voucher under paragraph (2) shall be made
21 with respect to a specific qualifying medical school
22 or post-baccalaureate program that is not more than
23 2 years and such school or program shall (as a con-
24 dition of, and prior to, such award being made with
25 respect to such school or program)—
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1 ‘‘(A) submit to the Secretary such infor-
2 mation as the Secretary may require to deter-
3 mine the amount of such award on the basis of
4 the costs of the costs of the items specified
5 under paragraph (4) (except for subparagraph
6 (D)) with respect to such school or program,
7 and
8 ‘‘(B) enter into an agreement with the Sec-
9 retary under which such school or provider will
10 verify (in such manner as the Secretary may
11 provide) that amounts paid by such school or
12 provider to the qualifying student are used for
13 such costs.
14 ‘‘(e) DEFINITIONS.—In this section:
15 ‘‘(1) HEALTH PROFESSIONAL SHORTAGE
16 AREA.—The team ‘health professional shortage area’

17 has the meaning given such term in subparagraphs
18 (A) or (B) of section 332(a)(1) of the Public Health
19 Service Act.
20 ‘‘(2) INITIAL RESIDENCY PERIOD.—The term
21 ‘initial residency period’ has the meaning given such
22 term in section 1886(h)(5)(F).
23 ‘‘(3) MEDICALLY UNDERSERVED AREA.—The
24 term ‘medically underserved area’ means an area
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1 designated pursuant to section 330(b)(3)(A) of the
2 Public Health Service Act.
3 ‘‘(4) PELL GRANT RECIPIENT.—The term ‘Pell
4 Grant recipient’ has the meaning given such term in
5 section 322(3) of the Higher Education Act of 1965.
6 ‘‘(5) PERIOD OF BOARD ELIGIBILITY.—The
7 term ‘period of board eligibility’ has the meaning

8 given such term in section 1886(h)(5)(G).
9 ‘‘(6) QUALIFYING MEDICAL SCHOOL.—The term
10 ‘qualifying medical school’ means a school of medi-
11 cine accredited by the Liaison Committee on Medical
12 Education of the American Medical Association and
13 the Association of American Medical Colleges (or ap-
14 proved by such Committee as meeting the standards
15 necessary for such accreditation) or a school of oste-
16 opathy accredited by the American Osteopathic As-
17 sociation, or approved by such Association as meet-
18 ing the standards necessary for such accreditation
19 which—
20 ‘‘(A) for each academic year, enrolls at
21 least 10 qualifying students who are in enrolled
22 in such a school;
23 ‘‘(B) requires qualifying students to enroll
24 in didactic coursework and clinical experience
25 applicable to practicing medicine in health pro-
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1 fessional shortage areas, medically underserved
2 areas, or rural areas, including—
3 ‘‘(i) clinical rotations in such areas in
4 applicable specialties (as applicable and as
5 available);
6 ‘‘(ii) coursework or training experi-
7 ences focused on medical issues prevalent
8 in such areas and cultural and structural
9 competency; and
10 ‘‘(C) is located in a State (as defined in
11 section 210(h)).
12 ‘‘(7) RURAL AREA.—The term ‘rural area’ has
13 the meaning given such term in section
14 1886(d)(2)(D).
15 ‘‘(f) PENALTY FOR FALSE INFORMATION.—Any per-
16 son who knowingly and willfully obtains by fraud, false
17 statement, or forgery, or fails to refund any funds, assets,
18 or property provided under this section or attempts to so
19 obtain by fraud, false statement or forgery, or fail to re-
20 fund any funds, assets, or property, received pursuant to
21 this section shall be fined not more than $20,000 or im-
22 prisoned for not more than 5 years, or both.’’.
23 (2) AGREEMENTS.—Section 1892 of the Social
24 Security Act (42 U.S.C. 1395ccc) is amended—
25 (A) in subsection (a)(1)(A)—
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1 (i) by striking ‘‘, or the’’ and inserting
2 ‘‘, the’’; and
3 (ii) by inserting ‘‘or the Rural and
4 Underserved Pathway to Practice Training
5 Program for Post- Baccalaureate and Med-
6 ical Students under section 1899C’’ before
7 ‘‘, owes a past-due obligation’’;
8 (B) in subsection (b)—
9 (i) in paragraph (1), by striking at
10 the end ‘‘or’’;
11 (ii) in paragraph (2), by striking the
12 period at the end and inserting ‘‘; or’’; and
13 (iii) by adding the end the following
14 new paragraph:
15 ‘‘(3) subject to subsection (f), owed by an indi-
16 vidual to the United States by breach of an agree-
17 ment under section 1899C(c) and which payment
18 has not been paid by the individual for any amounts
19 received under the Rural and Underserved Pathway
20 to Practice Training Program for Post-Bacca-
21 laureate and Medical Students (and accrued interest
22 determined in accordance with subsection (f)(4)) in
23 the case such individual fails to complete the re-
24 quirements of such agreement.’’; and
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2 subsection:
3 ‘‘(f) AUTHORITIES WITH RESPECT TO THE COLLEC-
4 TION UNDER THE PATHWAY TO PRACTICE TRAINING
5 PROGRAM.—The Secretary—
6 ‘‘(1) shall require payment to the United States
7 for any amount of damages that the United States
8 is entitled to recover under subsection (b)(3), within
9 the 5-year period beginning on the date an eligible
10 individual fails to complete the requirements of such
11 agreement under section 1899C(d)(5) (or such
12 longer period beginning on such date as specified by
13 the Secretary), and any such amounts not paid with-
14 in such period shall be subject to collection through
15 deductions in Medicare payments pursuant to sub-
16 section (e);
17 ‘‘(2) may allow payments described in para-
18 graph (1) to be paid in installments over such 5-year
19 period, which shall accrue interest in an amount de-
20 termined pursuant to paragraph (5);
21 ‘‘(3) may waive the requirement for an indi-
22 vidual to pay a past-due obligation under subsection
23 (b)(3) in the case of hardship (as determined by the
24 Secretary);
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1 ‘‘(4) may not disclose any past-due obligation
2 under subsection (b)(3) that is owed to the United
3 States to any credit reporting agency that the
4 United States entitled to be recovered the United
5 States under this section; and
6 ‘‘(5) shall make a final determination of wheth-
7 er the amount of payment under section 1899C
8 made to a qualifying student (as described in sub-
9 section (b) of such section) was in excess of or less
10 than the amount of payment that is due, and pay-
11 ment of such excess or deficit is not made (or ef-
12 fected by offset) within 90 days of the date of the
13 determination, and interest shall accrue on the bal-
14 ance of such excess or deficit not paid or offset (to
15 the extent that the balance is owed by or owing to
16 the provider) at a rate determined in accordance
17 with the regulations of the Secretary of the Treasury
18 applicable to charges for late payments.’’.
19 SEC. 137602. FUNDING FOR THE RURAL AND UNDERSERVED
21 GRAMS FOR POST-BACCALAUREATE STU-
22 DENTS AND MEDICAL STUDENTS.

24 chapter A of chapter 1 of the Internal Revenue Code of
25 1986, as amended by the preceding provisions of this Act,
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1 is amended by inserting after section 36F the following
2 new section:
3 ‘‘SEC. 36G. PATHWAY TO PRACTICE MEDICAL SCHOLAR-
4 SHIP VOUCHER CREDIT.
5 ‘‘(a) IN GENERAL.—In the case of a qualified edu-

6 cational institution, there shall be allowed as a credit
7 against the tax imposed by this subtitle for any taxable
8 year an amount equal to the aggregate amount paid or
9 incurred by such institution during such taxable year pur-
10 suant to any Pathway to Practice medical scholarship
11 voucher awarded to a qualifying student with respect to
12 such institution.
13 ‘‘(b) DETERMINATION OF AMOUNTS PAID PURSUANT
14 TO QUALIFIED SCHOLARSHIP VOUCHERS, ETC.—For pur-
15 poses of this section—
16 ‘‘(1) an amount shall be treated as paid or in-
17 curred pursuant to an annual award of a Pathway
18 to Practice medical scholarship voucher only if such
19 amount is paid or incurred in reimbursement, or an-
20 ticipation of, an expense described in subparagraphs
21 (A) through (E) of paragraph (4) of section
22 1899C(d) of the Social Security Act and is subject
23 to verification in such manner as the Secretary of
24 Health and Human Services may provide under
25 paragraph (6) of such section, and
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1 ‘‘(2) in the case of any amount credited by a
2 qualified educational institution against a liability
3 owed by the qualifying student to such institution,
4 such amount shall be treated as paid by such insti-
5 tution to such student as of the date that such liabil-
6 ity would otherwise be due.
8 ‘‘(1) QUALIFIED EDUCATIONAL INSTITUTION.—
9 The term ‘qualified educational institution’ means,

10 with respect to any annual award of a Pathway to
11 Practice medical scholarship voucher—
12 ‘‘(A) any qualifying medical school (as de-
13 fined in subsection (e)(6) of section 1899C of
14 the Social Security Act), and
15 ‘‘(B) any provider of a post-baccalaureate
16 program referred to in subsection (b)(2)(A) of
17 such section,
18 which meets the requirements of subsection (d)(6) of
19 such section.
20 ‘‘(2) QUALIFYING STUDENT.—The term ‘quali-
21 fying student’ means any student to whom the Sec-
22 retary of Health and Human Services has made an
23 annual award of a Pathway to Practice medical
24 scholarship voucher under section 1899C of the So-
25 cial Security Act.
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1 ‘‘(3) ANNUAL AWARD OF A PATHWAY TO PRAC-
2 TICE MEDICAL SCHOLARSHIP VOUCHER.—The term

3 ‘annual award of a Pathway to Practice medical
4 scholarship voucher’ means the annual award of a
5 Pathway to Practice medical scholarship voucher re-
6 ferred to in section 1899C(d)(3) of the Social Secu-
7 rity Act.
8 ‘‘(d) COORDINATION OF ACADEMIC AND TAXABLE
9 YEARS.—The credit allowed under subsection (a) with re-
10 spect to any Pathway to Practice medical scholarship
11 voucher shall not exceed the amount of such voucher which
12 is for expenses described in subparagraphs (A) through
13 (E) of section 1899C(d)(4) of the Social Security Act, re-
14 duced by any amount of such voucher with respect to
15 which credit was allowed under this section for any prior
16 taxable year.
17 ‘‘(e) REGULATIONS.—The Secretary shall issue such
18 regulations or other guidance as are necessary or appro-
19 priate to carry out the purposes of this section.’’.
23 serting ‘‘36G,’’ after ‘‘36F,’’.
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2 ing ‘‘36G,’’ after ‘‘36F,’’.
3 (3) The table of sections for subpart C of part
4 IV of subchapter A of chapter 1 of the Internal Rev-
5 enue Code of 1986, and amended by the preceding
6 provisions of this Act, is amended by inserting after
7 the item relating to section 36F the following new
8 item:
‘‘Sec. 36G. Pathway to Practice medical scholarship voucher credit.’’.
9 (c) INFORMATION SHARING.—The Secretary of

10 Health and Human Services shall annually provide the
11 Secretary of the Treasury such information regarding the
12 program under section 1899C of the Social Security Act
13 as the Secretary of the Treasury may require to admin-
14 ister the tax credits determined under section 36G of the
15 Internal Revenue Code of 1986, including information to
16 identify qualifying students and the qualified educational
17 institutions at which such students are enrolled and the
18 amount of the annual award of the Pathway to Practice
19 medical scholarship voucher awarded to each such student
20 with respect to such institution. Terms used in this sub-
21 paragraph shall have the same meaning as when used is
22 such section 36G.
24 this section shall apply to taxable years ending after the
25 date of the enactment of this Act.
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1 SEC. 137603. ESTABLISHING RURAL AND UNDERSERVED
3 GRAMS FOR MEDICAL RESIDENTS.
4 Section 1886 of the Social Security Act (42 U.S.C.

5 1395ww) is amended—
6 (1) in subsection (d)(5)(B)(v), by inserting
7 ‘‘(h)(4)(H)(vii),’’ after ‘‘The provisions of sub-
8 sections (h)(4)(H)(vi),’’; and
9 (2) in subsection (h)(4)(H), by adding at the
10 end the following new clause:
11 ‘‘(vii) INCREASE IN FULL-TIME EQUIV-
12 ALENT LIMITATION FOR HOSPITALS IMPLE-
13 MENTING PATHWAY TRAINING PRO-
14 GRAMS.—
15 ‘‘(I) IN GENERAL.—For cost re-

16 porting periods beginning on or after
17 October 1, 2026, during which a resi-
18 dent trains in an applicable hospital
19 or hospitals (as defined in subclause
20 (II) in an approved medical residency
21 training program), the Secretary
22 shall, after any adjustment made
23 under any preceding provision of this
24 paragraph or under any of paragraphs
25 (7) through (9), subject to subclause
26 (III), increase the limitation under
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1 subparagraph (F) for such cost re-
2 porting period by the number of full-
3 time equivalent residents so trained
4 under such program during such pe-
5 riod (in this clause, referred to as the
6 ‘Rural and Underserved Pathway to
7 Practice Training Programs for Med-
8 ical Residents’ or ‘Program’).
9 ‘‘(II) APPLICABLE HOSPITAL OR
10 HOSPITALS DEFINED.—For purposes

11 of this clause, the term ‘applicable
12 hospital or hospitals’ means any hos-
13 pital that has been recognized by the
14 Accreditation Council for Graduate
15 Medical Education as meeting at least
16 the following requirements for their
17 approved medical residency training
18 programs:
19 ‘‘(aa) The programs provide
20 mentorships for residents.
21 ‘‘(bb) The programs include
22 cultural and structural com-
23 petency as part of the training of
24 residents under the programs.
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1 ‘‘(cc) The programs have a
2 demonstrated record of training
3 medical residents in medically
4 underserved areas, rural areas, or
5 health professional shortage
6 areas.
7 ‘‘(dd) The hospital agrees to
8 promote community-based train-
9 ing of residents under their pro-
10 grams, as appropriate.
11 ‘‘(III) ANNUAL LIMITATION FOR
12 NUMBER OF RESIDENTS IN PRO-
13 GRAM.—The Secretary shall ensure

14 that, during any 1-year period and
15 across all approved medical residency
16 training programs described in sub-
17 clause (I), not more than 1,000 full-
18 time equivalent residents are trained
19 each year.
20 ‘‘(IV) OTHER DEFINITIONS.—
21 ‘‘(aa) HEALTH PROFES-
22 SIONAL SHORTAGE AREA.—The
23 team ‘health professional short-

24 age area’ has the meaning given
25 such term in subparagraphs (A)
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1 or (B) of section 332(a)(1) of the
2 Public Health Service Act.
3 ‘‘(bb) MEDICAL UNDER-
4 SERVED AREA.—The term ‘medi-

5 cally underserved area’ means an
6 area designated pursuant to sec-
7 tion 330(b)(3)(A) of the Public
8 Health Service Act.
9 ‘‘(cc) QUALIFYING MEDICAL
10 SCHOOL.—The term ‘qualifying

11 medical school’ has the meaning
12 given such term in section
13 1899C(e)(6).
14 ‘‘(dd) QUALIFYING MEDICAL
15 STUDENT.—The term ‘qualifying

16 medical student’ has the meaning
17 given such term in section
18 1899C(b).
19 ‘‘(ee) RURAL AREA.—The
20 term ‘rural area’ has the mean-

22 1886(d)(2)(D).’’.
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1 SEC. 137604. ADMINISTRATIVE FUNDING OF THE RURAL
2 AND UNDERSERVED PATHWAY TO PRACTICE
3 TRAINING PROGRAMS FOR POST-BACCA-
4 LAUREATE STUDENTS, MEDICAL STUDENTS,
5 AND MEDICAL RESIDENTS.
6 The Secretary shall provide for the transfer of

7 $6,000,000 from the Hospital Insurance Trust Fund es-
8 tablished under section 1817 of the Social Security Act
9 (42 U.S.C. 1395i) and the Federal Supplementary Med-
10 ical Insurance Trust Fund under section 1841 of such Act
11 (42 U.S.C. 1395t), in addition to amounts otherwise avail-
12 able to remain available until expended, to carry out the
13 administration of the Rural and Underserved Pathway to
14 Practice Training Program for Post-Baccalaureate and
15 Medical Students under section 1899C of such Act (42
16 U.S.C. 1395mmm) and the Rural and Underserved Path-
17 way to Practice Training Programs for Medical Residents
18 under section 1886(h)(4)(H)(vii) of such Act (42 U.S.C.
19 1395ww(h)(4)(H)(vii)).
20 PART 7—HIGHER EDUCATION
21 SEC. 137701. CREDIT FOR PUBLIC UNIVERSITY RESEARCH
22 INFRASTRUCTURE.

25 visions of this Act, is amended by adding at the end the
26 following new section:
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1 ‘‘SEC. 45AA. PUBLIC UNIVERSITY RESEARCH INFRASTRUC-
2 TURE CREDIT.

4 tion 38, the public university research infrastructure cred-
5 it determined under this section for a taxable year is an
6 amount equal to 40 percent of the qualified cash contribu-
7 tions made by a taxpayer during such taxable year.
8 ‘‘(b) QUALIFIED CASH CONTRIBUTION.—
10 ‘‘(A) DEFINED.—For purposes of sub-

11 section (a), the qualified cash contribution for
12 any taxable year is the aggregate amount con-
13 tributed in cash by a taxpayer during such tax-
14 able year to a certified educational institution
15 in connection with a qualifying project that, but
16 for this section, would be treated as a charitable
17 contribution for purposes of section 170(c).
18 ‘‘(B) QUALIFIED CASH CONTRIBUTIONS
19 TAKEN INTO ACCOUNT FOR PURPOSES OF
20 CHARITABLE CONTRIBUTION LIMITATIONS.—
21 Any qualified cash contributions made by a tax-

22 payer under this section shall be taken into ac-
23 count for purposes of determining the percent-
24 age limitations under section 170(b).
25 ‘‘(2) DESIGNATION REQUIRED.—A contribution
26 shall only be treated as a qualified cash contribution
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1 to the extent that it is designated as such by a cer-
2 tified educational institution under subsection (d).
4 ‘‘(1) QUALIFYING PROJECT.—The term ‘quali-
5 fying project’ means a project to purchase, con-
6 struct, or improve research infrastructure property.
7 ‘‘(2) RESEARCH INFRASTRUCTURE PROP-
8 ERTY.—The term ‘research infrastructure property’

9 means any portion of a property, building, or struc-
10 ture of an eligible educational institution, or any
11 land associated with such property, building, or
12 structure, that is used for research.
13 ‘‘(3) ELIGIBLE EDUCATIONAL INSTITUTION.—
14 The term ‘eligible educational institution’ means—

15 ‘‘(A) an institution of higher education (as
16 such term is defined in section 101 or 102(c)
17 of the Higher Education Act of 1965) that is
18 a college or university described in section
19 511(a)(2)(B), or
20 ‘‘(B) an organization described in section
21 170(b)(1)(A)(iv) or section 509(a)(3) to which
22 authority has been delegated by an institution
23 described in subparagraph (A) for purposes of
24 applying for or administering credit amounts on
25 behalf of such institution.
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1 ‘‘(4) CERTIFIED EDUCATIONAL INSTITUTION.—
2 The term ‘certified educational institution’ means an

3 eligible educational institution which has been allo-
4 cated a credit amount for a qualifying project and—
5 ‘‘(A) has received a certification for such
6 project under subsection (d)(2), and
7 ‘‘(B) designates credit amounts to tax-
8 payers for qualifying cash contributions toward
9 such project under subsection (d)(4).
10 ‘‘(d) QUALIFYING UNIVERSITY RESEARCH INFRA-
11 STRUCTURE PROGRAM.—
12 ‘‘(1) ESTABLISHMENT.—
13 ‘‘(A) IN GENERAL.—Not later than 180
14 days after the date of the enactment of this sec-
15 tion, the Secretary, after consultation with the
16 Secretary of Education, shall establish a pro-
17 gram to—
18 ‘‘(i) certify and allocate credit
19 amounts for qualifying projects to eligible
20 educational institutions, and
21 ‘‘(ii) allow certified educational insti-
22 tutions to designate cash contributions for
23 qualifying projects of such certified edu-
24 cational institutions as qualified cash con-
25 tributions.
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1 ‘‘(B) LIMITATIONS.—
2 ‘‘(i) ALLOCATION LIMITATION PER IN-
3 STITUTION.—The credit amounts allocated

4 to a certified educational institution under
5 subparagraph (A)(i) for all projects shall
6 not exceed $50,000,000 per calendar year.
7 ‘‘(ii) OVERALL ALLOCATION LIMITA-
8 TION.—
9 ‘‘(I) IN GENERAL.—The total

10 amount of qualifying project credit
11 amounts that may be allocated under
12 subparagraph (A)(i) shall not ex-
13 ceed—
14 ‘‘(aa) $500,000,000 for each
15 of calendar years 2022, 2023,
16 2024, 2025, and 2026, and
17 ‘‘(bb) $0 for each subse-
18 quent year.
19 ‘‘(II) ROLLOVER OF
20 UNALLOCATED CREDIT AMOUNTS.—
21 Any credit amounts described in sub-

22 clause (I) that are unallocated during
23 a calendar year shall be carried to the
24 succeeding calendar year and added to
25 the limitation allowable under such
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1 subclause for such succeeding cal-
2 endar year.
3 ‘‘(iii) DESIGNATION LIMITATION.—
4 The aggregate amount of cash contribu-

5 tions which are designated by a certified
6 educational institution as qualifying cash
7 contributions with respect to any quali-
8 fying project shall not exceed 250 percent
9 of the credit amount allocated to such cer-
10 tified educational institution for a quali-
11 fying project under subparagraph (A)(i).
12 ‘‘(2) CERTIFICATION APPLICATION.—Each eligi-
13 ble educational institution which applies for certifi-
14 cation of a project under this paragraph shall sub-
15 mit an application in such time, form, and manner
16 as the Secretary may require.
17 ‘‘(3) SELECTION CRITERIA FOR ALLOCATIONS
18 TO ELIGIBLE EDUCATIONAL INSTITUTIONS.—The
19 Secretary, after consultation with the Secretary of

20 Education, shall select applications from eligible
21 educational institutions—
22 ‘‘(A) based on the extent of the expected
23 expansion of an eligible educational institution’s
24 targeted research within disciplines in science,
25 mathematics, engineering, and technology, and
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1 ‘‘(B) in a manner that ensures consider-
2 ation is given to eligible educational institutions
3 with full-time student populations of less than
4 12,000.
5 ‘‘(4) DESIGNATION OF QUALIFIED CASH CON-
6 TRIBUTIONS TO TAXPAYERS.—The Secretary, after

7 consultation with the Secretary of Education, shall
8 establish a process by which certified educational in-
9 stitutions shall designate cash contributions to such
10 institutions as qualified cash contributions.
11 ‘‘(5) DISCLOSURE OF ALLOCATIONS AND DES-
12 IGNATIONS.—
13 ‘‘(A) ALLOCATIONS.—The Secretary shall,

14 upon allocating credit amounts to an applicant
15 under this subsection, publicly disclose the iden-
16 tity of the applicant and the credit amount allo-
17 cated to such applicant.
18 ‘‘(B) DESIGNATIONS.—Each certified edu-
19 cational institution shall, upon designating con-
20 tributions of a taxpayer as qualified cash con-
21 tributions under this subsection, publicly dis-
22 close the identity of the taxpayer and the
23 amount of contributions designated in such
24 time, form, and manner as the Secretary may
25 require.
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1 ‘‘(e) REGULATIONS AND GUIDANCE.—The Secretary,
2 after consultation with the Secretary of Education when
3 applicable, shall prescribe such regulations and guidance
4 as may be necessary or appropriate to carry out the pur-
5 poses of this section, including regulations for—
6 ‘‘(1) prevention of abuse,
7 ‘‘(2) establishment of reporting requirements,
8 ‘‘(3) establishment of selection criteria for ap-
9 plications, and
10 ‘‘(4) disclosure of allocations.
11 ‘‘(f) PENALTY FOR NONCOMPLIANCE.—
12 ‘‘(1) IN GENERAL.—If at any time during the
13 5-year period beginning on the date of the allocation
14 of credit amounts to a certified educational institu-
15 tion under subsection (d)(1)(A)(i) there is a non-
16 compliance event with respect to such credit
17 amounts, then the following rules shall apply:
18 ‘‘(A) GENERAL RULE.—Any cash contribu-
19 tion designated as a qualifying cash contribu-
20 tion with respect to a qualifying project for
21 which such credit amounts were allocated under
22 subsection (d)(1)(A)(ii) shall be treated as un-
23 related business taxable income (as defined in
24 section 512) of such certified educational insti-
25 tution.
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1 ‘‘(B) RULE FOR UNUSED CREDIT
2 AMOUNTS.—In the case of unused credit

3 amounts described under paragraph (2)(A) and
4 identified pursuant to subsection (g), the Sec-
5 retary shall reallocate any portion of such un-
6 used credit amounts to certified educational in-
7 stitutions in lieu of imposing the general rule
8 under subparagraph (A).
9 ‘‘(2) NONCOMPLIANCE EVENT.—For purposes
10 of this subsection, the term ‘noncompliance event’
11 means, with respect to a credit amount allocated to
12 a certified educational institution—
13 ‘‘(A) cash contributions equaling the
14 amount of such credit amount are not des-
15 ignated as qualifying cash contributions within
16 2 years after December 31 of the year such
17 credit amount is allocated,
18 ‘‘(B) a qualifying project with respect to
19 which such credit amount was allocated is not
20 placed in service within either—
21 ‘‘(i) 4 years after December 31 of the
22 year such credit amount is allocated, or
23 ‘‘(ii) a period of time that the Sec-
24 retary determines is appropriate, or
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1 ‘‘(C) the research infrastructure property
2 placed in service as part of a qualifying project
3 with respect to which such credit amount was
4 allocated ceases to be used for research within
5 five years after such property is placed in serv-
6 ice.
7 ‘‘(g) REVIEW AND REALLOCATION OF CREDIT
8 AMOUNTS.—
9 ‘‘(1) REVIEW.—Not later than 5 years after the
10 date of enactment of this section, the Secretary shall
11 review the credit amounts allocated under this sec-
12 tion as of such date.
13 ‘‘(2) REALLOCATION.—
14 ‘‘(A) IN GENERAL.—The Secretary may re-
15 allocate credit amounts allocated under this sec-
16 tion if the Secretary determines, as of the date
17 of the review in paragraph (1), that such credit
18 amounts are subject to a noncompliance event.
19 ‘‘(B) ADDITIONAL PROGRAM.—If the Sec-
20 retary determines that credits under this sec-
21 tion are available for reallocation pursuant to
22 the requirements set forth in subparagraph (A),
23 the Secretary is authorized to conduct an addi-
24 tional program for applications for certification.
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1 ‘‘(C) DEADLINE FOR REALLOCATION.—
2 The Secretary shall not certify any project, or

3 reallocate any credit amount, pursuant to this
4 paragraph after December 31, 2031.
5 ‘‘(h) DENIAL OF DOUBLE BENEFIT.—No credit or
6 deduction shall be allowed under any other provision of
7 this chapter for any qualified cash contribution for which
8 a credit is allowed under this section.
9 ‘‘(i) RULE FOR TRUSTS AND ESTATES.—For pur-
10 poses of this section, rules similar to the rules of sub-
11 section (d) of section 52 shall apply.
12 ‘‘(j) TERMINATION.—This section shall not apply to
13 qualified cash contributions made after December 31,
14 2033.’’.
16 CREDIT.—Subsection (b) of section 38, as amended by the
17 preceding provisions of this Act, is amended by striking
21 ‘‘(43) the public university research infrastruc-
22 ture credit determined under section 45AA.’’.
24 for subpart D of part IV of subchapter A of chapter 1,
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2 amended by adding at the end the following new item:
‘‘Sec. 45AA. Public university research infrastructure credit.’’.

4 this section shall apply to qualified cash contributions
5 made after December 31, 2021.
6 SEC. 137702. MODIFICATION OF EXCISE TAX ON INVEST-
7 MENT INCOME OF PRIVATE COLLEGES AND
8 UNIVERSITIES.
9 (a) PHASEOUT OF INVESTMENT INCOME EXCISE TAX

10 FOR PRIVATE COLLEGES AND UNIVERSITIES PROVIDING
11 SUFFICIENT GRANTS AND SCHOLARSHIPS.—Section 4968
12 is amended by adding at the end the following new sub-
13 section:
14 ‘‘(e) PHASEOUT FOR INSTITUTIONS PROVIDING
15 QUALIFIED AID.—
16 ‘‘(1) IN GENERAL.—The amount of tax imposed
17 by subsection (a) (determined without regard to this
18 subsection) shall be reduced (but not below zero) by
19 the amount which bears the same ratio to such
20 amount of tax (as so determined) as—
21 ‘‘(A) the excess (if any) of—
22 ‘‘(i) the aggregate amount of qualified
23 aid awards provided by the institution to
24 its first-time, full-time undergraduate stu-
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1 dents for academic periods beginning dur-
2 ing the taxable year, over
3 ‘‘(ii) an amount equal to 20 percent of
4 the aggregate undergraduate tuition and
5 fees received by the institution from first-
6 time, full-time undergraduate students for
7 such academic periods, bears to
8 ‘‘(B) an amount equal to 13 percent of
9 such aggregate undergraduate tuition and fees
10 so received.
11 ‘‘(2) INSTITUTION MUST MEET REPORTING RE-
12 QUIREMENT.—
13 ‘‘(A) IN GENERAL.—Paragraph (1) shall

14 not apply to an applicable educational institu-
15 tion for a taxable year unless such institution
16 furnishes to the Secretary, and makes widely
17 available, a statement detailing the average ag-
18 gregate amount of Federal student loans re-
19 ceived by a student for attendance at the insti-
20 tution, averaged among each of the following
21 groups of first-time, full-time undergraduate
22 students who during the taxable year completed
23 a course of study for which the institution
24 awarded a baccalaureate degree:
25 ‘‘(i) All such students.
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1 ‘‘(ii) The students who have been
2 awarded a Federal Pell Grant under sub-
3 part 1 of part A of title IV of the Higher
4 Education Act of 1965 for attendance at
5 the institution.
6 ‘‘(iii) The students who received work-
7 study assistance under part C of title IV of
8 such Act for attendance at such institu-
9 tion.
10 ‘‘(iv) The students who were provided
11 such Federal student loans.
12 ‘‘(B) FORM AND MANNER FOR REPORT.—
13 Such statement shall be furnished at such time

14 and in such form and manner, and made widely
15 available, under such regulations or guidance as
16 the Secretary may prescribe.
17 ‘‘(C) FEDERAL STUDENT LOANS.—For
18 purposes of this paragraph, the term ‘Federal

19 student loans’ means a loan made under part D
20 of title IV of the Higher Education Act of
21 1965, except such term does not include a Fed-
22 eral Direct PLUS Loan made on behalf of a de-
23 pendent student.
24 ‘‘(3) OTHER DEFINITIONS.—For purposes of
25 this subsection—
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1 ‘‘(A) FIRST-TIME, FULL-TIME UNDER-
2 GRADUATE STUDENT.—The term ‘first-time,

3 full-time undergraduate student’ shall have the
4 same meaning as when used in section 132 of
5 the Higher Education Act of 1965.
6 ‘‘(B) QUALIFIED AID AWARDS.—The term
7 ‘qualified aid awards’ means, with respect to
8 any applicable educational institution, grants
9 and scholarships to the extent used for under-
10 graduate tuition and fees.
11 ‘‘(C) UNDERGRADUATE TUITION AND
12 FEES.—The term ‘undergraduate tuition and

13 fees’ means, with respect to any institution, the
14 tuition and fees required for the enrollment or
15 attendance of a student as an undergraduate
16 student at the institution.’’.
17 (b) INFLATION ADJUSTMENT TO PER STUDENT
18 ASSET THRESHOLD.—Section 4968(b) is amended by
20 ‘‘(3) INFLATION ADJUSTMENT.—In the case of
21 any taxable year beginning after 2022, the dollar
22 amount in paragraph (1)(D) shall be increased by
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1 ‘‘(B) the cost-of-living adjustment deter-
2 mined under section 1(f)(3) for the calendar
3 year in which the taxable year begins, deter-
4 mined by substituting ‘calendar year 2021’ for
5 ‘calendar year 2016’ in subparagraph (A)(ii)
6 thereof.
7 If any increase determined under this paragraph is
8 not a multiple of $1,000, such increase shall be
9 rounded to the nearest multiple of $1,000.’’.
10 (c) CLARIFICATION OF 500 STUDENT THRESH-
11 OLD.—Section 4968(b)(1)(A) is amended by inserting
12 ‘‘below the graduate level’’ after ‘‘500 tuition-paying stu-
13 dents’’.
14 (d) EFFECTIVE DATE.—The amendment made by
16 December 31, 2021.
17 SEC. 137703. TREATMENT OF FEDERAL PELL GRANTS FOR
18 INCOME TAX PURPOSES.
19 (a) EXCLUSION FROM GROSS INCOME.—Section

20 117(b)(1) is amended by striking ‘‘received by an indi-
21 vidual’’ and all that follows and inserting ‘‘received by an
22 individual—
23 ‘‘(A) as a scholarship or fellowship grant
24 to the extent the individual establishes that, in
25 accordance with the conditions of the grant,
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1 such amount was used for qualified tuition and
2 related expenses, or
3 ‘‘(B) as a Federal Pell Grant under section
4 401 of the Higher Education Act of 1965.’’.
5 (b) TREATMENT FOR PURPOSES OF AMERICAN OP-
6 PORTUNITY TAX CREDIT AND LIFETIME LEARNING
7 CREDIT.—Section 25A(g)(2) is amended—
8 (1) in subparagraph (A), by inserting ‘‘de-
9 scribed in section 117(b)(1)(A)’’ after ‘‘a qualified
10 scholarship’’, and
11 (2) in subparagraph (C), by inserting ‘‘or Fed-
12 eral Pell Grant under section 401 of the Higher
13 Education Act of 1965’’ after ‘‘within the meaning
14 of section 102(a)’’.
17 December 31, 2021.
18 SEC. 137704. REPEAL OF DENIAL OF AMERICAN OPPOR-
19 TUNITY TAX CREDIT ON BASIS OF FELONY
20 DRUG CONVICTION.
21 (a) IN GENERAL.—Section 25A(b)(2) is amended by

22 striking subparagraph (D).
25 December 31, 2021.
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1 Subtitle J—Drug Pricing
2 PART 1—LOWERING PRICES THROUGH FAIR
3 DRUG PRICE NEGOTIATION
4 SEC. 139001. PROVIDING FOR LOWER PRICES FOR CERTAIN
5 HIGH-PRICED SINGLE SOURCE DRUGS.
6 (a) PROGRAM TO LOWER PRICES FOR CERTAIN

7 HIGH-PRICED SINGLE SOURCE DRUGS.—Title XI of the
8 Social Security Act (42 U.S.C. 1301 et seq.) is amended
9 by adding at the end the following new part:
10 ‘‘PART E—FAIR PRICE NEGOTIATION PROGRAM
11 TO LOWER PRICES FOR CERTAIN HIGH-
12 PRICED SINGLE SOURCE DRUGS
13 ‘‘SEC. 1191. ESTABLISHMENT OF PROGRAM.
14 ‘‘(a) IN GENERAL.—The Secretary shall establish a

15 Fair Price Negotiation Program (in this part referred to
16 as the ‘program’). Under the program, with respect to
17 each price applicability period, the Secretary shall—
18 ‘‘(1) publish a list of selected drugs in accord-
19 ance with section 1192;
20 ‘‘(2) enter into agreements with manufacturers
21 of selected drugs with respect to such period, in ac-
22 cordance with section 1193;
23 ‘‘(3) negotiate and, if applicable, renegotiate
24 maximum fair prices for such selected drugs, in ac-
25 cordance with section 1194; and
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1 ‘‘(4) carry out the administrative duties de-
2 scribed in section 1196.
3 ‘‘(b) DEFINITIONS RELATING TO TIMING.—For pur-
4 poses of this part:
5 ‘‘(1) INITIAL PRICE APPLICABILITY YEAR.—The
6 term ‘initial price applicability year’ means a plan

7 year (beginning with plan year 2025) or, if agreed
8 to in an agreement under section 1193 by the Sec-
9 retary and manufacturer involved, a period of more
10 than one plan year (beginning on or after January
11 1, 2025).
12 ‘‘(2) PRICE APPLICABILITY PERIOD.—The term
13 ‘price applicability period’ means, with respect to a
14 drug, the period beginning with the initial price ap-
15 plicability year with respect to which such drug is a
16 selected drug and ending with the last plan year
17 during which the drug is a selected drug.
18 ‘‘(3) SELECTED DRUG PUBLICATION DATE.—
19 The term ‘selected drug publication date’ means,

20 with respect to each initial price applicability year,
21 April 15 of the plan year that begins 2 years prior
22 to such year.
23 ‘‘(4) VOLUNTARY NEGOTIATION PERIOD.—The
24 term ‘voluntary negotiation period’ means, with re-
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1 spect to an initial price applicability year with re-
2 spect to a selected drug, the period—
3 ‘‘(A) beginning on the sooner of—
4 ‘‘(i) the date on which the manufac-
5 turer of the drug and the Secretary enter
6 into an agreement under section 1193 with
7 respect to such drug; or
8 ‘‘(ii) June 15 following the selected
9 drug publication date with respect to such
10 selected drug; and
11 ‘‘(B) ending on March 31 of the year that
12 begins one year prior to the initial price appli-
13 cability year.
14 ‘‘(c) OTHER DEFINITIONS.—For purposes of this
15 part:
16 ‘‘(1) FAIR PRICE ELIGIBLE INDIVIDUAL.—The
17 term ‘fair price eligible individual’ means, with re-

18 spect to a selected drug—
19 ‘‘(A) in the case such drug is furnished or
20 dispensed to the individual at a pharmacy or by
21 a mail order service—
22 ‘‘(i) an individual who is enrolled
23 under a prescription drug plan under part
24 D of title XVIII or an MA–PD plan under
25 part C of such title if coverage is provided
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1 under such plan for such selected drug;
2 and
3 ‘‘(ii) an individual who is enrolled
4 under a group health plan or health insur-
5 ance coverage offered in the group or indi-
6 vidual market (as such terms are defined
7 in section 2791 of the Public Health Serv-
8 ice Act) with respect to which there is in
9 effect an agreement with the Secretary
10 under section 1197 with respect to such se-
11 lected drug as so furnished or dispensed;
12 and
13 ‘‘(B) in the case such drug is furnished or
14 administered to the individual by a hospital,
15 physician, or other provider of services or sup-
16 plier—
17 ‘‘(i) an individual who is entitled to
18 benefits under part A of title XVIII or en-
19 rolled under part B of such title if such se-
20 lected drug is covered under the respective
21 part; and
22 ‘‘(ii) an individual who is enrolled
23 under a group health plan or health insur-
24 ance coverage offered in the group or indi-
25 vidual market (as such terms are defined
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1 in section 2791 of the Public Health Serv-
2 ice Act) with respect to which there is in
3 effect an agreement with the Secretary
4 under section 1197 with respect to such se-
5 lected drug as so furnished or adminis-
6 tered.
7 ‘‘(2) MAXIMUM FAIR PRICE.—The term ‘max-
8 imum fair price’ means, with respect to a plan year
9 during a price applicability period and with respect
10 to a selected drug (as defined in section 1192(c))
11 with respect to such period, the price published pur-
12 suant to section 1195 in the Federal Register for
13 such drug and year.
14 ‘‘(3) AVERAGE INTERNATIONAL MARKET PRICE
15 DEFINED.—
16 ‘‘(A) IN GENERAL.—The terms ‘average

17 international market price’ and ‘AIM price’
18 mean, with respect to a drug, the average price
19 (which shall be the net average price, if prac-
20 ticable, and volume-weighted, if practicable) for
21 a unit (as defined in paragraph (4)) of the drug
22 for sales of such drug (calculated across dif-
23 ferent dosage forms and strengths of the drug
24 and not based on the specific formulation or
25 package size or package type), as computed (as
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1 of the date of publication of such drug as a se-
2 lected drug under section 1192(a)) in all coun-
3 tries described in clause (ii) of subparagraph
4 (B) that are applicable countries (as described
5 in clause (i) of such subparagraph) with respect
6 to such drug.
7 ‘‘(B) APPLICABLE COUNTRIES.—
8 ‘‘(i) IN GENERAL.—For purposes of

9 subparagraph (A), a country described in
10 clause (ii) is an applicable country de-
11 scribed in this clause with respect to a
12 drug if there is available an average price
13 for any unit for the drug for sales of such
14 drug in such country.
15 ‘‘(ii) COUNTRIES DESCRIBED.—For
16 purposes of this paragraph, the following

17 are countries described in this clause:
18 ‘‘(I) Australia.
19 ‘‘(II) Canada.
20 ‘‘(III) France.
21 ‘‘(IV) Germany.
22 ‘‘(V) Japan.
23 ‘‘(VI) The United Kingdom.
24 ‘‘(4) UNIT.—The term ‘unit’ means, with re-
25 spect to a drug, the lowest identifiable quantity
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1 (such as a capsule or tablet, milligram of molecules,
2 or grams) of the drug that is dispensed.
3 ‘‘SEC. 1192. SELECTION OF NEGOTIATION-ELIGIBLE DRUGS
4 AS SELECTED DRUGS.
5 ‘‘(a) IN GENERAL.—Not later than the selected drug

6 publication date with respect to an initial price applica-
7 bility year, subject to subsection (h), the Secretary shall
8 select and publish in the Federal Register a list of—
9 ‘‘(1)(A) with respect to an initial price applica-
10 bility year during 2025, at least 25 negotiation-eligi-
11 ble drugs described in subparagraphs (A) and (B),
12 but not subparagraph (C), of subsection (d)(1) (or,
13 with respect to an initial price applicability year dur-
14 ing such period beginning after 2025, the maximum
15 number (if such number is less than 25) of such ne-
16 gotiation-eligible drugs for the year) with respect to
17 such year; and
18 ‘‘(B) with respect to an initial price applica-
19 bility year during 2026 or a subsequent year, at
20 least 50 negotiation-eligible drugs described in sub-
21 paragraphs (A) and (B), but not subparagraph (C),
22 of subsection (d)(1) (or, with respect to an initial
23 price applicability year during such period, the max-
24 imum number (if such number is less than 50) of
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1 such negotiation-eligible drugs for the year) with re-
2 spect to such year;
3 ‘‘(2) all negotiation-eligible drugs described in
4 subparagraph (C) of such subsection with respect to
5 such year; and
6 ‘‘(3) all new-entrant negotiation-eligible drugs
7 (as defined in subsection (g)(1)) with respect to such
8 year.
9 Each drug published on the list pursuant to the previous
10 sentence shall be subject to the negotiation process under
11 section 1194 for the voluntary negotiation period with re-
12 spect to such initial price applicability year (and the re-
13 negotiation process under such section as applicable for
14 any subsequent year during the applicable price applica-
15 bility period). In applying this subsection, any negotiation-
16 eligible drug that is selected under this subsection for an
17 initial price applicability year shall not count toward the
18 required minimum amount of drugs to be selected under
19 paragraph (1) for any subsequent year, including such a
20 drug so selected that is subject to renegotiation under sec-
21 tion 1194.
22 ‘‘(b) SELECTION OF DRUGS.—In carrying out sub-
23 section (a)(1) the Secretary shall select for inclusion on
24 the published list described in subsection (a) with respect
25 to a price applicability period, the negotiation-eligible
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1 drugs that the Secretary projects will result in the greatest
2 savings to the Federal Government or fair price eligible
3 individuals during the price applicability period. In making
4 this projection of savings for drugs for which there is an
5 AIM price for a price applicability period, the savings shall
6 be projected across different dosage forms and strengths
7 of the drugs and not based on the specific formulation or
8 package size or package type of the drugs, taking into con-
9 sideration both the volume of drugs for which payment
10 is made, to the extent such data is available, and the
11 amount by which the net price for the drugs exceeds the
12 AIM price for the drugs.
13 ‘‘(c) SELECTED DRUG.—For purposes of this part,
14 each drug included on the list published under subsection
15 (a) with respect to an initial price applicability year shall
16 be referred to as a ‘selected drug’ with respect to such
17 year and each subsequent plan year beginning before the
18 first plan year beginning after the date on which the Sec-
19 retary determines two or more drug products—
20 ‘‘(1) are approved or licensed (as applicable)—
21 ‘‘(A) under section 505(j) of the Federal
22 Food, Drug, and Cosmetic Act using such drug
23 as the listed drug; or
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1 ‘‘(B) under section 351(k) of the Public
2 Health Service Act using such drug as the ref-
3 erence product; and
4 ‘‘(2) continue to be marketed.
5 ‘‘(d) NEGOTIATION-ELIGIBLE DRUG.—
6 ‘‘(1) IN GENERAL.—For purposes of this part,
7 the term ‘negotiation-eligible drug’ means, with re-
8 spect to the selected drug publication date with re-
9 spect to an initial price applicability year, a quali-
10 fying single source drug, as defined in subsection
11 (e), that meets any of the following criteria:
12 ‘‘(A) COVERED PART D DRUGS.—The drug
13 is among the 125 covered part D drugs (as de-
14 fined in section 1860D–2(e)) for which there
15 was an estimated greatest net spending under
16 parts C and D of title XVIII, as determined by
17 the Secretary, during the most recent plan year
18 prior to such drug publication date for which
19 data are available.
20 ‘‘(B) OTHER DRUGS.—The drug is among
21 the 125 drugs for which there was an estimated
22 greatest net spending in the United States (in-
23 cluding the 50 States, the District of Columbia,
24 and the territories of the United States), as de-
25 termined by the Secretary, during the most re-
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1 cent plan year prior to such drug publication
2 date for which data are available.
3 ‘‘(C) INSULIN.—The drug is a qualifying
4 single source drug described in subsection
5 (e)(3).
6 ‘‘(2) CLARIFICATION.—In determining whether
7 a qualifying single source drug satisfies any of the
8 criteria described in paragraph (1), the Secretary
9 shall, to the extent practicable, use data that is ag-
10 gregated across dosage forms and strengths of the
11 drug and not based on the specific formulation or
12 package size or package type of the drug.
13 ‘‘(3) PUBLICATION.—Not later than the se-
14 lected drug publication date with respect to an ini-
15 tial price applicability year, the Secretary shall pub-
16 lish in the Federal Register a list of negotiation-eli-
17 gible drugs with respect to such selected drug publi-
18 cation date.
19 ‘‘(e) QUALIFYING SINGLE SOURCE DRUG.—For pur-
20 poses of this part, the term ‘qualifying single source drug’
21 means any of the following:
22 ‘‘(1) DRUG PRODUCTS.—A drug that—
23 ‘‘(A) is approved under section 505(c) of
24 the Federal Food, Drug, and Cosmetic Act and
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1 continues to be marketed pursuant to such ap-
2 proval; and
3 ‘‘(B) is not the listed drug for any drug
4 that is approved and continues to be marketed
5 under section 505(j) of such Act.
6 ‘‘(2) BIOLOGICAL PRODUCTS.—A biological
7 product that—
8 ‘‘(A) is licensed under section 351(a) of
9 the Public Health Service Act, including any
10 product that has been deemed to be licensed
11 under section 351 of such Act pursuant to sec-
12 tion 7002(e)(4) of the Biologics Price Competi-
13 tion and Innovation Act of 2009, and continues
14 to be marketed under section 351 of such Act;
15 and
16 ‘‘(B) is not the reference product for any
17 biological product that is licensed and continues
18 to be marketed under section 351(k) of such
19 Act.
20 ‘‘(3) INSULIN PRODUCT.—Notwithstanding
21 paragraphs (1) and (2), any insulin product that is

22 approved under subsection (c) or (j) of section 505
23 of the Federal Food, Drug, and Cosmetic Act or li-
24 censed under subsection (a) or (k) of section 351 of
25 the Public Health Service Act and continues to be
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1 marketed under such section 505 or 351, including
2 any insulin product that has been deemed to be li-
3 censed under section 351(a) of the Public Health
4 Service Act pursuant to section 7002(e)(4) of the
5 Biologics Price Competition and Innovation Act of
6 2009 and continues to be marketed pursuant to such
7 licensure.
8 For purposes of applying paragraphs (1) and (2), a drug
9 or biological product that is marketed by the same sponsor
10 or manufacturer (or an affiliate thereof or a cross-licensed
11 producer or distributor) as the listed drug or reference
12 product described in such respective paragraph shall not
13 be taken into consideration.
14 ‘‘(f) INFORMATION ON INTERNATIONAL DRUG
15 PRICES.—For purposes of determining which negotiation-
16 eligible drugs to select under subsection (a) and, in the
17 case of such drugs that are selected drugs, to determine
18 the maximum fair price for such a drug and whether such
19 maximum fair price should be renegotiated under section
20 1194, the Secretary shall use data relating to the AIM
21 price with respect to such drug as available or provided
22 to the Secretary and shall on an ongoing basis request
23 from manufacturers of selected drugs information on the
24 AIM price of such a drug.
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1 ‘‘(g) NEW-ENTRANT NEGOTIATION-ELIGIBLE
2 DRUGS.—
3 ‘‘(1) IN GENERAL.—For purposes of this part,
4 the term ‘new-entrant negotiation-eligible drug’
5 means, with respect to the selected drug publication
6 date with respect to an initial price applicability
7 year, a qualifying single source drug—
8 ‘‘(A) that is first approved or licensed, as
9 described in paragraph (1), (2), or (3) of sub-
10 section (e), as applicable, during the year pre-
11 ceding such selected drug publication date; and
12 ‘‘(B) that the Secretary determines under
13 paragraph (2) is likely to be included as a nego-
14 tiation-eligible drug with respect to the subse-
15 quent selected drug publication date.
16 ‘‘(2) DETERMINATION.—In the case of a quali-
17 fying single source drug that meets the criteria de-
18 scribed in subparagraph (A) of paragraph (1), with
19 respect to an initial price applicability year, if the
20 wholesale acquisition cost at which such drug is first
21 marketed in the United States is equal to or greater
22 than the median household income (as determined
23 according to the most recent data collected by the
24 United States Census Bureau), the Secretary shall
25 determine before the selected drug publication date
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1 with respect to the initial price applicability year, if
2 the drug is likely to be included as a negotiation-eli-
3 gible drug with respect to the subsequent selected
4 drug publication date, based on the projected spend-
5 ing under title XVIII or in the United States on
6 such drug. For purposes of this paragraph the term
7 ‘United States’ includes the 50 States, the District
8 of Columbia, and the territories of the United
9 States.
10 ‘‘(h) CONFLICT OF INTEREST.—
11 ‘‘(1) IN GENERAL.—In the case the Inspector
12 General of the Department of Health and Human
13 Services determines the Secretary has a conflict,
14 with respect to a matter described in paragraph (2),
15 the individual described in paragraph (3) shall carry
16 out the duties of the Secretary under this part, with
17 respect to a negotiation-eligible drug, that would
18 otherwise be such a conflict.
19 ‘‘(2) MATTER DESCRIBED.—A matter described
20 in this paragraph is—
21 ‘‘(A) a financial interest (as described in
22 section 2635.402 of title 5, Code of Federal
23 Regulations, as in effect on the date of the en-
24 actment of this section, (except for an interest
25 described in subsection (b)(2)(iv) of such sec-
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1 tion)) on the date of the selected drug publica-
2 tion date, with respect the price applicability
3 year (as applicable);
4 ‘‘(B) a personal or business relationship
5 (as described in section 2635.502 of such title)
6 on the date of the selected drug publication
7 date, with respect the price applicability year;
8 ‘‘(C) employment by a manufacturer of a
9 negotiation-eligible drug during the preceding
10 10-year period beginning on the date of the se-
11 lected drug publication date, with respect to
12 each price applicability year; and
13 ‘‘(D) any other matter the General Counsel
14 determines appropriate.
15 ‘‘(3) INDIVIDUAL DESCRIBED.—An individual
16 described in this paragraph is—
17 ‘‘(A) the highest-ranking officer or em-
18 ployee of the Department of Health and
19 Human Services (as determined by the organi-
20 zational chart of the Department) that does not
21 have a conflict under this subsection; and
22 ‘‘(B) is nominated by the President and
23 confirmed by the Senate with respect to the po-
24 sition.
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1 ‘‘SEC. 1193. MANUFACTURER AGREEMENTS.
2 ‘‘(a) IN GENERAL.—For purposes of section

3 1191(a)(2), the Secretary shall enter into agreements with
4 manufacturers of selected drugs with respect to a price
5 applicability period, by not later than June 15 following
6 the selected drug publication date with respect to such se-
7 lected drug, under which—
8 ‘‘(1) during the voluntary negotiation period for
9 the initial price applicability year for the selected
10 drug, the Secretary and manufacturer, in accordance
11 with section 1194, negotiate to determine (and, by
12 not later than the last date of such period and in ac-
13 cordance with subsection (c), agree to) a maximum
14 fair price for such selected drug of the manufacturer
15 in order to provide access to such price—
16 ‘‘(A) to fair price eligible individuals who
17 with respect to such drug are described in sub-
18 paragraph (A) of section 1191(c)(1) and are
19 furnished or dispensed such drug during, sub-
20 ject to subparagraph (2), the price applicability
21 period; and
22 ‘‘(B) to hospitals, physicians, and other
23 providers of services and suppliers with respect
24 to fair price eligible individuals who with re-
25 spect to such drug are described in subpara-
26 graph (B) of such section and are furnished or
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1 administered such drug during, subject to sub-
2 paragraph (2), the price applicability period;
3 ‘‘(2) the Secretary and the manufacturer shall,
4 in accordance with a process and during a period
5 specified by the Secretary pursuant to rulemaking,
6 renegotiate (and, by not later than the last date of
7 such period and in accordance with subsection (c),
8 agree to) the maximum fair price for such drug if
9 the Secretary determines that there is a material
10 change in any of the factors described in section
11 1194(d) relating to the drug, including changes in
12 the AIM price for such drug, in order to provide ac-
13 cess to such maximum fair price (as so renegoti-
14 ated)—
15 ‘‘(A) to fair price eligible individuals who
16 with respect to such drug are described in sub-
17 paragraph (A) of section 1191(c)(1) and are
18 furnished or dispensed such drug during any
19 year during the price applicability period (be-
20 ginning after such renegotiation) with respect
21 to such selected drug; and
22 ‘‘(B) to hospitals, physicians, and other
23 providers of services and suppliers with respect
24 to fair price eligible individuals who with re-
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541
1 graph (B) of such section and are furnished or
2 administered such drug during any year de-
3 scribed in subparagraph (A);
4 ‘‘(3) the maximum fair price (including as re-
5 negotiated pursuant to paragraph (2)), with respect
6 to such a selected drug, shall be provided to fair
7 price eligible individuals, who with respect to such
8 drug are described in subparagraph (A) of section
9 1191(c)(1), at the pharmacy or by a mail order serv-
10 ice at the point-of-sale of such drug;
11 ‘‘(4) the manufacturer, subject to subsection
12 (d), submits to the Secretary, in a form and manner
13 specified by the Secretary—
14 ‘‘(A) for the voluntary negotiation period
15 for the price applicability period (and, if appli-
16 cable, before any period of renegotiation speci-
17 fied pursuant to paragraph (2)) with respect to
18 such drug all information that the Secretary re-
19 quires to carry out the negotiation (or renegoti-
20 ation process) under this part, including infor-
21 mation described in section 1192(f) and section
22 1194(d)(1); and
23 ‘‘(B) on an ongoing basis, information on
24 changes in prices for such drug that would af-
25 fect the AIM price for such drug or otherwise
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542
1 provide a basis for renegotiation of the max-
2 imum fair price for such drug pursuant to
3 paragraph (2);
4 ‘‘(5) the manufacturer agrees that in the case
5 the selected drug of a manufacturer is a drug de-
6 scribed in subsection (c), the manufacturer will, in
7 accordance with such subsection, make any payment
8 required under such subsection with respect to such
9 drug; and
10 ‘‘(6) the manufacturer complies with require-
11 ments imposed by the Secretary for purposes of ad-
12 ministering the program, including with respect to
13 the duties described in section 1196.
14 ‘‘(b) AGREEMENT IN EFFECT UNTIL DRUG IS NO
15 LONGER A SELECTED DRUG.—An agreement entered into
16 under this section shall be effective, with respect to a drug,
17 until such drug is no longer considered a selected drug
18 under section 1192(c).
19 ‘‘(c) SPECIAL RULE FOR CERTAIN SELECTED DRUGS
20 WITHOUT AIM PRICE.—
21 ‘‘(1) IN GENERAL.—In the case of a selected
22 drug for which there is no AIM price available with
23 respect to the initial price applicability year for such
24 drug and for which an AIM price becomes available
25 beginning with respect to a subsequent plan year
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1 during the price applicability period for such drug,
2 if the Secretary determines that the amount de-
3 scribed in paragraph (2)(A) for a unit of such drug
4 is greater than the amount described in paragraph
5 (2)(B) for a unit of such drug, then by not later
6 than one year after the date of such determination,
7 the manufacturer of such selected drug shall pay to
8 the Treasury an amount equal to the product of—
9 ‘‘(A) the difference between such amount
10 described in paragraph (2)(A) for a unit of
11 such drug and such amount described in para-
12 graph (2)(B) for a unit of such drug; and
13 ‘‘(B) the number of units of such drug sold
14 in the United States, including the 50 States,
15 the District of Columbia, and the territories of
16 the United States, during the period described
17 in paragraph (2)(B).
18 ‘‘(2) AMOUNTS DESCRIBED.—
19 ‘‘(A) WEIGHTED AVERAGE PRICE BEFORE
20 AIM PRICE AVAILABLE.—For purposes of para-

21 graph (1), the amount described in this sub-
22 paragraph for a selected drug described in such
23 paragraph, is the amount equal to the weighted
24 average manufacturer price (as defined in sec-
25 tion 1927(k)(1)) for such dosage strength and
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1 form for the drug during the period beginning
2 with the first plan year for which the drug is
3 included on the list of negotiation-eligible drugs
4 published under section 1192(d) and ending
5 with the last plan year during the price applica-
6 bility period for such drug with respect to which
7 there is no AIM price available for such drug.
8 ‘‘(B) AMOUNT MULTIPLIER AFTER AIM
9 PRICE AVAILABLE.—For purposes of paragraph

10 (1), the amount described in this subparagraph
11 for a selected drug described in such paragraph,
12 is the amount equal to 200 percent of the AIM
13 price for such drug with respect to the first
14 plan year during the price applicability period
15 for such drug with respect to which there is an
16 AIM price available for such drug.
17 ‘‘(d) CONFIDENTIALITY OF INFORMATION.—Infor-
18 mation submitted to the Secretary under this part by a
19 manufacturer of a selected drug that is proprietary infor-
20 mation of such manufacturer (as determined by the Sec-
21 retary) may be used only by the Secretary or disclosed
22 to and used by the Comptroller General of the United
23 States or the Medicare Payment Advisory Commission for
24 purposes of carrying out this part.
25 ‘‘(e) REGULATIONS.—
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1 ‘‘(1) IN GENERAL.—The Secretary shall, pursu-
2 ant to rulemaking, specify, in accordance with para-
3 graph (2), the information that must be submitted
4 under subsection (a)(4).
5 ‘‘(2) INFORMATION SPECIFIED.—Information
6 described in paragraph (1), with respect to a se-

7 lected drug, shall include information on sales of the
8 drug (by the manufacturer of the drug or by another
9 entity under license or other agreement with the
10 manufacturer, with respect to the sales of such drug,
11 regardless of the name under which the drug is sold)
12 in any foreign country that is part of the AIM price.
13 The Secretary shall verify, to the extent practicable,
14 such sales from appropriate officials of the govern-
15 ment of the foreign country involved.
16 ‘‘(f) COMPLIANCE WITH REQUIREMENTS FOR AD-
17 MINISTRATION OF PROGRAM.—Each manufacturer with
18 an agreement in effect under this section shall comply with
19 requirements imposed by the Secretary or a third party
20 with a contract under section 1196(c)(1), as applicable,
21 for purposes of administering the program.
22 ‘‘SEC. 1194. NEGOTIATION AND RENEGOTIATION PROCESS.
23 ‘‘(a) IN GENERAL.—For purposes of this part, under

24 an agreement under section 1193 between the Secretary
25 and a manufacturer of a selected drug, with respect to
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1 the period for which such agreement is in effect and in
2 accordance with subsections (b) and (c), the Secretary and
3 the manufacturer—
4 ‘‘(1) shall during the voluntary negotiation pe-
5 riod with respect to the initial price applicability
6 year for such drug, in accordance with this section,
7 negotiate a maximum fair price for such drug for
8 the purpose described in section 1193(a)(1); and
9 ‘‘(2) as applicable pursuant to section
10 1193(a)(2) and in accordance with the process speci-
11 fied pursuant to such section, renegotiate such max-
12 imum fair price for such drug for the purpose de-
13 scribed in such section.
14 ‘‘(b) NEGOTIATING METHODOLOGY AND OBJEC-
15 TIVE.—
16 ‘‘(1) IN GENERAL.—The Secretary shall develop

17 and use a consistent methodology for negotiations
18 under subsection (a) that, in accordance with para-
19 graph (2) and subject to paragraph (3), achieves the
20 lowest maximum fair price for each selected drug
21 while appropriately rewarding innovation.
22 ‘‘(2) PRIORITIZING FACTORS.—In considering
23 the factors described in subsection (d) in negotiating
24 (and, as applicable, renegotiating) the maximum fair
25 price for a selected drug, the Secretary shall, to the
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1 extent practicable, consider all of the available fac-
2 tors listed but shall prioritize the following factors:
3 ‘‘(A) RESEARCH AND DEVELOPMENT
4 COSTS.—The factor described in paragraph

5 (1)(A) of subsection (d).
6 ‘‘(B) MARKET DATA.—The factor de-
7 scribed in paragraph (1)(B) of such subsection.
8 ‘‘(C) UNIT COSTS OF PRODUCTION AND
9 DISTRIBUTION.—The factor described in para-

10 graph (1)(C) of such subsection.
11 ‘‘(D) COMPARISON TO EXISTING THERA-
12 PEUTIC ALTERNATIVES.—The factor described

13 in paragraph (2)(A) of such subsection.
14 ‘‘(3) REQUIREMENT.—
15 ‘‘(A) IN GENERAL.—In negotiating the
16 maximum fair price of a selected drug, with re-
17 spect to an initial price applicability year for
18 the selected drug, and, as applicable, in renego-
19 tiating the maximum fair price for such drug,
20 with respect to a subsequent year during the
21 price applicability period for such drug, in the
22 case that the manufacturer of the selected drug
23 offers under the negotiation or renegotiation, as
24 applicable, a price for such drug that is not
25 more than the target price described in sub-
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1 paragraph (B) for such drug for the respective
2 year, the Secretary shall agree under such ne-
3 gotiation or renegotiation, respectively, to such
4 offered price as the maximum fair price.
5 ‘‘(B) TARGET PRICE.—
6 ‘‘(i) IN GENERAL.—Subject to clause

7 (ii), the target price described in this sub-
8 paragraph for a selected drug with respect
9 to a year, is the average price (which shall
10 be the net average price, if practicable, and
11 volume-weighted, if practicable) for a unit
12 of such drug for sales of such drug, as
13 computed (across different dosage forms
14 and strengths of the drug and not based
15 on the specific formulation or package size
16 or package type of the drug) in the appli-
17 cable country described in section
18 1191(c)(3)(B) with respect to such drug
19 that, with respect to such year, has the
20 lowest average price for such drug as com-
21 pared to the average prices (as so com-
22 puted) of such drug with respect to such
23 year in the other applicable countries de-
24 scribed in such section with respect to such
25 drug.
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1 ‘‘(ii) SELECTED DRUGS WITHOUT AIM
2 PRICE.—In applying this paragraph in the

3 case of negotiating the maximum fair price
4 of a selected drug for which there is no
5 AIM price available with respect to the ini-
6 tial price applicability year for such drug,
7 or, as applicable, renegotiating the max-
8 imum fair price for such drug with respect
9 to a subsequent year during the price ap-
10 plicability period for such drug before the
11 first plan year for which there is an AIM
12 price available for such drug, the target
13 price described in this subparagraph for
14 such drug and respective year is the
15 amount that is 80 percent of the average
16 manufacturer price (as defined in section
17 1927(k)(1)) for such drug and year.
18 ‘‘(c) LIMITATION.—
19 ‘‘(1) IN GENERAL.—Subject to paragraph (2),
20 the maximum fair price negotiated (including as re-
21 negotiated) under this section for a selected drug,
22 with respect to each plan year during a price appli-
23 cability period for such drug, shall not exceed 120
24 percent of the AIM price applicable to such drug
25 with respect to such year.
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1 ‘‘(2) SELECTED DRUGS WITHOUT AIM PRICE.—
2 In the case of a selected drug for which there is no

3 AIM price available with respect to the initial price
4 applicability year for such drug, for each plan year
5 during the price applicability period before the first
6 plan year for which there is an AIM price available
7 for such drug, the maximum fair price negotiated
8 (including as renegotiated) under this section for the
9 selected drug shall not exceed the amount equal to
10 85 percent of the average manufacturer price for the
11 drug with respect to such year.
12 ‘‘(d) CONSIDERATIONS.—For purposes of negotiating
13 and, as applicable, renegotiating (including for purposes
14 of determining whether to renegotiate) the maximum fair
15 price of a selected drug under this part with the manufac-
16 turer of the drug, the Secretary, consistent with sub-
17 section (b)(2), shall take into consideration the factors de-
18 scribed in paragraphs (1), (2), (3), and (5), and may take
19 into consideration the factor described in paragraph (4):
20 ‘‘(1) MANUFACTURER-SPECIFIC INFORMA-
21 TION.—The following information, including as sub-

22 mitted by the manufacturer:
23 ‘‘(A) Research and development costs of
24 the manufacturer for the drug and the extent to
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1 which the manufacturer has recouped research
2 and development costs.
3 ‘‘(B) Market data for the drug, including
4 the distribution of sales across different pro-
5 grams and purchasers and projected future rev-
6 enues for the drug.
7 ‘‘(C) Unit costs of production and distribu-
8 tion of the drug.
9 ‘‘(D) Prior Federal financial support for
10 novel therapeutic discovery and development
11 with respect to the drug.
12 ‘‘(E) Data on patents and on existing and
13 pending exclusivity for the drug.
14 ‘‘(F) National sales data for the drug.
15 ‘‘(G) Information on clinical trials for the
16 drug in the United States or in applicable coun-
17 tries described in section 1191(c)(3)(B).
18 ‘‘(2) INFORMATION ON ALTERNATIVE PROD-
19 UCTS.—The following information:

20 ‘‘(A) The extent to which the drug rep-
21 resents a therapeutic advance as compared to
22 existing therapeutic alternatives and, to the ex-
23 tent such information is available, the costs of
24 such existing therapeutic alternatives.
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1 ‘‘(B) Information on approval by the Food
2 and Drug Administration of alternative drug
3 products.
4 ‘‘(C) Information on comparative effective-
5 ness analysis for such products, taking into
6 consideration the effects of such products on
7 specific populations, such as individuals with
8 disabilities, the elderly, terminally ill, children,
9 and other patient populations.
10 In considering information described in subpara-
11 graph (C), the Secretary shall not use evidence or
12 findings from comparative clinical effectiveness re-
13 search in a manner that treats extending the life of
14 an elderly, disabled, or terminally ill individual as of
15 lower value than extending the life of an individual
16 who is younger, nondisabled, or not terminally ill.
17 Nothing in the previous sentence shall affect the ap-
18 plication or consideration of an AIM price for a se-
19 lected drug.
20 ‘‘(3) FOREIGN SALES INFORMATION.—To the
21 extent available on a timely basis, including as pro-
22 vided by a manufacturer of the selected drug or oth-
23 erwise, information on sales of the selected drug in
24 each of the countries described in section
25 1191(c)(3)(B).
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1 ‘‘(4) VA DRUG PRICING INFORMATION.—Infor-
2 mation disclosed to the Secretary pursuant to sub-

3 section (f).
4 ‘‘(5) ADDITIONAL INFORMATION.—Information
5 submitted to the Secretary, in accordance with a

6 process specified by the Secretary, by other parties
7 that are affected by the establishment of a maximum
8 fair price for the selected drug.
9 ‘‘(e) REQUEST FOR INFORMATION.—For purposes of
10 negotiating and, as applicable, renegotiating (including for
11 purposes of determining whether to renegotiate) the max-
12 imum fair price of a selected drug under this part with
13 the manufacturer of the drug, with respect to a price ap-
14 plicability period, and other relevant data for purposes of
15 this section—
16 ‘‘(1) the Secretary shall, not later than the se-
17 lected drug publication date with respect to the ini-
18 tial price applicability year of such period, request
19 drug pricing information from the manufacturer of
20 such selected drug, including information described
21 in subsection (d)(1); and
22 ‘‘(2) by not later than October 1 following the
23 selected drug publication date, the manufacturer of
24 such selected drug shall submit to the Secretary
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1 such requested information in such form and man-
2 ner as the Secretary may require.
3 The Secretary shall request, from the manufacturer or
4 others, such additional information as may be needed to
5 carry out the negotiation and renegotiation process under
6 this section.
7 ‘‘(f) DISCLOSURE OF INFORMATION.—For purposes
8 of this part, the Secretary of Veterans Affairs may disclose
9 to the Secretary of Health and Human Services the price
10 of any negotiation-eligible drug that is purchased pursuant
11 to section 8126 of title 38, United States Code.
12 ‘‘SEC. 1195. PUBLICATION OF MAXIMUM FAIR PRICES.
13 ‘‘(a) IN GENERAL.—With respect to an initial price

14 applicability year and selected drug with respect to such
15 year, not later than April 1 of the plan year prior to such
16 initial price applicability year, the Secretary shall publish
17 in the Federal Register the maximum fair price for such
18 drug negotiated under this part with the manufacturer of
19 such drug.
20 ‘‘(b) UPDATES.—
21 ‘‘(1) SUBSEQUENT YEAR MAXIMUM FAIR
22 PRICES.—For a selected drug, for each plan year

23 subsequent to the initial price applicability year for
24 such drug with respect to which an agreement for
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1 such drug is in effect under section 1193, the Sec-
2 retary shall publish in the Federal Register—
3 ‘‘(A) subject to subparagraph (B), the
4 amount equal to the maximum fair price pub-
5 lished for such drug for the previous year, in-
6 creased by the annual percentage increase in
7 the consumer price index for all urban con-
8 sumers (all items; U.S. city average) as of Sep-
9 tember of such previous year; or
10 ‘‘(B) in the case the maximum fair price
11 for such drug was renegotiated, for the first
12 year for which such price as so renegotiated ap-
13 plies, such renegotiated maximum fair price.
14 ‘‘(2) PRICES NEGOTIATED AFTER DEADLINE.—
15 In the case of a selected drug with respect to an ini-

16 tial price applicability year for which the maximum
17 fair price is determined under this part after the
18 date of publication under this section, the Secretary
19 shall publish such maximum fair price in the Fed-
20 eral Register by not later than 30 days after the
21 date such maximum price is so determined.
22 ‘‘SEC. 1196. ADMINISTRATIVE DUTIES; COORDINATION PRO-
23 VISIONS.
24 ‘‘(a) ADMINISTRATIVE DUTIES.—
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1 ‘‘(1) IN GENERAL.—For purposes of section
2 1191, the administrative duties described in this sec-
3 tion are the following:
4 ‘‘(A) The establishment of procedures (in-
5 cluding through agreements with manufacturers
6 under this part, contracts with prescription
7 drug plans under part D of title XVIII and
8 MA–PD plans under part C of such title, and
9 agreements under section 1197 with group
10 health plans and health insurance issuers of
11 health insurance coverage offered in the indi-
12 vidual or group market) under which the max-
13 imum fair price for a selected drug is provided
14 to fair price eligible individuals, who with re-
16 graph (A) of section 1191(c)(1), at pharmacies
17 or by mail order service at the point-of-sale of
18 the drug for the applicable price period for such
19 drug and providing that such maximum fair
20 price is used for determining cost-sharing under
21 such plans or coverage for the selected drug.
22 ‘‘(B) The establishment of procedures (in-
23 cluding through agreements with manufacturers
24 under this part and contracts with hospitals,
25 physicians, and other providers of services and
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1 suppliers and agreements under section 1197
2 with group health plans and health insurance
3 issuers of health insurance coverage offered in
4 the individual or group market) under which, in
5 the case of a selected drug furnished or admin-
6 istered by such a hospital, physician, or other
7 provider of services or supplier to fair price eli-
8 gible individuals (who with respect to such drug
9 are described in subparagraph (B) of section
10 1191(c)(1)), the maximum fair price for the se-
11 lected drug is provided to such hospitals, physi-
12 cians, and other providers of services and sup-
13 pliers (as applicable) with respect to such indi-
14 viduals and providing that such maximum fair
15 price is used for determining cost-sharing under
16 the respective part, plan, or coverage for the se-
17 lected drug.
18 ‘‘(C) The establishment of procedures (in-
19 cluding through agreements and contracts de-
20 scribed in subparagraphs (A) and (B)) to en-
21 sure that, not later than 90 days after the dis-
22 pensing of a selected drug to a fair price eligi-
23 ble individual by a pharmacy or mail order serv-
24 ice, the pharmacy or mail order service is reim-
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1 bursed for an amount equal to the difference
2 between—
3 ‘‘(i) the lesser of—
4 ‘‘(I) the wholesale acquisition
5 cost of the drug;
6 ‘‘(II) the national average drug
7 acquisition cost of the drug; and
8 ‘‘(III) any other similar deter-
9 mination of pharmacy acquisition
10 costs of the drug, as determined by
11 the Secretary; and
12 ‘‘(ii) the maximum fair price for the
13 drug.
14 ‘‘(D) The establishment of procedures to
15 ensure that the maximum fair price for a se-
16 lected drug is applied before—
17 ‘‘(i) any coverage or financial assist-
18 ance under other health benefit plans or
19 programs that provide coverage or finan-
20 cial assistance for the purchase or provi-
21 sion of prescription drug coverage on be-
22 half of fair price eligible individuals as the
23 Secretary may specify; and
24 ‘‘(ii) any other discounts.
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1 ‘‘(E) The establishment of procedures to
2 enter into appropriate agreements and protocols
3 for the ongoing computation of AIM prices for
4 selected drugs, including, to the extent possible,
5 to compute the AIM price for selected drugs
6 and including by providing that the manufac-
7 turer of such a selected drug should provide in-
8 formation for such computation not later than
9 3 months after the first date of the voluntary
10 negotiation period for such selected drug.
11 ‘‘(F) The establishment of procedures to
12 compute and apply the maximum fair price
13 across different strengths and dosage forms of
14 a selected drug and not based on the specific
15 formulation or package size or package type of
16 the drug.
17 ‘‘(G) The establishment of procedures to
18 negotiate and apply the maximum fair price in
19 a manner that does not include any dispensing
20 or similar fee.
21 ‘‘(H) The establishment of procedures to
22 carry out the provisions of this part, as applica-
23 ble, with respect to—
24 ‘‘(i) fair price eligible individuals who
25 are enrolled under a prescription drug plan
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1 under part D of title XVIII or an MA–PD
2 plan under part C of such title;
3 ‘‘(ii) fair price eligible individuals who
4 are enrolled under a group health plan or
5 health insurance coverage offered by a
6 health insurance issuer in the individual or
7 group market with respect to which there
8 is an agreement in effect under section
9 1197; and
10 ‘‘(iii) fair price eligible individuals who
11 are entitled to benefits under part A of
12 title XVIII or enrolled under part B of
13 such title.
14 ‘‘(I) The establishment of a negotiation
15 process and renegotiation process in accordance
16 with section 1194, including a process for ac-
17 quiring information described in subsection (d)
18 of such section and determining amounts de-
19 scribed in subsection (b) of such section.
20 ‘‘(J) The provision of a reasonable dispute
21 resolution mechanism to resolve disagreements
22 between manufacturers, fair price eligible indi-
23 viduals, and the third party with a contract
24 under subsection (c)(1).
25 ‘‘(2) MONITORING COMPLIANCE.—
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2 monitor compliance by a manufacturer with the
3 terms of an agreement under section 1193, in-
4 cluding by establishing a mechanism through
5 which violations of such terms may be reported.
6 ‘‘(B) NOTIFICATION.—If a third party
7 with a contract under subsection (c)(1) deter-
8 mines that the manufacturer is not in compli-
9 ance with such agreement, the third party shall
10 notify the Secretary of such noncompliance for
11 appropriate enforcement under section 4192 of
12 the Internal Revenue Code of 1986 or section
13 1198, as applicable.
14 ‘‘(b) COLLECTION OF DATA.—
15 ‘‘(1) FROM PRESCRIPTION DRUG PLANS AND
16 MA–PD PLANS.—The Secretary may collect appro-

17 priate data from prescription drug plans under part
18 D of title XVIII and MA–PD plans under part C of
19 such title in a timeframe that allows for maximum
20 fair prices to be provided under this part for selected
21 drugs.
22 ‘‘(2) FROM HEALTH PLANS.—The Secretary
23 may collect appropriate data from group health
24 plans or health insurance issuers offering group or
25 individual health insurance coverage in a timeframe
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1 that allows for maximum fair prices to be provided
2 under this part for selected drugs.
3 ‘‘(3) COORDINATION OF DATA COLLECTION.—
4 To the extent feasible, as determined by the Sec-

5 retary, the Secretary shall ensure that data collected
6 pursuant to this subsection is coordinated with, and
7 not duplicative of, other Federal data collection ef-
8 forts.
9 ‘‘(c) CONTRACT WITH THIRD PARTIES.—
10 ‘‘(1) IN GENERAL.—The Secretary may enter
11 into a contract with 1 or more third parties to ad-
12 minister the requirements established by the Sec-
13 retary in order to carry out this part. At a min-
14 imum, the contract with a third party under the pre-
15 ceding sentence shall require that the third party—
16 ‘‘(A) receive and transmit information be-
17 tween the Secretary, manufacturers, and other
18 individuals or entities the Secretary determines
19 appropriate;
20 ‘‘(B) receive, distribute, or facilitate the
21 distribution of funds of manufacturers to ap-
22 propriate individuals or entities in order to
23 meet the obligations of manufacturers under
24 agreements under this part;
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1 ‘‘(C) provide adequate and timely informa-
2 tion to manufacturers, consistent with the
3 agreement with the manufacturer under this
4 part, as necessary for the manufacturer to ful-
5 fill its obligations under this part; and
6 ‘‘(D) permit manufacturers to conduct
7 periodic audits, directly or through contracts, of
8 the data and information used by the third
9 party to determine discounts for applicable
10 drugs of the manufacturer under the program.
11 ‘‘(2) PERFORMANCE REQUIREMENTS.—The
12 Secretary shall establish performance requirements

13 for a third party with a contract under paragraph
14 (1) and safeguards to protect the independence and
15 integrity of the activities carried out by the third
16 party under the program under this part.
17 ‘‘SEC. 1197. VOLUNTARY PARTICIPATION BY OTHER
18 HEALTH PLANS.
19 ‘‘(a) AGREEMENT TO PARTICIPATE UNDER PRO-

20 GRAM.—

22 under the program under this part the Secretary
23 shall be treated as having in effect an agreement
24 with a group health plan or health insurance issuer
25 offering group or individual health insurance cov-
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1 erage (as such terms are defined in section 2791 of
2 the Public Health Service Act), with respect to a
3 price applicability period and a selected drug with
4 respect to such period—
5 ‘‘(A) with respect to such selected drug
6 furnished or dispensed at a pharmacy or by
7 mail order service if coverage is provided under
8 such plan or coverage during such period for
9 such selected drug as so furnished or dispensed;
10 and
11 ‘‘(B) with respect to such selected drug
12 furnished or administered by a hospital, physi-
13 cian, or other provider of services or supplier if
14 coverage is provided under such plan or cov-
15 erage during such period for such selected drug
16 as so furnished or administered.
17 ‘‘(2) OPTING OUT OF AGREEMENT.—The Sec-
18 retary shall not be treated as having in effect an
19 agreement under the program under this part with
20 a group health plan or health insurance issuer offer-
21 ing group or individual health insurance coverage
22 with respect to a price applicability period and a se-
23 lected drug with respect to such period if such a
24 plan or issuer affirmatively elects, through a process
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1 specified by the Secretary, not to participate under
2 the program with respect to such period and drug.
3 ‘‘(b) PUBLICATION OF ELECTION.—With respect to
4 each price applicability period and each selected drug with
5 respect to such period, the Secretary and the Secretary
6 of Labor and the Secretary of the Treasury, as applicable,
7 shall make public a list of each group health plan and each
8 health insurance issuer offering group or individual health
9 insurance coverage, with respect to which coverage is pro-
10 vided under such plan or coverage for such drug, that has
11 elected under subsection (a) not to participate under the
12 program with respect to such period and drug.
13 ‘‘SEC. 1198. CIVIL MONETARY PENALTY.
14 ‘‘(a) VIOLATIONS RELATING TO OFFERING OF MAX-

15 IMUM FAIR PRICE.—Any manufacturer of a selected drug
16 that has entered into an agreement under section 1193,
17 with respect to a plan year during the price applicability
18 period for such drug, that does not provide access to a
19 price that is not more than the maximum fair price (or
20 a lesser price) for such drug for such year—
21 ‘‘(1) to a fair price eligible individual who with
22 respect to such drug is described in subparagraph
23 (A) of section 1191(c)(1) and who is furnished or
24 dispensed such drug during such year; or
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1 ‘‘(2) to a hospital, physician, or other provider
2 of services or supplier with respect to fair price eligi-
3 ble individuals who with respect to such drug is de-
4 scribed in subparagraph (B) of such section and is
5 furnished or administered such drug by such hos-
6 pital, physician, or provider or supplier during such
7 year;
8 shall be subject to a civil monetary penalty equal to ten
9 times the amount equal to the difference between the price
10 for such drug made available for such year by such manu-
11 facturer with respect to such individual or hospital, physi-
12 cian, provider, or supplier and the maximum fair price for
13 such drug for such year.
14 ‘‘(b) VIOLATIONS OF CERTAIN TERMS OF AGREE-
15 MENT.—Any manufacturer of a selected drug that has en-
16 tered into an agreement under section 1193, with respect
17 to a plan year during the price applicability period for
18 such drug, that is in violation of a requirement imposed
19 pursuant to section 1193(a)(6) shall be subject to a civil
20 monetary penalty of not more than $1,000,000 for each
21 such violation.
22 ‘‘(c) APPLICATION.—The provisions of section 1128A
23 (other than subsections (a) and (b)) shall apply to a civil
24 monetary penalty under this section in the same manner
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1 as such provisions apply to a penalty or proceeding under
2 section 1128A(a).
3 ‘‘SEC. 1199. MISCELLANEOUS PROVISIONS.
4 ‘‘(a) PAPERWORK REDUCTION ACT.—Chapter 35 of

5 title 44, United States Code, shall not apply to data col-
6 lected under this part.
7 ‘‘(b) LIMITATION ON JUDICIAL REVIEW.—The fol-
8 lowing shall not be subject to judicial review:
9 ‘‘(1) The selection of drugs for publication
10 under section 1192(a).
11 ‘‘(2) The determination of whether a drug is a
12 negotiation-eligible drug under section 1192(d).
13 ‘‘(3) The determination of the maximum fair
14 price of a selected drug under section 1194.
15 ‘‘(4) The determination of units of a drug for
16 purposes of section 1191(c)(3).
17 ‘‘(c) COORDINATION.—In carrying out this part with
18 respect to group health plans or health insurance coverage
19 offered in the group market that are subject to oversight
20 by the Secretary of Labor or the Secretary of the Treas-
21 ury, the Secretary of Health and Human Services shall
22 coordinate with such respective Secretary.
23 ‘‘(d) DATA SHARING.—The Secretary shall share
24 with the Secretary of the Treasury such information as
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1 is necessary to determine the tax imposed by section 4192
2 of the Internal Revenue Code of 1986.’’.
3 (b) APPLICATION OF MAXIMUM FAIR PRICES AND
4 CONFORMING AMENDMENTS.—
5 (1) UNDER MEDICARE.—
6 (A) APPLICATION TO PAYMENTS UNDER
7 PART B.—Section 1847A(b)(1)(B) of the Social

8 Security Act (42 U.S.C. 1395w–3a(b)(1)(B)) is
9 amended by inserting ‘‘or in the case of such a
10 drug or biological that is a selected drug (as de-
11 fined in section 1192(c)), with respect to a
12 price applicability period (as defined in section
13 1191(b)(2)), 106 percent of the maximum fair
14 price (as defined in section 1191(c)(2)) applica-
15 ble for such drug and a plan year during such
16 period’’ after ‘‘paragraph (4)’’.
17 (B) EXCEPTION TO PART D NON-INTER-
18 FERENCE.—Section 1860D–11(i) of the Social

19 Security Act (42 U.S.C. 1395w–111(i)) is
20 amended by inserting ‘‘, except as provided
21 under part E of title XI’’ after ‘‘the Secretary’’.
22 (C) APPLICATION AS NEGOTIATED PRICE
23 UNDER PART D.—Section 1860D–2(d)(1) of the

24 Social Security Act (42 U.S.C. 1395w–
25 102(d)(1)) is amended—
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1 (i) in subparagraph (B), by inserting
2 ‘‘, subject to subparagraph (D),’’ after
3 ‘‘negotiated prices’’; and
4 (ii) by adding at the end the following
5 new subparagraph:
6 ‘‘(D) APPLICATION OF MAXIMUM FAIR
7 PRICE FOR SELECTED DRUGS.—In applying this

8 section, in the case of a covered part D drug
9 that is a selected drug (as defined in section
10 1192(c)), with respect to a price applicability
11 period (as defined in section 1191(b)(2)), the
12 negotiated prices used for payment (as de-
13 scribed in this subsection) shall be the max-
14 imum fair price (as defined in section
15 1191(c)(2)) for such drug and for each plan
16 year during such period.’’.
17 (D) INFORMATION FROM PRESCRIPTION
18 DRUG PLANS AND MA–PD PLANS REQUIRED.—
19 (i) PRESCRIPTION DRUG PLANS.—Sec-
20 tion 1860D–12(b) of the Social Security

21 Act (42 U.S.C. 1395w–112(b)) is amended
22 by adding at the end the following new
23 paragraph:
24 ‘‘(8) PROVISION OF INFORMATION RELATED TO
25 MAXIMUM FAIR PRICES.—Each contract entered into
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1 with a PDP sponsor under this part with respect to
2 a prescription drug plan offered by such sponsor
3 shall require the sponsor to provide information to
4 the Secretary as requested by the Secretary in ac-
5 cordance with section 1196(b).’’.
6 (ii) MA–PD PLANS.—Section
7 1857(f)(3) of the Social Security Act (42

8 U.S.C. 1395w–27(f)(3)) is amended by
9 adding at the end the following new sub-
10 paragraph:
11 ‘‘(E) PROVISION OF INFORMATION RE-
12 LATED TO MAXIMUM FAIR PRICES.—Section
13 1860D–12(b)(8).’’.
14 (2) UNDER GROUP HEALTH PLANS AND
15 HEALTH INSURANCE COVERAGE.—
16 (A) PHSA.—Part D of title XXVII of the

17 Public Health Service Act (42 U.S.C. 300gg–
18 111 et seq.) is amended by adding at the end
20 ‘‘SEC. 2799A–11. FAIR PRICE NEGOTIATION PROGRAM AND
21 APPLICATION OF MAXIMUM FAIR PRICES.
22 ‘‘(a) IN GENERAL.—In the case of a group health

23 plan or health insurance issuer offering group or indi-
24 vidual health insurance coverage that is treated under sec-
25 tion 1197 of the Social Security Act as having in effect
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1 an agreement with the Secretary under the Fair Price Ne-
2 gotiation Program under part E of title XI of such Act,
3 with respect to a price applicability period (as defined in
4 section 1191(b) of such Act) and a selected drug (as de-
5 fined in section 1192(c) of such Act) with respect to such
6 period with respect to which coverage is provided under
7 such plan or coverage—
8 ‘‘(1) the provisions of such part shall apply—
9 ‘‘(A) if coverage of such selected drug is
10 provided under such plan or coverage if the
11 drug is furnished or dispensed at a pharmacy
12 or by a mail order service, to the plans or cov-
13 erage offered by such plan or issuer, and to the
14 individuals enrolled under such plans or cov-
15 erage, during such period, with respect to such
16 selected drug, in the same manner as such pro-
17 visions apply to prescription drug plans and
18 MA–PD plans, and to individuals enrolled
19 under such prescription drug plans and MA–
20 PD plans during such period; and
21 ‘‘(B) if coverage of such selected drug is
23 drug is furnished or administered by a hospital,
25 plier, to the plans or coverage offered by such
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1 plan or issuers, to the individuals enrolled
2 under such plans or coverage, and to hospitals,
4 suppliers during such period, with respect to
5 such drug in the same manner as such provi-
6 sions apply to the Secretary, to individuals enti-
7 tled to benefits under part A of title XVIII or
8 enrolled under part B of such title, and to hos-
9 pitals, physicians, and other providers and sup-
10 pliers participating under title XVIII during
11 such period;
12 ‘‘(2) the plan or issuer shall apply any cost-
13 sharing responsibilities under such plan or coverage,
14 with respect to such selected drug, by substituting
15 an amount not more than the maximum fair price
16 negotiated under such part E of title XI for such
17 drug in lieu of the drug price upon which the cost-
18 sharing would have otherwise applied, and such cost-
19 sharing responsibilities with respect to such selected
20 drug may not exceed such maximum fair price; and
21 ‘‘(3) the Secretary shall apply the provisions of
22 such part E to such plan, issuer, and coverage, such
23 individuals so enrolled in such plans and coverage,
24 and such hospitals, physicians, and other providers
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1 and suppliers participating in such plans and cov-
2 erage.
3 ‘‘(b) NOTIFICATION REGARDING NONPARTICIPATION
4 IN FAIR PRICE NEGOTIATION PROGRAM.—A group health
5 plan or a health insurance issuer offering group or indi-
6 vidual health insurance coverage shall publicly disclose in
7 a manner and in accordance with a process specified by
8 the Secretary any election made under section 1197 of the
9 Social Security Act by the plan or issuer to not participate
10 in the Fair Price Negotiation Program under part E of
11 title XI of such Act with respect to a selected drug (as
12 defined in section 1192(c) of such Act) for which coverage
13 is provided under such plan or coverage before the begin-
14 ning of the plan year for which such election was made.’’.
15 (B) ERISA.—
16 (i) IN GENERAL.—Subpart B of part
17 7 of subtitle B of title I of the Employee
18 Retirement Income Security Act of 1974
19 (29 U.S.C. 1181 et seq.) is amended by
20 adding at the end the following new sec-
21 tion:
22 ‘‘SEC. 726. FAIR PRICE NEGOTIATION PROGRAM AND APPLI-
23 CATION OF MAXIMUM FAIR PRICES.

25 plan or health insurance issuer offering group health in-
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1 surance coverage that is treated under section 1197 of the
2 Social Security Act as having in effect an agreement with
3 the Secretary under the Fair Price Negotiation Program
4 under part E of title XI of such Act, with respect to a
5 price applicability period (as defined in section 1191(b)
6 of such Act) and a selected drug (as defined in section
7 1192(c) of such Act) with respect to such period with re-
8 spect to which coverage is provided under such plan or
9 coverage—
10 ‘‘(1) the provisions of such part shall apply, as
11 applicable—
14 drug is furnished or dispensed at a pharmacy
15 or by a mail order service, to the plans or cov-
16 erage offered by such plan or issuer, and to the
17 individuals enrolled under such plans or cov-
18 erage, during such period, with respect to such
19 selected drug, in the same manner as such pro-
20 visions apply to prescription drug plans and
21 MA–PD plans, and to individuals enrolled
22 under such prescription drug plans and MA–
23 PD plans during such period; and
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1 drug is furnished or administered by a hospital,
3 plier, to the plans or coverage offered by such
4 plan or issuers, to the individuals enrolled
5 under such plans or coverage, and to hospitals,
7 suppliers during such period, with respect to
8 such drug in the same manner as such provi-
9 sions apply to the Secretary, to individuals enti-
10 tled to benefits under part A of title XVIII or
11 enrolled under part B of such title, and to hos-
12 pitals, physicians, and other providers and sup-
13 pliers participating under title XVIII during
14 such period;
15 ‘‘(2) the plan or issuer shall apply any cost-
16 sharing responsibilities under such plan or coverage,
17 with respect to such selected drug, by substituting
18 an amount not more than the maximum fair price
19 negotiated under such part E of title XI for such
20 drug in lieu of the drug price upon which the cost-
21 sharing would have otherwise applied, and such cost-
22 sharing responsibilities with respect to such selected
23 drug may not exceed such maximum fair price; and
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2 such part E to such plan, issuer, and coverage, and
3 such individuals so enrolled in such plans.
6 plan or a health insurance issuer offering group health in-
7 surance coverage shall publicly disclose in a manner and
8 in accordance with a process specified by the Secretary
9 any election made under section 1197 of the Social Secu-
10 rity Act by the plan or issuer to not participate in the
11 Fair Price Negotiation Program under part E of title XI
12 of such Act with respect to a selected drug (as defined
13 in section 1192(c) of such Act) for which coverage is pro-
14 vided under such plan or coverage before the beginning
15 of the plan year for which such election was made.’’.
16 (ii) APPLICATION TO RETIREE AND
17 CERTAIN SMALL GROUP HEALTH PLANS.—
18 Section 732(a) of the Employee Retire-

19 ment Income Security Act of 1974 (29
20 U.S.C. 1191a(a)) is amended by striking
21 ‘‘section 711’’ and inserting ‘‘sections 711
22 and 726’’.
23 (iii) CLERICAL AMENDMENT.—The
24 table of sections for subpart B of part 7 of

25 subtitle B of title I of the Employee Re-
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1 tirement Income Security Act of 1974 is
2 amended by adding at the end the fol-
3 lowing:
‘‘Sec. 726. Fair Price Negotiation Program and application of maximum fair
prices.’’.
4 (C) IRC.—
5 (i) IN GENERAL.—Subchapter B of
6 chapter 100 of the Internal Revenue Code
7 of 1986 is amended by adding at the end
9 ‘‘SEC. 9826. FAIR PRICE NEGOTIATION PROGRAM AND AP-
10 PLICATION OF MAXIMUM FAIR PRICES.

12 plan that is treated under section 1197 of the Social Secu-
13 rity Act as having in effect an agreement with the Sec-
14 retary under the Fair Price Negotiation Program under
15 part E of title XI of such Act, with respect to a price
16 applicability period (as defined in section 1191(b) of such
17 Act) and a selected drug (as defined in section 1192(c)
18 of such Act) with respect to such period with respect to
19 which coverage is provided under such plan—
20 ‘‘(1) the provisions of such part shall apply, as
21 applicable—
23 provided under such plan if the drug is fur-
24 nished or dispensed at a pharmacy or by a mail
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1 order service, to the plan, and to the individuals
2 enrolled under such plan during such period,
3 with respect to such selected drug, in the same
4 manner as such provisions apply to prescription
5 drug plans and MA–PD plans, and to individ-
6 uals enrolled under such prescription drug
7 plans and MA–PD plans during such period;
8 and
10 provided under such plan if the drug is fur-
11 nished or administered by a hospital, physician,
12 or other provider of services or supplier, to the
13 plan, to the individuals enrolled under such
14 plan, and to hospitals, physicians, and other
15 providers of services and suppliers during such
16 period, with respect to such drug in the same
17 manner as such provisions apply to the Sec-
18 retary, to individuals entitled to benefits under
19 part A of title XVIII or enrolled under part B
20 of such title, and to hospitals, physicians, and
21 other providers and suppliers participating
22 under title XVIII during such period;
23 ‘‘(2) the plan shall apply any cost-sharing re-
24 sponsibilities under such plan, with respect to such
25 selected drug, by substituting an amount not more
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1 than the maximum fair price negotiated under such
2 part E of title XI for such drug in lieu of the drug
3 price upon which the cost-sharing would have other-
4 wise applied, and such cost-sharing responsibilities
5 with respect to such selected drug may not exceed
6 such maximum fair price; and
8 such part E to such plan and such individuals so en-
9 rolled in such plan.
12 plan shall publicly disclose in a manner and in accordance
13 with a process specified by the Secretary any election
14 made under section 1197 of the Social Security Act by
15 the plan to not participate in the Fair Price Negotiation
16 Program under part E of title XI of such Act with respect
17 to a selected drug (as defined in section 1192(c) of such
18 Act) for which coverage is provided under such plan before
19 the beginning of the plan year for which such election was
20 made.’’.
21 (ii) APPLICATION TO RETIREE AND
22 CERTAIN SMALL GROUP HEALTH PLANS.—
23 Section 9831(a)(2) of the Internal Revenue

24 Code of 1986 is amended by inserting
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1 ‘‘other than with respect to section 9826,’’
2 before ‘‘any group health plan’’.
3 (iii) CLERICAL AMENDMENT.—The
4 table of sections for subchapter B of chap-

5 ter 100 of such Code is amended by add-
6 ing at the end the following new item:
‘‘Sec. 9826. Fair Price Negotiation Program and application of maximum fair
prices.’’.
7 (3) FAIR PRICE NEGOTIATION PROGRAM PRICES
8 INCLUDED IN BEST PRICE AND AMP.—Section 1927

9 of the Social Security Act (42 U.S.C. 1396r–8) is
10 amended—
11 (A) in subsection (c)(1)(C)(ii)—
12 (i) in subclause (III), by striking at
13 the end ‘‘; and’’;
14 (ii) in subclause (IV), by striking at
15 the end the period and inserting ‘‘; and’’;
16 and
18 lowing new subclause:
19 ‘‘(V) in the case of a rebate pe-
20 riod and a covered outpatient drug
21 that is a selected drug (as defined in
22 section 1192(c)) during such rebate
23 period, shall be inclusive of the price
24 for such drug made available from the
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1 manufacturer during the rebate period
2 by reason of application of part E of
3 title XI to any wholesaler, retailer,
4 provider, health maintenance organi-
5 zation, nonprofit entity, or govern-
6 mental entity within the United
7 States.’’; and
8 (B) in subsection (k)(1)(B), by adding at
9 the end the following new clause:
10 ‘‘(iii) CLARIFICATION.—Notwith-
11 standing clause (i), in the case of a rebate
12 period and a covered outpatient drug that
13 is a selected drug (as defined in section
14 1192(c)) during such rebate period, any
15 reduction in price paid during the rebate
16 period to the manufacturer for the drug by
17 a wholesaler or retail community pharmacy
18 described in subparagraph (A) by reason of
19 application of part E of title XI shall be
20 included in the average manufacturer price
21 for the covered outpatient drug.’’.
22 (4) FEHBP.—Section 8902 of title 5, United
23 States Code, is amended by adding at the end the
24 following:
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1 ‘‘(p) A contract may not be made or a plan approved
2 under this chapter with any carrier that has affirmatively
3 elected, pursuant to section 1197 of the Social Security
4 Act, not to participate in the Fair Price Negotiation Pro-
5 gram established under section 1191 of such Act for any
6 selected drug (as that term is defined in section 1192(c)
7 of such Act).’’.
8 (5) OPTION OF SECRETARY OF VETERANS AF-
9 FAIRS TO PURCHASE COVERED DRUGS AT MAXIMUM
10 FAIR PRICES.—Section 8126 of title 38, United

11 States Code, is amended—
12 (A) in subsection (a)(2), by inserting ‘‘,
13 subject to subsection (j),’’ after ‘‘may not ex-
14 ceed’’;
15 (B) in subsection (d), in the matter pre-
16 ceding paragraph (1), by inserting ‘‘, subject to
17 subsection (j)’’ after ‘‘for the procurement of
18 the drug’’; and
20 subsection:
21 ‘‘(j)(1) In the case of a covered drug that is a selected
22 drug, for any year during the price applicability period for
23 such drug, if the Secretary determines that the maximum
24 fair price of such drug for such year is less than the price
25 for such drug otherwise in effect pursuant to this section
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1 (including after application of any reduction under sub-
2 section (a)(2) and any discount under subsection (c)), at
3 the option of the Secretary, in lieu of the maximum price
4 (determined after application of the reduction under sub-
5 section (a)(2) and any discount under subsection (c), as
6 applicable) that would be permitted to be charged during
7 such year for such drug pursuant to this section without
8 application of this subsection, the maximum price per-
9 mitted to be charged during such year for such drug pur-
10 suant to this section shall be such maximum fair price for
12 ‘‘(2) For purposes of this subsection:
13 ‘‘(A) The term ‘maximum fair price’ means,
14 with respect to a selected drug and year during the
15 price applicability period for such drug, the max-
16 imum fair price (as defined in section 1191(c)(2) of
17 the Social Security Act) for such drug and year.
18 ‘‘(B) The term ‘negotiation eligible drug’ has
19 the meaning given such term in section 1192(d)(1)
20 of the Social Security Act.
21 ‘‘(C) The term ‘price applicability period’ has,
22 with respect to a selected drug, the meaning given
23 such term in section 1191(b)(2) of such Act.
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1 ‘‘(D) The term ‘selected drug’ means, with re-
2 spect to a year, a drug that is a selected drug under
3 section 1192(c) of such Act for such year.’’.
4 SEC. 139002. SELECTED DRUG MANUFACTURER EXCISE TAX
5 IMPOSED DURING NONCOMPLIANCE PERI-
6 ODS.
7 (a) IN GENERAL.—Subchapter E of chapter 32 of the

8 Internal Revenue Code of 1986 is amended by adding at
9 the end the following new section:
10 ‘‘SEC. 4192. SELECTED DRUGS DURING NONCOMPLIANCE
11 PERIODS.
12 ‘‘(a) IN GENERAL.—There is hereby imposed on the

13 sale by the manufacturer, producer, or importer of any
14 selected drug during a day described in subsection (b) a
15 tax in an amount such that the applicable percentage is
16 equal to the ratio of—
17 ‘‘(1) such tax, divided by
18 ‘‘(2) the sum of such tax and the price for
19 which so sold.
20 ‘‘(b) NONCOMPLIANCE PERIODS.—A day is described
21 in this subsection with respect to a selected drug if it is
22 a day during one of the following periods:
23 ‘‘(1) The period beginning on the June 16th
24 immediately following the selected drug publication
25 date and ending on the first date during which the
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1 manufacturer of the drug has in place an agreement
2 described in subsection (a) of section 1193 of the
3 Social Security Act with respect to such drug.
4 ‘‘(2) The period beginning on the April 1st im-
5 mediately following the June 16th described in para-
6 graph (1) and ending on the first date during which
7 the manufacturer of the drug has agreed to a max-
8 imum fair price under such agreement.
9 ‘‘(3) In the case of a selected drug with respect
10 to which the Secretary of Health and Human Serv-
11 ices has specified a renegotiation period under such
12 agreement, the period beginning on the first date
13 after the last date of such renegotiation period and
14 ending on the first date during which the manufac-
15 turer of the drug has agreed to a renegotiated max-
16 imum fair price under such agreement.
17 ‘‘(4) With respect to information that is re-
18 quired to be submitted to the Secretary of Health
19 and Human Services under such agreement, the pe-
20 riod beginning on the date on which such Secretary
21 certifies that such information is overdue and ending
22 on the date that such information is so submitted.
23 ‘‘(5) In the case of a selected drug with respect
24 to which a payment is due under subsection (c) of
25 such section 1193, the period beginning on the date
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1 on which the Secretary of Health and Human Serv-
2 ices certifies that such payment is overdue and end-
3 ing on the date that such payment is made in full.
4 ‘‘(c) APPLICABLE PERCENTAGE.—For purposes of
5 this section, the term ‘applicable percentage’ means—
6 ‘‘(1) in the case of sales of a selected drug dur-
7 ing the first 90 days described in subsection (b) with
8 respect to such drug, 65 percent,
9 ‘‘(2) in the case of sales of such drug during
10 the 91st day through the 180th day described in
11 subsection (b) with respect to such drug, 75 percent,
13 the 181st day through the 270th day described in
14 subsection (b) with respect to such drug, 85 percent,
15 and
17 any subsequent day, 95 percent.
18 ‘‘(d) SELECTED DRUG.—For purposes of this sec-
19 tion—
20 ‘‘(1) IN GENERAL.—The term ‘selected drug’
21 means any selected drug (within the meaning of sec-
22 tion 1192 of the Social Security Act) which is manu-
23 factured or produced in the United States or entered
24 into the United States for consumption, use, or
25 warehousing.
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1 ‘‘(2) UNITED STATES.—The term ‘United
2 States’ has the meaning given such term by section
3 4612(a)(4).
4 ‘‘(3) COORDINATION WITH RULES FOR POSSES-
5 SIONS OF THE UNITED STATES.—Rules similar to

6 the rules of paragraphs (2) and (4) of section
7 4132(c) shall apply for purposes of this section.
8 ‘‘(e) OTHER DEFINITIONS.—For purposes of this
9 section, the terms ‘selected drug publication date’ and
10 ‘maximum fair price’ have the meaning given such terms
11 in section 1191 of the Social Security Act.
12 ‘‘(f) ANTI-ABUSE RULE.—In the case of a sale which
13 was timed for the purpose of avoiding the tax imposed by
14 this section, the Secretary may treat such sale as occur-
15 ring during a day described in subsection (b).’’.
16 (b) NO DEDUCTION FOR EXCISE TAX PAYMENTS.—
17 Section 275 of the Internal Revenue Code of 1986 is
18 amended by adding ‘‘or by section 4192’’ before the period
19 at the end of subsection (a)(6).
21 (1) Section 4221(a) of the Internal Revenue
22 Code of 1986 is amended by inserting ‘‘or 4192’’
23 after ‘‘section 4191’’.
24 (2) Section 6416(b)(2) of such Code is amend-
25 ed by inserting ‘‘or 4192’’ after ‘‘section 4191’’.
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1 (d) CLERICAL AMENDMENTS.—
2 (1) The heading of subchapter E of chapter 32
3 of the Internal Revenue Code of 1986 is amended by
4 striking ‘‘Medical Devices’’ and inserting
5 ‘‘Other Medical Products’’.
6 (2) The table of subchapters for chapter 32 of
7 such Code is amended by striking the item relating
8 to subchapter E and inserting the following new
9 item:
‘‘SUBCHAPTER E. OTHER MEDICAL PRODUCTS’’.
10 (3) The table of sections for subchapter E of

11 chapter 32 of such Code is amended by adding at
12 the end the following new item:
‘‘Sec. 4192. Selected drugs during noncompliance periods.’’.

14 this section shall apply to sales after the date of the enact-
15 ment of this Act.
16 SEC. 139003. FAIR PRICE NEGOTIATION IMPLEMENTATION
17 FUND.
18 (a) IN GENERAL.—There is hereby established a Fair

19 Price Negotiation Implementation Fund (referred to in
20 this section as the ‘‘Fund’’). The Secretary of Health and
21 Human Services may obligate and expend amounts in the
22 Fund to carry out this part and parts 2 and 3 (and the
23 amendments made by such parts).
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1 (b) FUNDING.—There is authorized to be appro-
2 priated, and there is hereby appropriated, out of any mon-
3 ies in the Treasury not otherwise appropriated, to the
4 Fund $3,000,000,000, to remain available until expended,
5 of which—
6 (1) $600,000,000 shall become available on the
7 date of the enactment of this Act;
8 (2) $600,000,000 shall become available on Oc-
9 tober 1, 2023;
11 tober 1, 2024;
13 tober 1, 2025; and
15 tober 1, 2026.
16 (c) SUPPLEMENT NOT SUPPLANT.—Any amounts
17 appropriated pursuant to this section shall be in addition
18 to any other amounts otherwise appropriated pursuant to
19 any other provision of law.
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1 PART 2—PRESCRIPTION DRUG INFLATION
2 REBATES
3 SEC. 139101. MEDICARE PART B REBATE BY MANUFACTUR-
4 ERS.
5 (a) IN GENERAL.—Section 1834 of the Social Secu-

6 rity Act (42 U.S.C. 1395m) is amended by adding at the
7 end the following new subsection:
8 ‘‘(z) REBATE BY MANUFACTURERS FOR SINGLE
9 SOURCE DRUGS WITH PRICES INCREASING FASTER
10 THAN INFLATION.—
11 ‘‘(1) REQUIREMENTS.—
12 ‘‘(A) SECRETARIAL PROVISION OF INFOR-
13 MATION.—Not later than 6 months after the

14 end of each calendar quarter beginning on or
15 after July 1, 2023, the Secretary shall, for each
16 part B rebatable drug, report to each manufac-
17 turer of such part B rebatable drug the fol-
18 lowing for such calendar quarter:
19 ‘‘(i) Information on the total number
20 of units of the billing and payment code
21 described in subparagraph (A)(i) of para-
22 graph (3) with respect to such drug and
23 calendar quarter.
24 ‘‘(ii) Information on the amount (if
25 any) of the excess average sales price in-
26 crease described in subparagraph (A)(ii) of
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1 such paragraph for such drug and calendar
2 quarter.
3 ‘‘(iii) The rebate amount specified
4 under such paragraph for such part B
5 rebatable drug and calendar quarter.
6 ‘‘(B) MANUFACTURER REQUIREMENT.—
7 For each calendar quarter beginning on or after

8 July 1, 2023, the manufacturer of a part B
9 rebatable drug shall, for such drug, not later
10 than 30 days after the date of receipt from the
11 Secretary of the information described in sub-
12 paragraph (A) for such calendar quarter, pro-
13 vide to the Secretary a rebate that is equal to
14 the amount specified in paragraph (3) for such
15 drug for such calendar quarter.
16 ‘‘(2) PART B REBATABLE DRUG DEFINED.—
17 ‘‘(A) IN GENERAL.—In this subsection, the

18 term ‘part B rebatable drug’ means a single
19 source drug or biological (as defined in sub-
20 paragraph (D) of section 1847A(c)(6)), includ-
21 ing a biosimilar biological product (as defined
22 in subparagraph (H) of such section), payable
23 (if such drug were furnished to an individual
24 enrolled under this part) under this part, except
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1 such term shall not include such a drug or bio-
2 logical—
3 ‘‘(i) if the average total allowed
4 charges under this part as determined by
5 the Secretary for a year per individual that
6 uses such a drug or biological, as deter-
7 mined by the Secretary, are less than, sub-
8 ject to subparagraph (B), $100; or
9 ‘‘(ii) that is a vaccine described in
10 subparagraph (A) or (B) of section
11 1861(s)(10).
12 ‘‘(B) INCREASE.—The dollar amount ap-
13 plied under subparagraph (A)(i)—
14 ‘‘(i) for 2024, shall be the dollar
15 amount specified under such subparagraph
16 for 2023, increased by the percentage in-
17 crease in the consumer price index for all
18 urban consumers (United States city aver-
19 age) for the 12-month period ending with
20 June of the previous year; and
21 ‘‘(ii) for a subsequent year, shall be
22 the dollar amount specified in this clause
23 (or clause (i)) for the previous year, in-
24 creased by the percentage increase in the
25 consumer price index for all urban con-
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1 sumers (United States city average) for
2 the 12-month period ending with June of
3 the previous year.
4 Any dollar amount specified under this sub-
5 paragraph that is not a multiple of $10 shall be
7 ‘‘(3) REBATE AMOUNT.—

9 graph (1), the amount specified in this para-
10 graph for a part B rebatable drug assigned to
11 a billing and payment code for a calendar quar-
12 ter is, subject to subparagraph (B) and para-
13 graph (4), the amount equal to the product
14 of—
15 ‘‘(i) the total number of units, as de-
16 scribed in section 1847A(c)(1)(B), with re-
17 spect to such drug during the calendar
18 quarter; and
19 ‘‘(ii) the amount (if any) by which—
20 ‘‘(I) the payment amount under
21 subparagraph (B) or (C) of section
22 1847A(b)(1), as applicable, for such
23 part B rebatable drug during the cal-
24 endar quarter; exceeds
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1 ‘‘(II) the inflation-adjusted pay-
2 ment amount determined under sub-
3 paragraph (C) for such part B
4 rebatable drug during the calendar
5 quarter.
6 ‘‘(B) EXCLUDED UNITS.—For purposes of
7 subparagraph (A)(i), the Secretary shall exclude
8 from the total number of units with respect to
9 a part B rebatable drug and calendar quarter
10 units of such part B rebatable drug for which
11 payment was made under a State plan under
12 title XIX (or waiver of such plan), as reported
13 by States under section 1927(b)(2)(A) for the
14 most recent rebate period.
15 ‘‘(C) DETERMINATION OF INFLATION-AD-
16 JUSTED PAYMENT AMOUNT.—The inflation-ad-

17 justed payment amount determined under this
18 subparagraph for a part B rebatable drug for
19 a calendar quarter is—
20 ‘‘(i) the payment amount for the bill-
21 ing and payment code for such drug in the
22 payment amount benchmark quarter (as
23 defined in subparagraph (D)); increased by
24 ‘‘(ii) the percentage by which the re-
25 bate period CPI–U (as defined in subpara-
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1 graph (F)) for the calendar quarter ex-
2 ceeds the benchmark period CPI–U (as de-
3 fined in subparagraph (E)).
4 ‘‘(D) PAYMENT AMOUNT BENCHMARK
5 QUARTER.—The term ‘payment amount bench-

6 mark quarter’ means the calendar quarter be-
7 ginning January 1, 2016.
8 ‘‘(E) BENCHMARK PERIOD CPI–U.—The
9 term ‘benchmark period CPI–U’ means the con-

10 sumer price index for all urban consumers
11 (United States city average) for July 2015.
12 ‘‘(F) REBATE PERIOD CPI–U.—The term
13 ‘rebate period CPI–U’ means, with respect to a
14 calendar quarter described in subparagraph
15 (C), the greater of the benchmark period CPI–
16 U and the consumer price index for all urban
17 consumers (United States city average) for the
18 first month of the calendar quarter that is two
19 calendar quarters prior to such described cal-
20 endar quarter.
21 ‘‘(4) SPECIAL TREATMENT OF CERTAIN DRUGS
22 AND EXEMPTION.—
23 ‘‘(A) SUBSEQUENTLY APPROVED DRUGS.—
24 Subject to subparagraph (B), in the case of a

25 part B rebatable drug first approved or licensed
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1 by the Food and Drug Administration after
2 July 1, 2015, clause (i) of paragraph (3)(C)
3 shall be applied as if the term ‘payment amount
4 benchmark quarter’ were defined under para-
5 graph (3)(D) as the third full calendar quarter
6 after the day on which the drug was first mar-
7 keted and clause (ii) of paragraph (3)(C) shall
8 be applied as if the term ‘benchmark period
9 CPI–U’ were defined under paragraph (3)(E)
10 as if the reference to ‘July 2015’ under such
11 paragraph were a reference to ‘the first month
12 of the first full calendar quarter after the day
13 on which the drug was first marketed’.
14 ‘‘(B) TIMELINE FOR PROVISION OF RE-
15 BATES FOR SUBSEQUENTLY APPROVED
16 DRUGS.—In the case of a part B rebatable drug

17 first approved or licensed by the Food and
18 Drug Administration after July 1, 2015, para-
19 graph (1)(B) shall be applied as if the reference
20 to ‘July 1, 2023’ under such paragraph were a
21 reference to the later of the 6th full calendar
22 quarter after the day on which the drug was
23 first marketed or July 1, 2023.
24 ‘‘(C) EXEMPTION FOR SHORTAGES.—The
25 Secretary may reduce or waive the rebate
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1 amount under paragraph (1)(B) with respect to
2 a part B rebatable drug that is described as
3 currently in shortage on the shortage list in ef-
4 fect under section 506E of the Federal Food,
5 Drug, and Cosmetic Act or in the case of other
6 exigent circumstances, as determined by the
7 Secretary.
8 ‘‘(D) SELECTED DRUGS.—In the case of a
9 part B rebatable drug that is a selected drug
10 (as defined in section 1192(c)) for a price appli-
11 cability period (as defined in section
12 1191(b)(2))—
13 ‘‘(i) for calendar quarters during such
14 period for which a maximum fair price (as
15 defined in section 1191(c)(2)) for such
16 drug has been determined and is applied
17 under part E of title XI, the rebate
18 amount under paragraph (1)(B) shall be
19 waived; and
20 ‘‘(ii) in the case such drug is deter-
21 mined (pursuant to such section 1192(c))
22 to no longer be a selected drug, for each
23 applicable year beginning after the price
24 applicability period with respect to such
25 drug, clause (i) of paragraph (3)(C) shall
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1 be applied as if the term ‘payment amount
2 benchmark quarter’ were defined under
3 paragraph (3)(D) as the calendar quarter
4 beginning January 1 of the last year be-
5 ginning during such price applicability pe-
6 riod with respect to such selected drug and
7 clause (ii) of paragraph (3)(C) shall be ap-
8 plied as if the term ‘benchmark period
9 CPI–U’ were defined under paragraph
10 (3)(E) as if the reference to ‘July 2015’
11 under such paragraph were a reference to
12 the July of the year preceding such last
13 year.
14 ‘‘(5) APPLICATION TO BENEFICIARY COINSUR-
15 ANCE.—In the case of a part B rebatable drug, if

16 the payment amount under this part for a quarter
17 exceeds the inflation adjusted payment for such
18 quarter—
19 ‘‘(A) in computing the amount of any coin-
20 surance applicable under this part to an indi-
21 vidual to whom such drug is furnished, the
22 computation of such coinsurance shall be based
23 on the inflation-adjusted payment amount de-
24 termined under paragraph (3)(C) for such part
25 B rebatable drug; and
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1 ‘‘(B) the amount of such coinsurance is
2 equal to 20 percent of such inflation-adjusted
3 payment amount so determined.
4 ‘‘(6) REBATE DEPOSITS.—Amounts paid as re-
5 bates under paragraph (1)(B) shall be deposited into
6 the Federal Supplementary Medical Insurance Trust
7 Fund established under section 1841.
8 ‘‘(7) CIVIL MONEY PENALTY.—If a manufac-
9 turer of a part B rebatable drug has failed to com-
10 ply with the requirements under paragraph (1)(B)
11 for such drug for a calendar quarter, the manufac-
12 turer shall be subject to, in accordance with a proc-
13 ess established by the Secretary pursuant to regula-
14 tions, a civil money penalty in an amount equal to
15 at least 125 percent of the amount specified in para-
16 graph (3) for such drug for such calendar quarter.
17 The provisions of section 1128A (other than sub-
18 sections (a) (with respect to amounts of penalties or
19 additional assessments) and (b)) shall apply to a
20 civil money penalty under this paragraph in the
21 same manner as such provisions apply to a penalty
22 or proceeding under section 1128A(a).
23 ‘‘(8) APPLICATION TO MULTIPLE SOURCE
24 DRUGS.—The Secretary may, pursuant to rule-

25 making, apply the provisions of this subsection to
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1 multiple source drugs (as defined in section
2 1847A(c)(6)(C)), including, for purposes of deter-
3 mining the rebate amount under paragraph (3), by
4 calculating manufacturer-specific average sales
5 prices for the benchmark period and the rebate pe-
6 riod.’’.
7 (b) AMOUNTS PAYABLE; COST-SHARING.—Section
8 1833 of the Social Security Act (42 U.S.C. 1395l) is
9 amended—
10 (1) in subsection (a)—
11 (A) in paragraph (1)—
12 (i) in subparagraph (G), by inserting
13 ‘‘, subject to subsection (i)(9),’’ after ‘‘the
14 amounts paid’’;
15 (ii) in subparagraph (S), by striking
16 ‘‘with respect to’’ and inserting ‘‘subject to
17 subparagraph (DD), with respect to’’;
18 (iii) by striking ‘‘and (DD)’’ and in-
19 serting ‘‘(EE)’’; and
20 (iv) by inserting before the semicolon
21 at the end the following: ‘‘, and (EE) with
22 respect to a part B rebatable drug (as de-
23 fined in paragraph (2) of section 1834(z))
24 for which the payment amount for a cal-
25 endar quarter under paragraph
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1 (3)(A)(ii)(I) of such section for such quar-
2 ter exceeds the inflation-adjusted payment
3 under paragraph (3)(A)(ii)(II) of such sec-
4 tion for such quarter, the amounts paid
5 shall be the difference between (i) the pay-
6 ment amount under paragraph
7 (3)(A)(ii)(I) of such section for such drug,
8 and (ii) 20 percent of the inflation-ad-
9 justed payment amount under paragraph
10 (3)(A)(ii)(II) of such section for such
11 drug’’; and
12 (B) by adding at the end of the flush left
13 matter following paragraph (9), the following:
14 ‘‘For purposes of applying paragraph (1)(EE), sub-
15 sections (i)(9) and (t)(8)(F), and section 1834(z)(5), the
16 Secretary shall make such estimates and use such data
17 as the Secretary determines appropriate, and may do so
18 by program instruction or otherwise.’’;
19 (2) in subsection (i), by adding at the end the
21 ‘‘(9) In the case of a part B rebatable drug (as de-
22 fined in paragraph (2) of section 1834(z)) for which pay-
23 ment under this subsection is not packaged into a payment
24 for a covered OPD service (as defined in subsection
25 (t)(1)(B)) (or group of services) furnished on or after July
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1 1, 2023, under the system under this subsection, in lieu
2 of calculation of coinsurance and the amount of payment
3 otherwise applicable under this subsection, the provisions
4 of section 1834(z)(5), paragraph (1)(EE) of subsection
5 (a), and the flush left matter following paragraph (9) of
6 subsection (a), shall, as determined appropriate by the
7 Secretary, apply under this subsection in the same manner
8 as such provisions of section 1834(z)(5) and subsection
9 (a) apply under such section and subsection.’’; and
10 (3) in subsection (t)(8), by adding at the end
12 ‘‘(F) PART B REBATABLE DRUGS.—In the
13 case of a part B rebatable drug (as defined in
14 paragraph (2) of section 1834(z)) for which
15 payment under this part is not packaged into a
16 payment for a service furnished on or after July
17 1, 2023, under the system under this sub-
18 section, in lieu of calculation of coinsurance and
19 the amount of payment otherwise applicable
20 under this subsection, the provisions of section
21 1834(z)(5), paragraph (1)(EE) of subsection
22 (a), and the flush left matter following para-
23 graph (9) of subsection (a), shall, as determined
24 appropriate by the Secretary, apply under this
25 subsection in the same manner as such provi-
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1 sions of section 1834(z)(5) and subsection (a)
2 apply under such section and subsection.’’.
4 (1) TO PART B ASP CALCULATION.—Section
5 1847A(c)(3) of the Social Security Act (42 U.S.C.

6 1395w–3a(c)(3)) is amended by inserting ‘‘or section
7 1834(z)’’ after ‘‘section 1927’’.
8 (2) EXCLUDING PARTS B DRUG INFLATION RE-
9 BATE FROM BEST PRICE.—Section
10 1927(c)(1)(C)(ii)(I) of the Social Security Act (42

11 U.S.C. 1396r–8(c)(1)(C)(ii)(I)) is amended by in-
12 serting ‘‘or section 1834(z)’’ after ‘‘this section’’.
13 (3) COORDINATION WITH MEDICAID REBATE IN-
14 FORMATION DISCLOSURE.—Section 1927(b)(3)(D)(i)

15 of the Social Security Act (42 U.S.C. 1396r–
16 8(b)(3)(D)(i)) is amended by striking ‘‘or to carry
17 out section 1847B’’ and inserting ‘‘to carry out sec-
18 tion 1847B or section 1834(z)’’.
19 SEC. 139102. MEDICARE PART D REBATE BY MANUFACTUR-
20 ERS.
21 (a) IN GENERAL.—Part D of title XVIII of the Social

22 Security Act is amended by inserting after section 1860D–
23 14A (42 U.S.C. 1395w–114a) the following new section:
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1 ‘‘SEC. 1860D–14B. MANUFACTURER REBATE FOR CERTAIN
2 DRUGS WITH PRICES INCREASING FASTER
3 THAN INFLATION.
4 ‘‘(a) REQUIREMENTS.—
5 ‘‘(1) SECRETARIAL PROVISION OF INFORMA-
6 TION.—Not later than 9 months after the end of

7 each applicable year (as defined in subsection
8 (g)(7)), the Secretary shall, for each part D
9 rebatable drug, report to each manufacturer of such
10 part D rebatable drug the following for such year:
11 ‘‘(A) Information on the amount (if any)
12 of the excess average manufacturer price in-
13 crease described in subsection (b)(1)(B) for
14 each dosage form and strength with respect to
16 ‘‘(B) The rebate amount specified under
17 subsection (b) for each dosage form and
18 strength with respect to such drug and year.
19 ‘‘(2) MANUFACTURER REQUIREMENTS.—For
20 each applicable year, the manufacturer of a part D

21 rebatable drug, for each dosage form and strength
22 with respect to such drug, not later than 30 days
23 after the date of receipt from the Secretary of the
24 information described in paragraph (1) for such
25 year, shall provide to the Secretary a rebate that is
26 equal to the amount specified in subsection (b) for
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1 such dosage form and strength with respect to such
2 drug for such year.
3 ‘‘(b) REBATE AMOUNT.—
5 ‘‘(A) CALCULATION.—For purposes of this

6 section, the amount specified in this subsection
7 for a dosage form and strength with respect to
8 a part D rebatable drug and applicable year is,
9 subject to subparagraph (B) of this paragraph
10 and subparagraphs (B) and (C) of paragraph
11 (5), the amount equal to the product of—
12 ‘‘(i) the total number of units that are
13 used to calculate the average manufacturer
14 price of such dosage form and strength
15 with respect to such part D rebatable
16 drug, as reported by the manufacturer of
17 such drug under section 1927 for each re-
18 cent rebate period under such section, with
19 respect to such year, under such section
20 for which such information is available;
21 and
22 ‘‘(ii) the amount (if any) by which—
23 ‘‘(I) the annual manufacturer
24 price (as determined in paragraph
25 (2)) paid for such dosage form and
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1 strength with respect to such part D
2 rebatable drug for the year; exceeds
3 ‘‘(II) the inflation-adjusted pay-
4 ment amount determined under para-
5 graph (3) for such dosage form and
6 strength with respect to such part D
7 rebatable drug for the year.
8 ‘‘(B) EXCLUDED UNITS.—For purposes of
9 subparagraph (A)(i), the Secretary shall exclude
10 from the total number of units for a dosage
11 form and strength with respect to a part D
12 rebatable drug and the most recent rebate pe-
13 riod under section 1927, with respect to an ap-
14 plicable year, for which such information is
15 available, units of each dosage form and
16 strength of such part D rebatable drug, for
17 which payment was made under a State plan
18 under title XIX (or waiver of such plan), as re-
19 ported by States under section 1927(b)(2)(A)
20 for such rebate period.
21 ‘‘(2) DETERMINATION OF ANNUAL MANUFAC-
22 TURER PRICE.—The annual manufacturer price de-

23 termined under this paragraph for a dosage form
24 and strength, with respect to a part D rebatable
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1 drug and an applicable year, is the sum of the prod-
2 ucts of—
3 ‘‘(A) the average manufacturer price (as
4 defined in subsection (g)(6)) of such dosage
5 form and strength, as calculated for a unit of
6 such drug, with respect to each of the calendar
7 quarters of such year; and
8 ‘‘(B) the ratio of—
9 ‘‘(i) the total number of units of such
10 dosage form and strength reported for the
11 purpose of calculating average manufac-
12 turer price under section 1927 during each
13 such calendar quarter of such year; to
14 ‘‘(ii) the total number of units of such
15 dosage form and strength reported for the
16 purpose of calculating average manufac-
17 turer price under section 1927 during such
18 year, as determined by the Secretary.
19 ‘‘(3) DETERMINATION OF INFLATION-ADJUSTED
20 PAYMENT AMOUNT.—The inflation-adjusted payment

21 amount determined under this paragraph for a dos-
22 age form and strength with respect to a part D
23 rebatable drug for an applicable year, subject to sub-
24 paragraphs (A) and (D) of paragraph (5), is—
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1 ‘‘(A) the benchmark year manufacturer
2 price determined under paragraph (4) for such
3 dosage form and strength with respect to such
4 drug and year; increased by
5 ‘‘(B) the percentage by which the applica-
6 ble year CPI–U (as defined in subsection
7 (g)(5)) for the year exceeds the benchmark pe-
8 riod CPI–U (as defined in subsection (g)(4)).
9 ‘‘(4) DETERMINATION OF BENCHMARK YEAR
10 MANUFACTURER PRICE.—The benchmark year man-

11 ufacturer price determined under this paragraph for
12 a dosage form and strength, with respect to a part
13 D rebatable drug and an applicable year, is the sum
14 of the products of—
15 ‘‘(A) the average manufacturer price (as
16 defined in subsection (g)(6)) of such dosage
17 form and strength, as calculated for a unit of
18 such drug, with respect to each of the calendar
19 quarters of the payment amount benchmark
20 year (as defined in subsection (g)(3)); and
21 ‘‘(B) the ratio of—
22 ‘‘(i) the total number of units of such
23 dosage form and strength dispensed during
24 each such calendar quarter of such pay-
25 ment amount benchmark year; to
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1 ‘‘(ii) the total number of units of such
2 dosage form and strength dispensed during
3 such payment amount benchmark year.
4 ‘‘(5) SPECIAL TREATMENT OF CERTAIN DRUGS
5 AND EXEMPTION.—
6 ‘‘(A) SUBSEQUENTLY APPROVED DRUGS.—
7 In the case of a part D rebatable drug first ap-

8 proved or licensed by the Food and Drug Ad-
9 ministration after January 1, 2016, subpara-
10 graphs (A) and (B) of paragraph (4) shall be
11 applied as if the term ‘payment amount bench-
12 mark year’ were defined under subsection
13 (g)(3) as the first calendar year beginning after
14 the day on which the drug was first marketed
15 by any manufacturer and subparagraph (B) of
16 paragraph (3) shall be applied as if the term
17 ‘benchmark period CPI–U’ were defined under
18 subsection (g)(4) as if the reference to ‘January
19 2016’ under such subsection were a reference to
20 ‘January of the first year beginning after the
21 date on which the drug was first marketed by
22 any manufacturer’.
23 ‘‘(B) EXEMPTION FOR SHORTAGES.—The
24 Secretary may reduce or waive the rebate under

25 paragraph (1) with respect to a part D
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1 rebatable drug that is described as currently in
2 shortage on the shortage list in effect under
3 section 506E of the Federal Food, Drug, and
4 Cosmetic Act or in the case of other exigent cir-
5 cumstances, as determined by the Secretary.
6 ‘‘(C) TREATMENT OF NEW FORMULA-
7 TIONS.—

9 part D rebatable drug that is a line exten-
10 sion of a part D rebatable drug that is an
11 oral solid dosage form, the Secretary shall
12 establish a formula for determining the
13 amount specified in this subsection with
14 respect to such part D rebatable drug and
15 an applicable year with consideration of
16 the original part D rebatable drug.
17 ‘‘(ii) LINE EXTENSION DEFINED.—In
18 this subparagraph, the term ‘line exten-

19 sion’ means, with respect to a part D
20 rebatable drug, a new formulation of the
21 drug, such as an extended release formula-
22 tion, but does not include an abuse-deter-
23 rent formulation of the drug (as deter-
24 mined by the Secretary), regardless of
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1 whether such abuse-deterrent formulation
2 is an extended release formulation.
3 ‘‘(D) SELECTED DRUGS.—In the case of a
4 part D rebatable drug that is a selected drug
5 (as defined in section 1192(c)) for a price appli-
7 1191(b)(2))—
8 ‘‘(i) for plan years during such period
9 for which a maximum fair price (as defined
10 in section 1191(c)(2)) for such drug has
11 been determined and is applied under part
12 E of title XI, the rebate under subsection
13 (a)(1)(B) shall be waived; and
14 ‘‘(ii) in the case such drug is deter-
15 mined (pursuant to such section 1192(c))
16 to no longer be a selected drug, for each
17 applicable year beginning after the price
18 applicability period with respect to such
19 drug, subparagraphs (A) and (B) of para-
20 graph (4) shall be applied as if the term
21 ‘payment amount benchmark year’ were
22 defined under subsection (g)(3) as the last
23 year beginning during such price applica-
24 bility period with respect to such selected
25 drug and subparagraph (B) of paragraph
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1 (3) shall be applied as if the term ‘bench-
2 mark period CPI–U’ were defined under
3 subsection (g)(4) as if the reference to
4 ‘January 2016’ under such subsection were
5 a reference to January of the last year be-
6 ginning during such price applicability pe-
7 riod with respect to such drug.
8 ‘‘(c) REBATE DEPOSITS.—Amounts paid as rebates
9 under subsection (b) shall be deposited into the Medicare
10 Prescription Drug Account in the Federal Supplementary
11 Medical Insurance Trust Fund established under section
12 1841.
13 ‘‘(d) INFORMATION.—For purposes of carrying out
14 this section, the Secretary shall use information submitted
15 by manufacturers under section 1927(b)(3) and informa-
16 tion submitted by States under section 1927(b)(2)(A).
17 ‘‘(e) CIVIL MONEY PENALTY.—If a manufacturer of
18 a part D rebatable drug has failed to comply with the re-
19 quirement under subsection (a)(1)(B) with respect to such
20 drug for an applicable year, the manufacturer shall be
21 subject to, in accordance with a process established by the
22 Secretary pursuant to regulations, a civil money penalty
23 in an amount equal to 125 percent of the amount specified
24 in subsection (b) for such drug for such year. The provi-
25 sions of section 1128A (other than subsections (a) (with
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1 respect to amounts of penalties or additional assessments)
2 and (b)) shall apply to a civil money penalty under this
3 subsection in the same manner as such provisions apply
4 to a penalty or proceeding under section 1128A(a).
5 ‘‘(f) JUDICIAL REVIEW.—There shall be no judicial
6 review of the following:
7 ‘‘(1) The determination of units under this sec-
8 tion.
9 ‘‘(2) The determination of whether a drug is a
10 part D rebatable drug under this section.
11 ‘‘(3) The calculation of the rebate amount
12 under this section.
13 ‘‘(g) DEFINITIONS.—In this section:
14 ‘‘(1) PART D REBATABLE DRUG DEFINED.—
15 ‘‘(A) IN GENERAL.—The term ‘part D

16 rebatable drug’ means a drug or biological that
17 would (without application of this section) be a
18 covered part D drug, except such term shall,
19 with respect to an applicable year, not include
20 such a drug or biological if the average annual
21 total cost under this part for such year per in-
22 dividual who uses such a drug or biological, as
23 determined by the Secretary, is less than, sub-
24 ject to subparagraph (B), $100, as determined
25 by the Secretary using the most recent data
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1 available or, if data is not available, as esti-
2 mated by the Secretary.
3 ‘‘(B) INCREASE.—The dollar amount ap-
4 plied under subparagraph (A)—
5 ‘‘(i) for 2024, shall be the dollar
6 amount specified under such subparagraph
7 for 2023, increased by the percentage in-
8 crease in the consumer price index for all
9 urban consumers (United States city aver-
10 age) for the 12-month period beginning
11 with January of 2023; and
12 ‘‘(ii) for a subsequent year, shall be
13 the dollar amount specified in this sub-
14 paragraph for the previous year, increased
15 by the percentage increase in the consumer
16 price index for all urban consumers
17 (United States city average) for the 12-
18 month period beginning with January of
19 the previous year.
20 Any dollar amount specified under this sub-
21 paragraph that is not a multiple of $10 shall be
23 ‘‘(2) UNIT DEFINED.—The term ‘unit’ means,
24 with respect to a part D rebatable drug, the lowest
25 identifiable quantity (such as a capsule or tablet,
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1 milligram of molecules, or grams) of the part D
2 rebatable drug, including data reported under sec-
3 tion 1927.
4 ‘‘(3) PAYMENT AMOUNT BENCHMARK YEAR.—
5 The term ‘payment amount benchmark year’ means

6 the year beginning January 1, 2016.
7 ‘‘(4) BENCHMARK PERIOD CPI–U.—The term
8 ‘benchmark period CPI–U’ means the consumer
9 price index for all urban consumers (United States
10 city average) for January 2016.
11 ‘‘(5) APPLICABLE YEAR CPI–U.—The term ‘ap-
12 plicable year CPI–U’ means, with respect to an ap-
13 plicable year, the consumer price index for all urban
14 consumers (United States city average) for January
15 of such year.
16 ‘‘(6) AVERAGE MANUFACTURER PRICE.—The
17 term ‘average manufacturer price’ has the meaning,

18 with respect to a part D rebatable drug of a manu-
19 facturer, given such term in section 1927(k)(1), with
20 respect to a covered outpatient drug of a manufac-
21 turer for a rebate period under section 1927.
22 ‘‘(7) APPLICABLE YEAR.—The term ‘applicable
23 year’ means a year beginning with 2023.’’.
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1 (1) TO PART B ASP CALCULATION.—Section
2 1847A(c)(3) of the Social Security Act (42 U.S.C.

3 1395w–3a(c)(3)), as amended by section
4 139101(c)(1), is further amended by striking ‘‘sec-
5 tion 1927 or section 1834(z)’’ and inserting ‘‘section
6 1927, section 1834(z), or section 1860D–14B’’.
7 (2) EXCLUDING PART D DRUG INFLATION RE-
8 BATE FROM BEST PRICE.—Section
9 1927(c)(1)(C)(ii)(I) of the Social Security Act (42

10 U.S.C. 1396r–8(c)(1)(C)(ii)(I)), as amended by sec-
11 tion 139101(c)(2), is further amended by striking
12 ‘‘or section 1834(z)’’ and inserting ‘‘, section
13 1834(z), or section 1860D–14B’’.
14 (3) COORDINATION WITH MEDICAID REBATE IN-
15 FORMATION DISCLOSURE.—Section 1927(b)(3)(D)(i)

16 of the Social Security Act (42 U.S.C. 1396r–
17 8(b)(3)(D)(i)), as amended by section 139101(c)(3),
18 is further amended by striking ‘‘or section 1834(z)’’
19 and inserting ‘‘, section 1834(z), or section 1860D–
20 14B’’.
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1 PART 3—PART D IMPROVEMENTS AND MAXIMUM
2 OUT-OF-POCKET CAP FOR MEDICARE BENE-
3 FICIARIES
4 SEC. 139201. MEDICARE PART D BENEFIT REDESIGN.
5 (a) BENEFIT STRUCTURE REDESIGN.—Section

6 1860D–2(b) of the Social Security Act (42 U.S.C. 1395w–
7 102(b)) is amended—
9 (A) in subparagraph (A), in the matter
10 preceding clause (i), by inserting ‘‘for a year
11 preceding 2024 and for costs above the annual
12 deductible specified in paragraph (1) and up to
13 the annual out-of-pocket threshold specified in
14 paragraph (4)(B) for 2024 and each subsequent
15 year’’ after ‘‘paragraph (3)’’;
16 (B) in subparagraph (C)—
17 (i) in clause (i), in the matter pre-
18 ceding subclause (I), by inserting ‘‘for a
19 year preceding 2024,’’ after ‘‘paragraph
20 (4),’’; and
21 (ii) in clause (ii)(III), by striking
22 ‘‘and each subsequent year’’ and inserting
23 ‘‘through 2023’’; and
24 (C) in subparagraph (D)—
25 (i) in clause (i)—
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1 (I) in the matter preceding sub-
2 clause (I), by inserting ‘‘for a year
3 preceding 2024,’’ after ‘‘paragraph
4 (4),’’; and
5 (II) in subclause (I)(bb), by
6 striking ‘‘a year after 2018’’ and in-
7 serting ‘‘each of years 2018 through
8 2023’’; and
9 (ii) in clause (ii)(V), by striking
10 ‘‘2019 and each subsequent year’’ and in-
11 serting ‘‘each of years 2019 through
12 2023’’;
13 (2) in paragraph (3)(A)—
14 (A) in the matter preceding clause (i), by
15 inserting ‘‘for a year preceding 2024,’’ after
16 ‘‘and (4),’’; and
17 (B) in clause (ii), by striking ‘‘for a subse-
18 quent year’’ and inserting ‘‘for each of years
19 2007 through 2023’’; and
21 (A) in subparagraph (A)—
23 (I) by redesignating subclauses
24 (I) and (II) as items (aa) and (bb),
25 respectively, and moving the margin
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619
1 of each such redesignated item 2 ems
2 to the right;
3 (II) in the matter preceding item
4 (aa), as redesignated by subclause (I),
5 by striking ‘‘is equal to the greater
6 of—’’ and inserting ‘‘is equal to—
7 ‘‘(I) for a year preceding 2024,
8 the greater of—’’;
9 (III) by striking the period at the
10 end of item (bb), as redesignated by
11 subclause (I), and inserting ‘‘; and’’;
12 and
13 (IV) by adding at the end the fol-
14 lowing:
15 ‘‘(II) for 2024 and each suc-
16 ceeding year, $0.’’; and
17 (ii) in clause (ii), by striking ‘‘clause
18 (i)(I)’’ and inserting ‘‘clause (i)(I)(aa)’’;
19 (B) in subparagraph (B)—
21 (I) in subclause (V), by striking
22 ‘‘or’’ at the end;
23 (II) in subclause (VI)—
24 (aa) by striking ‘‘for a sub-
25 sequent year’’ and inserting ‘‘for
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1 each of years 2021 through
2 2023’’; and
3 (bb) by striking the period
4 at the end and inserting a semi-
5 colon; and
6 (III) by adding at the end the
7 following new subclauses:
8 ‘‘(VII) for 2024, is equal to
9 $2,000; or
10 ‘‘(VIII) for a subsequent year, is
11 equal to the amount specified in this
12 subparagraph for the previous year,
13 increased by the annual percentage in-
14 crease described in paragraph (6) for
15 the year involved.’’; and
16 (ii) in clause (ii), by striking ‘‘clause
17 (i)(II)’’ and inserting ‘‘clause (i)’’;
18 (C) in subparagraph (C)(i), by striking
19 ‘‘and for amounts’’ and inserting ‘‘and, for a
20 year preceding 2024, for amounts’’; and
21 (D) in subparagraph (E), by striking ‘‘In
22 applying’’ and inserting ‘‘For each of years
23 2011 through 2023, in applying’’.
24 (b) DECREASING REINSURANCE PAYMENT
25 AMOUNT.—Section 1860D–15(b)(1) of the Social Security
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1 Act (42 U.S.C. 1395w–115(b)(1)) is amended by inserting
2 after ‘‘80 percent’’ the following: ‘‘(or, with respect to a
3 coverage year after 2023, 20 percent)’’.
4 (c) MANUFACTURER DISCOUNT PROGRAM.—
5 (1) IN GENERAL.—Part D of title XVIII of the
6 Social Security Act (42 U.S.C. 1395w–101 et seq.),
7 as amended by section 139102, is further amended
8 by inserting after section 1860D–14B the following
9 new section:
10 ‘‘SEC. 1860D–14C. MANUFACTURER DISCOUNT PROGRAM.
11 ‘‘(a) ESTABLISHMENT.—The Secretary shall estab-

12 lish a manufacturer discount program (in this section re-
13 ferred to as the ‘program’). Under the program, the Sec-
14 retary shall enter into agreements described in subsection
15 (b) with manufacturers and provide for the performance
16 of the duties described in subsection (c). The Secretary
17 shall establish a model agreement for use under the pro-
18 gram by not later than January 1, 2023, in consultation
19 with manufacturers, and allow for comment on such model
20 agreement.
21 ‘‘(b) TERMS OF AGREEMENT.—
23 ‘‘(A) AGREEMENT.—An agreement under

24 this section shall require the manufacturer to
25 provide applicable beneficiaries access to dis-
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1 counted prices for applicable drugs of the man-
2 ufacturer that are dispensed on or after Janu-
3 ary 1, 2024.
4 ‘‘(B) PROVISION OF DISCOUNTED PRICES
5 AT THE POINT-OF-SALE.—The discounted prices

6 described in subparagraph (A) shall be provided
7 to the applicable beneficiary at the pharmacy or
8 by the mail order service at the point-of-sale of
9 an applicable drug.
10 ‘‘(C) TIMING OF AGREEMENT.—
11 ‘‘(i) SPECIAL RULE FOR 2024.—In
12 order for an agreement with a manufac-

13 turer to be in effect under this section with
14 respect to the period beginning on January
15 1, 2024, and ending on December 31,
16 2024, the manufacturer shall enter into
17 such agreement not later than 30 days
18 after the date of the establishment of a
19 model agreement under subsection (a).
20 ‘‘(ii) 2025 AND SUBSEQUENT
21 YEARS.—In order for an agreement with a

22 manufacturer to be in effect under this
23 section with respect to plan year 2025 or
24 a subsequent plan year, the manufacturer
25 shall enter into such agreement (or such
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1 agreement shall be renewed under para-
2 graph (4)(A)) not later than January 30 of
3 the preceding year.
4 ‘‘(2) PROVISION OF APPROPRIATE DATA.—Each
5 manufacturer with an agreement in effect under this

6 section shall collect and have available appropriate
7 data, as determined by the Secretary, to ensure that
8 it can demonstrate to the Secretary compliance with
9 the requirements under the program.
10 ‘‘(3) COMPLIANCE WITH REQUIREMENTS FOR
11 ADMINISTRATION OF PROGRAM.—Each manufac-

12 turer with an agreement in effect under this section
13 shall comply with requirements imposed by the Sec-
14 retary or a third party with a contract under sub-
15 section (d)(3), as applicable, for purposes of admin-
16 istering the program, including any determination
17 under subparagraph (A) of subsection (c)(1) or pro-
18 cedures established under such subsection (c)(1).
19 ‘‘(4) LENGTH OF AGREEMENT.—
20 ‘‘(A) IN GENERAL.—An agreement under

21 this section shall be effective for an initial pe-
22 riod of not less than 12 months and shall be
23 automatically renewed for a period of not less
24 than 1 year unless terminated under subpara-
25 graph (B).
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1 ‘‘(B) TERMINATION.—
2 ‘‘(i) BY THE SECRETARY.—The Sec-
3 retary may provide for termination of an
4 agreement under this section for a knowing
5 and willful violation of the requirements of
6 the agreement or other good cause shown.
7 Such termination shall not be effective ear-
8 lier than 30 days after the date of notice
9 to the manufacturer of such termination.
10 The Secretary shall provide, upon request,
11 a manufacturer with a hearing concerning
12 such a termination, and such hearing shall
13 take place prior to the effective date of the
14 termination with sufficient time for such
15 effective date to be repealed if the Sec-
16 retary determines appropriate.
17 ‘‘(ii) BY A MANUFACTURER.—A man-
18 ufacturer may terminate an agreement
19 under this section for any reason. Any
20 such termination shall be effective, with re-
21 spect to a plan year—
22 ‘‘(I) if the termination occurs be-
23 fore January 30 of a plan year, as of
24 the day after the end of the plan year;
25 and
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1 ‘‘(II) if the termination occurs on
2 or after January 30 of a plan year, as
3 of the day after the end of the suc-
4 ceeding plan year.
5 ‘‘(iii) EFFECTIVENESS OF TERMI-
6 NATION.—Any termination under this sub-

7 paragraph shall not affect discounts for
8 applicable drugs of the manufacturer that
9 are due under the agreement before the ef-
10 fective date of its termination.
11 ‘‘(iv) NOTICE TO THIRD PARTY.—The
12 Secretary shall provide notice of such ter-

13 mination to a third party with a contract
14 under subsection (d)(3) within not less
15 than 30 days before the effective date of
16 such termination.
17 ‘‘(c) DUTIES DESCRIBED.—The duties described in
18 this subsection are the following:
19 ‘‘(1) ADMINISTRATION OF PROGRAM.—Admin-
20 istering the program, including—

21 ‘‘(A) the determination of the amount of
22 the discounted price of an applicable drug of a
23 manufacturer;
24 ‘‘(B) the establishment of procedures
25 under which discounted prices are provided to
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626
1 applicable beneficiaries at pharmacies or by
2 mail order service at the point-of-sale of an ap-
3 plicable drug;
4 ‘‘(C) the establishment of procedures to
5 ensure that, not later than the applicable num-
6 ber of calendar days after the dispensing of an
7 applicable drug by a pharmacy or mail order
8 service, the pharmacy or mail order service is
9 reimbursed for an amount equal to the dif-
10 ference between—
11 ‘‘(i) the negotiated price of the appli-
12 cable drug; and
13 ‘‘(ii) the discounted price of the appli-
14 cable drug;
15 ‘‘(D) the establishment of procedures to
16 ensure that the discounted price for an applica-
17 ble drug under this section is applied before any
18 coverage or financial assistance under other
19 health benefit plans or programs that provide
20 coverage or financial assistance for the pur-
21 chase or provision of prescription drug coverage
22 on behalf of applicable beneficiaries as the Sec-
23 retary may specify; and
24 ‘‘(E) providing a reasonable dispute resolu-
25 tion mechanism to resolve disagreements be-
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1 tween manufacturers, applicable beneficiaries,
2 and the third party with a contract under sub-
3 section (d)(3).
4 ‘‘(2) MONITORING COMPLIANCE.—

6 monitor compliance by a manufacturer with the
7 terms of an agreement under this section.
8 ‘‘(B) NOTIFICATION.—If a third party
9 with a contract under subsection (d)(3) deter-
10 mines that the manufacturer is not in compli-
11 ance with such agreement, the third party shall
12 notify the Secretary of such noncompliance for
13 appropriate enforcement under subsection (e).
14 ‘‘(3) COLLECTION OF DATA FROM PRESCRIP-
15 TION DRUG PLANS AND MA–PD PLANS.—The Sec-

16 retary may collect appropriate data from prescrip-
17 tion drug plans and MA–PD plans in a timeframe
18 that allows for discounted prices to be provided for
19 applicable drugs under this section.
20 ‘‘(d) ADMINISTRATION.—
22 the Secretary shall provide for the implementation of
23 this section, including the performance of the duties
24 described in subsection (c).
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1 ‘‘(2) LIMITATION.—In providing for the imple-
2 mentation of this section, the Secretary shall not re-
3 ceive or distribute any funds of a manufacturer
4 under the program.
5 ‘‘(3) CONTRACT WITH THIRD PARTIES.—The
6 Secretary shall enter into a contract with 1 or more

7 third parties to administer the requirements estab-
8 lished by the Secretary in order to carry out this
9 section. At a minimum, the contract with a third
10 party under the preceding sentence shall require
11 that the third party—
12 ‘‘(A) receive and transmit information be-
13 tween the Secretary, manufacturers, and other
14 individuals or entities the Secretary determines
15 appropriate;
16 ‘‘(B) receive, distribute, or facilitate the
17 distribution of funds of manufacturers to ap-
18 propriate individuals or entities in order to
19 meet the obligations of manufacturers under
20 agreements under this section;
21 ‘‘(C) provide adequate and timely informa-
22 tion to manufacturers, consistent with the
23 agreement with the manufacturer under this
24 section, as necessary for the manufacturer to
25 fulfill its obligations under this section; and
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1 ‘‘(D) permit manufacturers to conduct
2 periodic audits, directly or through contracts, of
3 the data and information used by the third
4 party to determine discounts for applicable
5 drugs of the manufacturer under the program.
6 ‘‘(4) PERFORMANCE REQUIREMENTS.—The
7 Secretary shall establish performance requirements

8 for a third party with a contract under paragraph
9 (3) and safeguards to protect the independence and
10 integrity of the activities carried out by the third
11 party under the program under this section.
12 ‘‘(5) IMPLEMENTATION.—The Secretary may
13 implement the program under this section by pro-
14 gram instruction or otherwise.
15 ‘‘(6) ADMINISTRATION.—Chapter 35 of title 44,
16 United States Code, shall not apply to the program
17 under this section.
18 ‘‘(e) ENFORCEMENT.—
19 ‘‘(1) AUDITS.—Each manufacturer with an
20 agreement in effect under this section shall be sub-
21 ject to periodic audit by the Secretary.
22 ‘‘(2) CIVIL MONEY PENALTY.—
23 ‘‘(A) IN GENERAL.—The Secretary may

24 impose a civil money penalty on a manufacturer
25 that fails to provide applicable beneficiaries dis-
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630
1 counts for applicable drugs of the manufacturer
2 in accordance with such agreement for each
3 such failure in an amount the Secretary deter-
4 mines is equal to the sum of—
5 ‘‘(i) the amount that the manufac-
6 turer would have paid with respect to such
7 discounts under the agreement, which will
8 then be used to pay the discounts which
9 the manufacturer had failed to provide;
10 and
11 ‘‘(ii) 25 percent of such amount.
12 ‘‘(B) APPLICATION.—The provisions of
13 section 1128A (other than subsections (a) and
14 (b)) shall apply to a civil money penalty under
15 this paragraph in the same manner as such
16 provisions apply to a penalty or proceeding
17 under section 1128A(a).
18 ‘‘(f) CLARIFICATION REGARDING AVAILABILITY OF
19 OTHER COVERED PART D DRUGS.—Nothing in this sec-

20 tion shall prevent an applicable beneficiary from pur-
21 chasing a covered part D drug that is not an applicable
22 drug (including a generic drug or a drug that is not on
23 the formulary of the prescription drug plan or MA–PD
24 plan that the applicable beneficiary is enrolled in).
25 ‘‘(g) DEFINITIONS.—In this section:
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1 ‘‘(1) APPLICABLE BENEFICIARY.—The term
2 ‘applicable beneficiary’ means an individual who, on
3 the date of dispensing a covered part D drug—
4 ‘‘(A) is enrolled in a prescription drug plan
5 or an MA–PD plan;
6 ‘‘(B) is not enrolled in a qualified retiree
7 prescription drug plan; and
8 ‘‘(C) has incurred costs, as determined in
9 accordance with section 1860D–2(b)(4)(C), for
10 covered part D drugs in the year that exceed
11 the annual deductible with respect to such indi-
12 vidual for such year, as specified in section
13 1860D–2(b)(1), section 1860D–14(a)(1)(B), or
14 section 1860D–14(a)(2)(B), as applicable.
15 ‘‘(2) APPLICABLE DRUG.—The term ‘applicable
16 drug’, with respect to an applicable beneficiary—
17 ‘‘(A) means a covered part D drug—
18 ‘‘(i) approved under a new drug appli-
19 cation under section 505(c) of the Federal
20 Food, Drug, and Cosmetic Act or, in the
21 case of a biologic product, licensed under
22 section 351 of the Public Health Service
23 Act; and
24 ‘‘(ii)(I) if the PDP sponsor of the pre-
25 scription drug plan or the MA organization
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September 10, 2021 (9:59 p.m.)
632
1 offering the MA–PD plan uses a for-
2 mulary, which is on the formulary of the
3 prescription drug plan or MA–PD plan
4 that the applicable beneficiary is enrolled
5 in;
6 ‘‘(II) if the PDP sponsor of the pre-
7 scription drug plan or the MA organization
8 offering the MA–PD plan does not use a
9 formulary, for which benefits are available
10 under the prescription drug plan or MA–
11 PD plan that the applicable beneficiary is
12 enrolled in; or
13 ‘‘(III) is provided through an excep-
14 tion or appeal; and
15 ‘‘(B) does not include a selected drug (as
16 defined in section 1192(c)) during a price appli-
18 1191(b)(2)) with respect to such drug.
19 ‘‘(3) APPLICABLE NUMBER OF CALENDAR
20 DAYS.—The term ‘applicable number of calendar

21 days’ means—
22 ‘‘(A) with respect to claims for reimburse-
23 ment submitted electronically, 14 days; and
24 ‘‘(B) with respect to claims for reimburse-
25 ment submitted otherwise, 30 days.
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633
1 ‘‘(4) DISCOUNTED PRICE.—
2 ‘‘(A) IN GENERAL.—The term ‘discounted

3 price’ means, with respect to an applicable drug
4 of a manufacturer dispensed during a year to
5 an applicable beneficiary—
6 ‘‘(i) who has not incurred costs, as de-
7 termined in accordance with section
8 1860D–2(b)(4)(C), for covered part D
9 drugs in the year that are equal to or ex-
10 ceed the annual out-of-pocket threshold
11 specified in section 1860D–2(b)(4)(B)(i)
12 for the year, 90 percent of the negotiated
13 price of such drug; and
14 ‘‘(ii) who has incurred such costs, as
15 so determined, in the year that are equal
16 to or exceed such threshold for the year,
17 70 percent of the negotiated price of such
18 drug.
19 ‘‘(B) CLARIFICATION.—Nothing in this
20 section shall be construed as affecting the re-
21 sponsibility of an applicable beneficiary for pay-
22 ment of a dispensing fee for an applicable drug.
23 ‘‘(C) SPECIAL CASE FOR CERTAIN
24 CLAIMS.—
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September 10, 2021 (9:59 p.m.)
634
1 ‘‘(i) CLAIMS SPANNING DEDUCT-
2 IBLE.—In the case where the entire

3 amount of the negotiated price of an indi-
4 vidual claim for an applicable drug with re-
5 spect to an applicable beneficiary does not
6 fall above the annual deductible specified
7 in section 1860D–2(b)(1) for the year, the
8 manufacturer of the applicable drug shall
9 provide the discounted price under this
10 section on only the portion of the nego-
11 tiated price of the applicable drug that
12 falls above such annual deductible.
13 ‘‘(ii) CLAIMS SPANNING OUT-OF-POCK-
14 ET THRESHOLD.—In the case where the

15 entire amount of the negotiated price of an
16 individual claim for an applicable drug
17 with respect to an applicable beneficiary
18 does not fall entirely below or entirely
19 above the annual out-of-pocket threshold
20 specified in section 1860D–2(b)(4)(B)(i)
21 for the year, the manufacturer of the ap-
22 plicable drug shall provide the discounted
23 price—
24 ‘‘(I) in accordance with subpara-
25 graph (A)(i) on the portion of the ne-
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September 10, 2021 (9:59 p.m.)
635
1 gotiated price of the applicable drug
2 that falls below such threshold; and
3 ‘‘(II) in accordance with subpara-
4 graph (A)(ii) on the portion of such
5 price of such drug that falls at or
6 above such threshold.
7 ‘‘(5) MANUFACTURER.—The term ‘manufac-
8 turer’ means any entity which is engaged in the pro-
9 duction, preparation, propagation, compounding,
10 conversion, or processing of prescription drug prod-
11 ucts, either directly or indirectly by extraction from
12 substances of natural origin, or independently by
13 means of chemical synthesis, or by a combination of
14 extraction and chemical synthesis. Such term does
15 not include a wholesale distributor of drugs or a re-
16 tail pharmacy licensed under State law.
17 ‘‘(6) NEGOTIATED PRICE.—The term ‘nego-
18 tiated price’ has the meaning given such term in sec-
19 tion 423.100 of title 42, Code of Federal Regula-
20 tions (or any successor regulation), except that, with
21 respect to an applicable drug, such negotiated price
22 shall not include any dispensing fee for the applica-
23 ble drug.
24 ‘‘(7) QUALIFIED RETIREE PRESCRIPTION DRUG
25 PLAN.—The term ‘qualified retiree prescription drug
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September 10, 2021 (9:59 p.m.)
636
1 plan’ has the meaning given such term in section
2 1860D–22(a)(2).’’.
3 (2) SUNSET OF MEDICARE COVERAGE GAP DIS-
4 COUNT PROGRAM.—Section 1860D–14A of the So-

5 cial Security Act (42 U.S.C. 1395–114a) is amend-
6 ed—
7 (A) in subsection (a), in the first sentence,
8 by striking ‘‘The Secretary’’ and inserting
9 ‘‘Subject to subsection (h), the Secretary’’; and
11 subsection:
12 ‘‘(h) SUNSET OF PROGRAM.—
13 ‘‘(1) IN GENERAL.—The program shall not
14 apply with respect to applicable drugs dispensed on
15 or after January 1, 2024, and, subject to paragraph
16 (2), agreements under this section shall be termi-
17 nated as of such date.
18 ‘‘(2) CONTINUED APPLICATION FOR APPLICA-
19 BLE DRUGS DISPENSED PRIOR TO SUNSET.—The
20 provisions of this section (including all responsibil-

21 ities and duties) shall continue to apply after Janu-
22 ary 1, 2024, with respect to applicable drugs dis-
23 pensed prior to such date.’’.
24 (3) INCLUSION OF ACTUARIAL VALUE OF MANU-
25 FACTURER DISCOUNTS IN BIDS.—Section 1860D–11
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September 10, 2021 (9:59 p.m.)
637
1 of the Social Security Act (42 U.S.C. 1395w–111)
2 is amended—
3 (A) in subsection (b)(2)(C)(iii)—
4 (i) by striking ‘‘assumptions regarding
5 the reinsurance’’ and inserting ‘‘assump-
6 tions regarding—
7 ‘‘(I) the reinsurance’’; and
8 (ii) by adding at the end the fol-
9 lowing:
10 ‘‘(II) for 2024 and each subse-
11 quent year, the manufacturer dis-
12 counts provided under section 1860D–
13 14C subtracted from the actuarial
14 value to produce such bid; and’’; and
15 (B) in subsection (c)(1)(C)—
16 (i) by striking ‘‘an actuarial valuation
17 of the reinsurance’’ and inserting ‘‘an ac-
18 tuarial valuation of—
19 ‘‘(i) the reinsurance’’;
20 (ii) in clause (i), as inserted by clause
21 (i) of this subparagraph, by adding ‘‘and’’
22 at the end; and
24 lowing:
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September 10, 2021 (9:59 p.m.)
638
1 ‘‘(ii) for 2024 and each subsequent
2 year, the manufacturer discounts provided
3 under section 1860D–14C;’’.
5 (1) Section 1860D–2 of the Social Security Act
6 (42 U.S.C. 1395w–102) is amended—
7 (A) in subsection (a)(2)(A)(i)(I), by strik-
8 ing ‘‘, or an increase in the initial’’ and insert-
9 ing ‘‘or, for a year preceding 2024, an increase
10 in the initial’’;
11 (B) in subsection (c)(1)(C)—
12 (i) in the subparagraph heading, by
13 striking ‘‘AT INITIAL COVERAGE LIMIT’’;
14 and
15 (ii) by inserting ‘‘for a year preceding
16 2024 or the annual out-of-pocket threshold
17 specified in subsection (b)(4)(B) for the
18 year for 2024 and each subsequent year’’
19 after ‘‘subsection (b)(3) for the year’’ each
20 place it appears; and
21 (C) in subsection (d)(1)(A), by striking ‘‘or
22 an initial’’ and inserting ‘‘or, for a year pre-
23 ceding 2024, an initial’’.
24 (2) Section 1860D–4(a)(4)(B)(i) of the Social
25 Security Act (42 U.S.C. 1395w–104(a)(4)(B)(i)) is
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September 10, 2021 (9:59 p.m.)
639
1 amended by striking ‘‘the initial’’ and inserting ‘‘for
2 a year preceding 2024, the initial’’.
3 (3) Section 1860D–14(a) of the Social Security
4 Act (42 U.S.C. 1395w–114(a)) is amended—
5 (A) in paragraph (1)—
6 (i) in subparagraph (C), by striking
7 ‘‘The continuation’’ and inserting ‘‘For a
8 year preceding 2024, the continuation’’;
9 (ii) in subparagraph (D)(iii), by strik-
10 ing ‘‘1860D–2(b)(4)(A)(i)(I)’’ and insert-
11 ing ‘‘1860D–2(b)(4)(A)(i)(I)(aa)’’; and
12 (iii) in subparagraph (E), by striking
13 ‘‘The elimination’’ and inserting ‘‘For a
14 year preceding 2024, the elimination’’; and
15 (B) in paragraph (2)—
16 (i) in subparagraph (C), by striking
17 ‘‘The continuation’’ and inserting ‘‘For a
18 year preceding 2024, the continuation’’;
19 and
20 (ii) in subparagraph (E), by striking
21 ‘‘1860D–2(b)(4)(A)(i)(I)’’ and inserting
22 ‘‘1860D–2(b)(4)(A)(i)(I)(aa)’’.
23 (4) Section 1860D–21(d)(7) of the Social Secu-
24 rity Act (42 U.S.C. 1395w–131(d)(7)) is amended
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September 10, 2021 (9:59 p.m.)
640
1 by striking ‘‘section 1860D–2(b)(4)(B)(i)’’ and in-
2 serting ‘‘section 1860D–2(b)(4)(C)(i)’’.
3 (5) Section 1860D–22(a)(2)(A) of the Social
4 Security Act (42 U.S.C. 1395w–132(a)(2)(A)) is
5 amended—
6 (A) by striking ‘‘the value of any discount’’
7 and inserting the following: ‘‘the value of—
8 ‘‘(i) for years prior to 2024, any dis-
9 count’’;
10 (B) in clause (i), as inserted by subpara-
11 graph (A) of this paragraph, by striking the pe-
12 riod at the end and inserting ‘‘; and’’; and
14 clause:
15 ‘‘(ii) for 2024 and each subsequent
16 year, any discount provided pursuant to
17 section 1860D–14C.’’.
18 (6) Section 1860D–41(a)(6) of the Social Secu-
19 rity Act (42 U.S.C. 1395w–151(a)(6)) is amended—
20 (A) by inserting ‘‘for a year before 2024’’
21 after ‘‘1860D–2(b)(3)’’; and
22 (B) by inserting ‘‘for such year’’ before the
23 period.
24 (7) Section 1860D–43 of the Social Security
25 Act (42 U.S.C. 1395w–153) is amended—
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September 10, 2021 (9:59 p.m.)
641
1 (A) in subsection (a)—
2 (i) by striking paragraph (1) and in-
3 serting the following:
4 ‘‘(1) participate in—
5 ‘‘(A) for 2011 through 2023, the Medicare
6 coverage gap discount program under section
7 1860D–14A; and
8 ‘‘(B) for 2024 and each subsequent year,
9 the manufacturer discount program under sec-
10 tion 1860D–14C;’’;
11 (ii) by striking paragraph (2) and in-
13 ‘‘(2) have entered into and have in effect—
14 ‘‘(A) for 2011 through 2023, an agreement
15 described in subsection (b) of section 1860D–
16 14A with the Secretary; and
18 an agreement described in subsection (b) of sec-
19 tion 1860D–14C with the Secretary; and’’; and
20 (iii) by striking paragraph (3) and in-
22 ‘‘(3) have entered into and have in effect, under
23 terms and conditions specified by the Secretary—
24 ‘‘(A) for 2011 through 2023, a contract
25 with a third party that the Secretary has en-
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September 10, 2021 (9:59 p.m.)
642
1 tered into a contract with under subsection
2 (d)(3) of section 1860D–14A; and
4 a contract with a third party that the Secretary
5 has entered into a contract with under sub-
6 section (d)(3) of section 1860D–14C.’’; and
7 (B) by striking subsection (b) and insert-
8 ing the following:
9 ‘‘(b) EFFECTIVE DATE.—Paragraphs (1)(A), (2)(A),
10 and (3)(A) of subsection (a) shall apply to covered part
11 D drugs dispensed under this part on or after January
12 1, 2011, and before January 1, 2024, and paragraphs
13 (1)(B), (2)(B), and (3)(B) of such subsection shall apply
14 to covered part D drugs dispensed under this part on or
15 after January 1, 2024.’’.
16 (8) Section 1927 of the Social Security Act (42
17 U.S.C. 1396r–8) is amended—
18 (A) in subsection (c)(1)(C)(i)(VI), by in-
19 serting before the period at the end the fol-
20 lowing: ‘‘or under the manufacturer discount
21 program under section 1860D–14C’’; and
22 (B) in subsection (k)(1)(B)(i)(V), by in-
23 serting before the period at the end the fol-
24 lowing: ‘‘or under section 1860D–14C’’.
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September 10, 2021 (9:59 p.m.)
643
2 this section shall apply with respect to plan year 2024 and
3 subsequent plan years.
4 SEC. 139202. ALLOWING CERTAIN ENROLLEES OF PRE-
5 SCRIPTION DRUG PLANS AND MA–PD PLANS
6 UNDER MEDICARE PROGRAM TO SPREAD
7 OUT COST-SHARING UNDER CERTAIN CIR-
8 CUMSTANCES.
9 Section 1860D–2(b)(2) of the Social Security Act (42

10 U.S.C. 1395w–102(b)(2)), as amended by section 139201,
11 is further amended—
12 (1) in subparagraph (A), by striking ‘‘Subject
13 to subparagraphs (C) and (D)’’ and inserting ‘‘Sub-
14 ject to subparagraphs (C), (D), and (E)’’; and
16 paragraph:
17 ‘‘(E) ENROLLEE OPTION REGARDING
18 SPREADING COST-SHARING.—The Secretary

19 shall establish by regulation a process under
20 which, with respect to plan year 2024 and sub-
21 sequent plan years, a prescription drug plan or
22 an MA–PD plan shall, in the case of a part D
23 eligible individual enrolled with such plan for
24 such plan year who is not a subsidy eligible in-
25 dividual (as defined in section 1860D–14(a)(3))
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September 10, 2021 (9:59 p.m.)
644
1 and with respect to whom the plan projects that
2 the dispensing of the first fill of a covered part
3 D drug to such individual will result in the indi-
4 vidual incurring costs that are equal to or above
5 the annual out-of-pocket threshold specified in
6 paragraph (4)(B) for such plan year, provide
7 such individual with the option to make the co-
8 insurance payment required under subpara-
9 graph (A) (for the portion of such costs that
10 are not above such annual out-of-pocket thresh-
11 old) in the form of periodic installments over
12 the remainder of such plan year.’’.
13 PART 4—REPEAL OF CERTAIN PRESCRIPTION
14 DRUG REBATE RULE
15 SEC. 139301. PROHIBITING IMPLEMENTATION OF RULE RE-
16 LATING TO ELIMINATING THE ANTI-KICK-
17 BACK STATUTE SAFE HARBOR PROTECTION
18 FOR PRESCRIPTION DRUG REBATES.
19 Beginning January 1, 2026, the Secretary of Health

20 and Human Services shall not implement, administer, or
21 enforce the provisions of the final rule published by the
22 Office of the Inspector General of the Department of
23 Health and Human Services on November 30, 2020, and
24 titled ‘‘Fraud and Abuse; Removal of Safe Harbor Protec-
25 tion for Rebates Involving Prescription Pharmaceuticals
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September 10, 2021 (9:59 p.m.)
645
1 and Creation of New Safe Harbor Protection for Certain
2 Point-of-Sale Reductions in Price on Prescription Phar-
3 maceuticals and Certain Pharmacy Benefit Manager Serv-
4 ice Fees’’ (85 Fed. Reg. 76666).
◊
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September 10, 2021 (9:59 p.m.)

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G:\P\17\TAX\RECON2\MARKUP\SUBFGHJ.

COMMITTEE PRINT CONSISTING OF

1 Subtitle F—Infrastructure Financ-

5 Except as otherwise expressly provided, whenever in

12 Subpart A—Bond Financing

13 SEC. 135101. CREDIT TO ISSUER FOR CERTAIN INFRA-

15 (a) IN GENERAL.—Subchapter B of chapter 65 is

3 ‘‘(a) IN GENERAL.—In the case of a qualified infra-

9 purposes of subparagraph (A)—

18 applicable credit rate with respect to any

24 ‘‘(i) BONDS WITH MORE THAN DE

25 MINIMIS ORIGINAL ISSUE DISCOUNT.—In

7 ANTEED.—For purposes of section 149(b), a

12 RULES.—For purposes of section 148, the yield

22 COME.—For purposes of this title, interest on any

2 term ‘available project proceeds’ means—

12 ‘‘(A) IN GENERAL.—In the case of a bond

8 TION.—The applicable percentage with respect

12 RITY.—For purposes of subparagraph (A)(i),

16 QUIREMENTS WITH RESPECT TO QUALIFIED INFRA-

17 STRUCTURE BONDS.—Subchapter IV of chapter 31

25 SEQUESTRATION.—In the case of any payment under sec-

23 (d) EFFECTIVE DATE.—The amendments made by

2 (a) IN GENERAL.—Section 149(d) is amended—

11 issue is described in this paragraph if any bond

16 ‘‘(A) IN GENERAL.—An issue is described

18 ‘‘(i) ISSUER MUST REDEEM ONLY IF

19 DEBT SERVICE SAVINGS.—Clause (ii) and

2 BEFORE 90TH DAY.—For purposes of

8 An issue is described in this paragraph if any bond

18 GRAPH (3).—For purposes of paragraph (3), bonds

9 TEMPORARY PERIOD.—For purposes of

19 ISSUER EXCEPTION TO TAX-EXEMPT INTER-

20 EST EXPENSE ALLOCATION RULES FOR FI-

22 (a) PERMANENT INCREASE IN LIMITATION.—Sub-

10 AS ISSUED BY EXEMPT ORGANIZATION.—In the

18 ‘‘(i) IN GENERAL.—In the case of a

6 (a) MANUFACTURING FACILITIES TO INCLUDE PRO-

11 purposes of this paragraph—

5 CLUDED.—The term ‘manufacturing facil-

17 SPACE.—A rule similar to the rule of sec-

21 FOR CERTAIN PROPERTY.—Subclauses (II)

18 the case of any calendar year after 2021, the

11 PRIVATE ACTIVITY BOND RULES FOR FIRST-

13 (a) INCREASE IN DOLLAR LIMITATION.—

18 ITATION ON USED FARM EQUIPMENT.—Section

19 147(c)(2) is amended by striking subparagraph (F)

23 CONFORMED TO INCREASED DOLLAR LIMITATION.—

24 Section 144(a)(11)(A) is amended by striking

2 (A) IN GENERAL.—Section 147(c)(2)(G),

19 BASIS OF AVERAGE RATHER THAN MEDIAN FARM

2 BONDS EXEMPT FROM VOLUME CAP ON PRI-

3 VATE ACTIVITY BONDS.

4 (a) IN GENERAL.—Section 146(g) is amended by

6 (a) IN GENERAL.—Section 142 is amended—

15 TIONS, ETC.—The term ‘zero-emission vehicle infra-

6 TURE LOCATED WITHIN OTHER FACILITIES OR

7 PROJECTS.—For purposes of subsection (a), any

18 FOR FLEET VEHICLES.—Subparagraphs (D), (E),