Expansion of earned income tax credit

(a) Decrease in phaseout percentage Section 32(b)(1) is amended to read as follows: (1) Percentages The credit percentage and phaseout percentage shall be determined as follows: In the case of an eligible individual with: The credit percentage is: The phaseout percentage is: 1 qualifying child 38 20 2 qualifying children 43 25 3 or more qualifying children 45 25 No qualifying children 30 (35 in the case of a joint return) 15. (b) Increase in maximum credit amount Section 32(b)(2) is amended to read as follows: (2) Amounts (B) Earned income amount The term earned income amount means— (i) in the case of an eligible individual with 1 qualifying child, $15,000, (ii) in the case of an individual with 2 or more qualifying children, $20,000, or (iii) in the case of an individual with no children— (I) in the case of a joint return, $10,000, or (II) in the case of any other individual, $8,500. (C) Phaseout amount The phaseout amount shall be— (i) $47,120 in the case of a joint return, or (ii) $40,000 in the case of any other individual.. (c) Conforming amendment Section 32(j)(1) is amended to read as follows: (1) In general In the case of any taxable year beginning after 2027 (2021 in the case of the dollar amount in subsection (i)(1)), each of the dollar amounts in subsections (b)(2) and (i)(1) shall be increased by an amount equal to— (A) such dollar amount, multiplied by (B) The cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting in subparagraph (A)(ii) thereof— (i) in the case of amounts in subsection (b)(2), calendar year 2026 for calendar year 2016, and (ii) in the case of the $10,000 amount in subsection (i)(1), calendar year 2020 for calendar year 2016.. (d) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2026.