Establishment of a tax on adjusted gross income

(a) In general Subtitle A of the Internal Revenue Code of 1986 is amended by inserting after chapter 2A the following new chapter: 2B Supplemental Individual Income Tax 1421. Supplemental tax on adjusted gross income (a) Imposition of tax In addition to the tax imposed by section 1, there is hereby imposed for each taxable year on the adjusted gross income (as defined in section 62) of every individual (other than an estate or trust) a tax equal to 2.5 percent of so much of the adjusted gross income of such individual as exceeds the exemption amount determined under subsection (b). (b) Exemption amount For purposes of this section, the term exemption amount means— (1) in the case of a joint return, $60,000, and (2) in any other case, one-half of the amount in paragraph (1). (c) Inflation adjustment (1) In general In the case of any taxable year beginning after 2026, the $60,000 amount in paragraph (1) of subsection (b) 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 2026 for 2016 in subparagraph (A)(ii) thereof. (2) Rounding If any increase determined under paragraph (1) is not a multiple of $100, such increase shall be rounded to the next lowest multiple of $100. (d) No offsetting credits or deductions (1) General rule After adjusted gross income (within the meaning of section 62) has been determined and reduced by the exemption amount in subsection (b), no other credit, deduction, exclusion, refund, rebate, or similar tax benefit may be applied to reduce the tax imposed by this section. (2) Prohibition on carryovers No unused amount of any credit or deduction disallowed under paragraph (1) may be carried forward or back to any other taxable year for purposes of offsetting the tax imposed by this section. (e) Regulations The Secretary shall prescribe such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this section, including rules for the withholding and estimated tax requirements attributable to the tax imposed by this section.. (b) Clerical amendment The table of chapters for subtitle A of the Internal Revenue Code of 1986 is amended by inserting after the item relating to chapter 2A the following new item: Chapter 2B. Supplemental individual income tax.. (c) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2025.