Temporary special rule for determination of earned income

(a) In general In the case of a qualified individual, if the earned income of a taxpayer for the taxpayer’s first taxable year beginning in 2025 is less than the earned income of the taxpayer for the preceding taxable year, the credits allowed under sections 24(d) and 32 of the Internal Revenue Code of 1986 may, at the election of the taxpayer, be determined by substituting— (1) such earned income for the preceding taxable year, for (2) such earned income for the taxpayer’s first taxable year beginning in 2025. (b) Qualified individual For purposes of this section, the term qualified individual means any individual whose principal place of abode at any time during the incident period of any qualified disaster was located— (1) in the qualified disaster zone with respect to such qualified disaster, or (2) in the qualified disaster area with respect to such qualified disaster (but outside the qualified disaster zone with respect to such qualified disaster) and such individual was displaced from such principal place of abode by reason of such qualified disaster. (c) Earned income For purposes of this section, the term earned income has the meaning given such term in section 32(c) of such Code. (d) Special rules (1) Application to joint returns For purposes of subsection (a), in the case of a joint return for the taxpayer’s first taxable year beginning in 2025— (A) such subsection shall apply if either spouse is a qualified individual, and (B) the earned income of the taxpayer for the preceding taxable year shall be the sum of the earned income of each spouse for such preceding taxable year. (2) Errors treated as mathematical or clerical error For purposes of section 6213 of such Code, an incorrect use on a return of earned income pursuant to subsection (a) shall be treated as a mathematical or clerical error. (3) No effect on determination of gross income, etc Except as otherwise provided in this section, the Internal Revenue Code of 1986 shall be applied without regard to any substitution under subsection (a).