Surcharge on high income individuals

(a) In general Subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new part: VIII Surcharge on high income individuals Sec. 59B. Surcharge on high income individuals. 59B. Surcharge on high income individuals (a) General rule In the case of a taxpayer other than a corporation, there is hereby imposed (in addition to any other tax imposed by this subtitle) a tax equal to the sum of— (1) 5 percent of so much of the modified adjusted gross income of the taxpayer as exceeds $1,000,000, but does not exceed $2,000,000, (2) 10 percent of so much of the modified adjusted gross income of the taxpayer as exceeds $2,000,000, but does not exceed $5,000,000, plus (3) 12 percent of so much of the modified adjusted gross income of the taxpayer as exceeds $5,000,000. (b) Inflation adjustment (1) In general In the case of any taxable year beginning after 2026, subsection (a) shall be applied by substituting each dollar amount in such subsection with an amount equal to the product of— (A) such dollar amount (as determined without regard to this subsection), multiplied by (B) an amount equal to the ratio of— (i) the CPI–U for the calendar year preceding the calendar year in which such taxable year begins, to (ii) the CPI–U for the calendar year preceding the calendar year of the date of enactment of the Working Americans’ Tax Cut Act. (2) CPI–U For purposes of this subsection, the term CPI–U means, when used with respect to a calendar year, the Consumer Price Index for all urban consumers, as published by the Bureau of Labor Statistics, for September of such year. (c) Taxpayers making a joint return In the case of any taxpayer filing a joint return under section 6013, subsection (a) shall be applied (after the application of subsection (b)) by increasing each of the dollar amounts by an amount equal to 50 percent of such dollar amount. (d) Modified adjusted gross income For purposes of this section, the term modified adjusted gross income means adjusted gross income reduced by any deduction (not taken into account in determining adjusted gross income) allowed for investment interest (as defined in section 163(d)). In the case of an estate or trust, adjusted gross income shall be determined as provided in section 67(e). (e) Special rules (1) Citizens and residents living abroad The dollar amount in effect under subsection (a) (after the application of subsections (b) and (c)) shall be decreased by the excess of— (A) the amounts excluded from the taxpayer’s gross income under section 911, over (B) the amounts of any deductions or exclusions disallowed under section 911(d)(6) with respect to the amounts described in subparagraph (A). (2) Charitable trusts Subsection (a) shall not apply to a trust all the unexpired interests in which are devoted to one or more of the purposes described in section 170(c)(2)(B). (3) Not treated as tax imposed by this chapter for certain purposes The tax imposed under this section shall not be treated as tax imposed by this chapter for purposes of determining the amount of any credit under this chapter or for purposes of section 55.. (b) Clerical amendment The table of parts for subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new item: Part VIII—Surcharge on high income individuals. (c) Section 15 not To apply The amendment made by subsection (a) shall not be treated as a change in a rate of tax for purposes of section 15 of the Internal Revenue Code of 1986. (d) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2025.