Overview
Title
To amend the Internal Revenue Code of 1986 to provide a refundable credit for certain home accessibility improvements.
ELI5 AI
H.R. 7393 is a plan to help people make their homes more accessible for those with disabilities by giving money back through a tax credit, up to a certain limit, for things like adding ramps and widening doorways.
Summary AI
H. R. 7393 proposes changes to the Internal Revenue Code to offer a refundable tax credit for expenses related to making homes more accessible for people with disabilities. The bill allows individuals to claim a credit of 35% for qualified accessibility improvement expenses, up to a limit of $15,000, with certain income-based reductions. It defines what constitutes eligible improvements, such as installing ramps and widening doorways, and outlines who qualifies to use this credit, including those entitled to specific disability or pension benefits. The bill also mandates the Secretary of the Treasury to update and publicize the list of qualifying improvements and includes provisions for outreach to notify the public about the credit.
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AnalysisAI
Overview of H.R. 7393
H.R. 7393 is a proposed bill introduced in the House of Representatives aiming to amend the Internal Revenue Code by offering a refundable tax credit for home accessibility improvements. The credit is set to cover 35% of the expenses incurred by individuals making modifications to their homes to improve accessibility for disabled or aged persons. The goal is to provide financial support to those undertaking construction or modifications, such as installing ramps, widening doorways, or making bathrooms more accessible, with a maximum eligible claim of $15,000 per taxpayer. The provisions will apply to taxable years starting after December 31, 2025.
Significant Issues
One of the major concerns revolves around the complexity of the bill language, particularly in determining the income limitation and modified adjusted gross income. This could cause confusion for taxpayers lacking financial expertise. Furthermore, the requirement for 'disability certification' involves intricate processes and additional paperwork, which might create barriers for individuals seeking to claim this tax credit.
There is also potential criticism concerning fairness in geographic regions with varying costs of living, as high-income individuals may see their credits reduced or nullified. Additionally, the outreach strategies for informing eligible taxpayers about these benefits are inadequately detailed, which could result in a limited impact among the intended audience. Finally, concerns arise over the possibility of claiming double benefits, necessitating clearer instructions for proper compliance.
Broad Public Impact
The bill could broadly benefit homeowners willing to make their living spaces more accessible, thereby promoting inclusivity and enhancing the quality of life for individuals with disabilities or those who are elderly. This initiative can lead to increased independence for these individuals by facilitating easier movement within their homes.
However, the complexity and precision required to navigate the tax code amendments could deter some from taking advantage of the benefits offered. Simplifying these processes or providing additional guidance may be necessary to ensure broad participation.
Impact on Specific Stakeholders
Homeowners with Disabilities or Elderly Individuals: This group stands to gain the most from the bill, both in terms of financial relief for accessibility improvements and it enhancing their living conditions.
Healthcare Providers: Physicians required to provide disability certifications could face increased administrative burdens. Without adequate compensation or resources to manage this workload, there could be delays or hindrances in certifying patients for tax credit eligibility.
High-Income Individuals in High Cost-of-Living Areas: There is a potential negative impact on this demographic as they may feel the income thresholds and phaseouts are inequitable, especially if the cost of making homes accessible is proportionally higher in more expensive locales.
Tax and Legal Professionals: These professionals are likely to see an increase in demand for their services as taxpayers seek help in understanding and claiming the new credits. While this is a positive for their industry, it could amplify the perception that tax laws are overly complex.
In conclusion, while H.R. 7393 offers progressive steps towards enhancing home accessibility, it could benefit from addressing the identified complexities and potential inequities to maximize its intended benefits. Clear, accessible information and support may be crucial in ensuring that the advantages are widely realized across all eligible segments of the population.
Financial Assessment
The bill H.R. 7393 focuses on providing a refundable tax credit for certain home accessibility improvements. This legislation includes several key financial references and limitations, which are crucial to understanding its potential implications and challenges.
Financial Allocations and Spending
The primary financial aspect of the bill is the introduction of a refundable tax credit that amounts to 35% of the costs associated with making homes more accessible for individuals with disabilities. This credit is aimed at specific improvements, such as installing ramps, zero-step entrances, and other modifications designed to enhance accessibility in a person's principal residence.
However, there is a dollar limitation on the amount an individual can claim each tax year. The maximum cumulative expenditure eligible for the credit is $15,000. This cap ensures that while the credit provides significant support for necessary home modifications, it does not cover excessively large-scale projects or repeated improvements over subsequent years in excess of this amount.
Income Limitations and Equity Concerns
Further complicating the financial landscape, the bill includes an income limitation that scales the credit based on a taxpayer's modified adjusted gross income (MAGI). The term "applicable threshold amount" dictates reductions in credit based on income levels: $400,000 for joint returns or surviving spouses, and $200,000 for heads of households and other cases. There is also a phaseout range of $100,000, $75,000, or $50,000 depending on filing status. These limitations could disproportionately affect those residing in high-cost living areas, raising issues of equity in how benefits are distributed.
Inflation Adjustment
The bill seeks to incorporate an inflation adjustment mechanism. This means the maximum credit amount and income limitation thresholds will rise over time according to the cost-of-living adjustments. While intended to keep the credit effective over time, the technical language of this section can be complex, potentially causing misunderstandings about how these financial limits will change, impacting public perception and potential use of the credit.
Challenges with Compliance and Administration
The requirement for a disability certification poses potential administrative challenges. This certification from a physician, necessary to claim the credit, might create additional hurdles. This could lead to difficulties for individuals who qualify under the tax provisions, highlighting a need for clarity and support to reach the intended beneficiaries.
Furthermore, the bill restricts the eligibility for double benefits. Taxpayers must be careful to not claim the same expenditures for multiple tax benefits in the same year, contributing to the taxpayer's compliance burden and necessitating clear instructions to prevent fraudulent claims.
Use of "Reasonable Amounts"
The bill specifies that only "reasonable amounts" spent on improvements will be eligible for the tax credit. However, without explicit criteria defining what constitutes a "reasonable amount," taxpayers might face inconsistencies or difficulties in claiming their rights under this provision. Clearer guidelines would be beneficial to avoid misuse and to assist taxpayers in understanding what expenses qualify.
In summary, while H.R. 7393 provides helpful financial support through a tax credit for home accessibility improvements, the complexities around income limits, inflation adjustments, and compliance requirements could limit its effectiveness and reach. These elements will need careful management to ensure the intended support reaches those who need it most without imposing excessive administrative burdens.
Issues
The complexity and potential confusion surrounding the calculation of the income limitation as described in Section 36C(b)(2), which could make it difficult for average taxpayers to understand without financial expertise. This includes how the modified adjusted gross income is determined and the use of financial thresholds and phaseout ranges.
The inflation adjustment mechanism outlined in Section 1(e)(1) and Section 36C uses technical tax language difficult for a general audience, potentially leading to misunderstandings about how tax credits will increase over time, affecting public perception and application.
The requirement for 'disability certification' as outlined in Section 36C(c)(2) could impose additional burdens on both taxpayers and healthcare providers, potentially creating barriers for individuals with disabilities seeking to claim the credit due to administrative challenges.
The outreach strategy described in Section 1(e) lacks specific implementation details, which raises concerns about the effectiveness of ensuring that the eligible population is aware of and can access this tax credit, thus potentially limiting its intended impact.
High-income taxpayers face reductions in credit eligibility based on their income in Section 36C(b)(2), which could disproportionately affect individuals in higher cost-of-living areas, sparking debates about equity and fairness in tax benefits distribution.
The potential for claimants to receive double benefits as highlighted in Section 1(e)(3) might necessitate clearer instructions to ensure compliance and prevent fraud, which is crucial for maintaining the integrity of the tax system.
The lack of explicit criteria for 'reasonable amounts' in Section 36C(d)(1) regarding qualified home accessibility improvement expenditures may lead to inconsistencies or misinterpretations in claims, necessitating clearer guidelines to avoid misuse.
Ambiguity in the language used in Section 36C(d)(2)(G) about unspecified 'such other improvements' as designated by the Secretary introduces potential for favoritism or unpredictable policy shifts, warranting more concrete definitions to prevent arbitrary decisions.
The provision in Section 1 regarding the documentation and substantiation of eligibility could impose a substantial burden on taxpayers, suggesting a need for clarification on acceptable substantiation forms to facilitate compliance without overwhelming individuals.
Sections
Sections are presented as they are annotated in the original legislative text. Any missing headers, numbers, or non-consecutive order is due to the original text.
1. Refundable tax credit for certain home accessibility improvements Read Opens in new tab
Summary AI
The discussed section proposes a refundable tax credit for individuals who make home improvements to make their living spaces more accessible for people with disabilities. This credit covers 35% of the improvement costs with specific income and expenditure limits, and includes various qualifying improvements like installing ramps and widening doors; it's set to apply starting in 2026.
Money References
- “(b) Limitations.— “(1) DOLLAR LIMITATION.—The aggregate amount of qualified home accessibility improvement expenditures taken into account under subsection (a) by any taxpayer for any taxable year shall not exceed the excess (if any) of— “(A) $15,000, over “(B) the aggregate amount of such expenditures so taken into account for all prior taxable years.
- “(B) APPLICABLE THRESHOLD AMOUNT.—For purposes of this paragraph, the term ‘applicable threshold amount’ means, with respect to any taxpayer— “(i) $400,000, in the case of a joint return or surviving spouse (as defined in section 2), “(ii) $200,000, in the case of a head of household, and “(iii) $200,000, in any other case.
- , the term ‘applicable phaseout range’ means, with respect to any taxpayer— “(i) $100,000, in the case of a joint return or surviving spouse (as defined in section 2), “(ii) $75,000, in the case of a head of household, and “(iii) $50,000, in any other case.
- — “(1) INFLATION ADJUSTMENT.—In the case of any taxable year beginning in a calendar year after 2023, each of the dollar amounts in subsections (b)(1)(A), (b)(2)(B), and (b)(2)(C) 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 ‘calendar year 2022’ for ‘calendar year 2016’ in subparagraph (A)(ii) thereof.
- Any increase determined under the preceding sentence which is not a multiple of $50 shall be rounded to the nearest multiple of $50.
36C. Credit for certain home accessibility improvements Read Opens in new tab
Summary AI
In this section, individuals can get a tax credit for 35% of the money they spend on improvements to make their homes more accessible for people with disabilities, with a cap of $15,000. However, the credit amount decreases for individuals with higher income levels and is unavailable to those filing separately if married.
Money References
- (b) Limitations.— (1) DOLLAR LIMITATION.—The aggregate amount of qualified home accessibility improvement expenditures taken into account under subsection (a) by any taxpayer for any taxable year shall not exceed the excess (if any) of— (A) $15,000, over (B) the aggregate amount of such expenditures so taken into account for all prior taxable years. (2) INCOME LIMITATION.
- (B) APPLICABLE THRESHOLD AMOUNT.—For purposes of this paragraph, the term “applicable threshold amount” means, with respect to any taxpayer— (i) $400,000, in the case of a joint return or surviving spouse (as defined in section 2), (ii) $200,000, in the case of a head of household, and (iii) $200,000, in any other case.
- (C) APPLICABLE PHASEOUT RANGE.—For purposes of this paragraph, the term “applicable phaseout range” means, with respect to any taxpayer— (i) $100,000, in the case of a joint return or surviving spouse (as defined in section 2), (ii) $75,000, in the case of a head of household, and (iii) $50,000, in any other case.
- — (1) INFLATION ADJUSTMENT.—In the case of any taxable year beginning in a calendar year after 2023, each of the dollar amounts in subsections (b)(1)(A), (b)(2)(B), and (b)(2)(C) 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 “calendar year 2022” for “calendar year 2016” in subparagraph (A)(ii) thereof. Any increase determined under the preceding sentence which is not a multiple of $50 shall be rounded to the nearest multiple of $50.