H.R. 2534: Paying a Fair Share Act of 2025

This bill, titled the Paying a Fair Share Act of 2025, proposes changes to the federal tax system aimed at ensuring that high-income earners contribute a fairer share of taxes. Here is a breakdown of the key components of the bill:

1. Introduction of the Fair Share Tax

The bill introduces a new tax, referred to as the Fair Share Tax, specifically targeting high-income taxpayers. This is an additional tax imposed on individuals with an adjusted gross income exceeding $1,000,000, which will be effective for taxable years beginning after December 31, 2024.

2. Calculation of the Fair Share Tax

The Fair Share Tax will be calculated based on the following methodology:

• Taxpayers must determine their adjusted gross income and identify the amount exceeding $1,000,000.
• The tax rate is set at 30% applied to the excess of adjusted gross income over a modified charitable contribution deduction for the taxable year.
• The calculation will involve determining a tentative fair share tax and adjusting it against the regular tax liabilities and allowable credits.

3. Definitions

The bill defines a high-income taxpayer as any individual (excluding corporations) who earns more than $1,000,000 in adjusted gross income. For married individuals filing separately, this threshold is set at $500,000. Additionally, the income threshold may be adjusted for inflation starting from 2025.

4. Additional Provisions

• The Fair Share Tax is not considered a standard tax when determining eligibility for certain tax credits.
• The payroll tax calculation would be taken into account as part of the overall tax obligations of individuals subject to this new tax.
• Estates and trusts are also included under these tax provisions, with specific rules for how adjusted gross income is calculated for them.

5. Sense of the House

The bill expresses the intent of the House of Representatives that tax reform should focus on eliminating unfair tax loopholes and making the tax system simpler for taxpayers and businesses. It positions this act as a necessary step towards broader tax reform aimed at ensuring high-income individuals pay their fair share.

6. Implementation Timeline

The amendments and provisions outlined in this bill would come into effect for taxable years beginning after December 31, 2024.

Relevant Companies

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