H.R.557 - Working Class Bonus Tax Relief Act of 2025 (119th Congress)
Summary
H.R. 557, the "Working Class Bonus Tax Relief Act of 2025," proposes an amendment to the Internal Revenue Code of 1986. The bill introduces a deduction for bonuses received by individuals, capped at 15% of their non-bonus wages. This deduction is subject to income limitations based on filing status, and it terminates after December 31, 2029.
Expected Effects
The bill aims to provide tax relief to the working class by allowing a deduction for bonuses. This could increase disposable income for eligible individuals. The changes would also necessitate modifications to withholding tables and procedures by the Secretary of the Treasury.
Potential Benefits
- Provides a tax deduction for bonuses, potentially increasing disposable income for eligible individuals.
- Targets working-class individuals with income limitations, focusing benefits on those with lower to middle incomes.
- Simplifies tax filing for non-itemizers by allowing the bonus deduction.
- Could incentivize employers to offer bonuses, potentially boosting employee morale and productivity.
- The bill is set to expire in 2029, allowing for future reevaluation of its effectiveness.
Potential Disadvantages
- The deduction is capped at 15% of non-bonus wages, limiting the potential tax relief for some individuals.
- Income limitations exclude higher-income earners from benefiting from the deduction.
- The deduction is temporary, expiring after December 31, 2029, creating uncertainty for taxpayers.
- May add complexity to tax preparation for some individuals, despite aiming to simplify for non-itemizers.
- Could create disparities between those who receive bonuses and those who do not.
Constitutional Alignment
The bill aligns with the constitutional power of Congress to lay and collect taxes, as outlined in Article I, Section 8, Clause 1. It aims to "provide for the general Welfare" of the United States, as stated in the Preamble. The bill does not appear to infringe upon any specific constitutional rights or limitations.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).