H.R. 9031

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 9031 Introduced in House (IH)]

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119th CONGRESS
2d Session
H. R. 9031

To amend the Internal Revenue Code of 1986 to establish a refundable 
young adult tax credit with monthly advance payment.

_______________________________________________________________________

IN THE HOUSE OF REPRESENTATIVES

May 26, 2026

Mr. McGarvey (for himself, Mr. Casar, Mrs. Watson Coleman, Mr. Garcia 
of California, Ms. Tlaib, and Ms. Norton) introduced the following 
bill; which was referred to the Committee on Ways and Means

_______________________________________________________________________

A BILL

To amend the Internal Revenue Code of 1986 to establish a refundable 
young adult tax credit with monthly advance payment.

Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the ``Young Adult Tax Credit Act''.

SEC. 2. ESTABLISHMENT OF REFUNDABLE YOUNG ADULT TAX CREDIT WITH MONTHLY 
ADVANCE PAYMENT.

(a) In General.--Subpart A of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by inserting after 
section 24 the following new sections:

``SEC. 24A. MONTHLY YOUNG ADULT TAX CREDIT.

``(a) Allowance of Credit.--There shall be allowed as a credit 
against the tax imposed by this chapter for the taxable year the sum of 
the monthly specified young adult allowances determined with respect to 
the taxpayer under subsection (b) for each calendar month during such 
taxable year.
``(b) Monthly Specified Young Adult Allowance.--
``(1) In general.--For purposes of this section, the term 
`monthly specified young adult allowance' means the sum of $500 
for each taxpayer or dependent of the taxpayer who is a 
specified young adult for any calendar month.
``(2) Monthly specified young adult allowance.--In the case 
of any month beginning after December 31, 2027, the $500 amount 
in paragraph (1) shall be increased by an amount equal to--
``(A) such dollar amount, multiplied by
``(B) the percentage (if any) by which--
``(i) the CPI (as defined in section 
1(f)(4)) for the calendar year preceding the 
calendar year in which such month begins, 
exceeds
``(ii) the CPI (as so defined) for calendar 
year 2027.
``(c) Specified Young Adult.--The term `specified young adult' 
means an individual--
``(1) who, as of the close of such month, is at least 18 
and will not have attained age 25, and
``(2) who either is a citizen, national, or resident of the 
United States.
``(d) Denial of Credit to Dependents.--No credit shall be allowed 
under this section to any individual with respect to whom a deduction 
under section 151 is allowable to another taxpayer for a taxable year 
beginning in the calendar year in which such individual's taxable year 
begins.
``(e) Credit Refundable.--If the taxpayer (in the case of a joint 
return, either spouse) has a principal place of abode (determined as 
provided in section 32) in the United States or Puerto Rico for more 
than one-half of any calendar month during the taxable year, so much of 
the credit otherwise allowed under subsection (a) as is attributable to 
monthly specified young adult allowances with respect to any such 
calendar month shall be allowed under subpart C (and not allowed under 
this subpart).
``(f) Identification Requirements.--
``(1) Dependent identification requirement.--No credit 
shall be allowed under this section to a taxpayer with respect 
to any dependent unless the taxpayer includes the name and 
taxpayer identification number of such dependent on the return 
of tax for the taxable year and such taxpayer identification 
number was issued on or before the due date for filing such 
return.
``(2) Taxpayer identification requirement.--No credit shall 
be allowed under this section if the taxpayer identification 
number of the taxpayer was issued after the due date for filing 
the return for the taxable year.
``(g) Reconciliation of Credit and Monthly Advance Young Adult 
Payments.--
``(1) In general.--The amount otherwise determined under 
subsection (a) with respect to any taxpayer for any taxable 
year shall be reduced (but not below zero) by the aggregate 
amount of payments made under section 7527B to such taxpayer 
for one or more calendar months in such taxable year. Any 
failure to so reduce the credit shall be treated as arising out 
of a mathematical or clerical error and assessed according to 
section 6213(b)(1).
``(2) Recapture of excess advance payments in certain 
circumstances.--In the case of a taxpayer described in 
paragraph (3) for any taxable year, the tax imposed by this 
chapter for such taxable year shall be increased by the excess 
(if any) of--
``(A) the aggregate amount of payments made to the 
taxpayer under section 7527B for one or more calendar 
months in such taxable year, over
``(B) the amount determined under subsection (a) 
with respect to the taxpayer for such taxable year 
(without regard to paragraph (1) of this subsection).
``(3) Taxpayers subject to recapture.--
``(A) Fraud or reckless or intentional disregard of 
rules and regulations.--A taxpayer is described in this 
paragraph with respect to any taxable year if the 
Secretary determines that the amount described in 
paragraph (2)(A) with respect to the taxpayer for such 
taxable year was determined on the basis of fraud or a 
reckless or intentional disregard of rules and 
regulations.
``(B) Certain payments made after notice from 
secretary.--If the Secretary notifies a taxpayer under 
section 7527B(e)(2) that such taxpayer is subject to 
recapture with respect to any payments--
``(i) such taxpayer shall be treated as 
described in this paragraph, and
``(ii) the increase determined under 
paragraph (2) by reason of this subparagraph 
shall not exceed the aggregate amount of such 
payments.
``(C) Other circumstances to prevent abuse.--A 
taxpayer is described in this paragraph with respect to 
any taxable year pursuant to regulations or other 
guidance of the Secretary describing other recapture 
circumstances to facilitate the administration and 
enforcement by the Secretary of section 7527B to 
minimize the amount of advance payments made under 
section 7527B to ineligible individuals and to prevent 
abuse.
``(4) Coordination with possessions of the united states.--
For purposes of this subsection, payments made under section 
7527B include payments made by any jurisdiction other than the 
United States under section 7527B of the income tax law of such 
jurisdiction, and advance payments made by American Samoa 
pursuant to a plan described in subsection (e)(3)(B). Any 
increase in tax imposed on a taxpayer by reason of paragraph 
(2) of the income tax law of a jurisdiction other than the 
United States shall be considered to reduce the aggregate 
amount of payments made to such taxpayer by such jurisdiction. 
In carrying out this section, the Secretary shall coordinate 
with each possession of the United States to prevent any 
application of this paragraph that is inconsistent with the 
purposes of this subsection.
``(h) Application of Credit in Possessions.--
``(1) Mirror code possessions.--
``(A) In general.--The Secretary shall pay to each 
possession of the United States with a mirror code tax 
system amounts equal to the loss (if any) to that 
possession by reason of the application of this section 
(determined without regard to this subsection) with 
respect to taxable years beginning in calendar years 
after 2026. Such amounts shall be determined by the 
Secretary based on information provided by the 
government of the respective possession.
``(B) Coordination with credit allowed against 
united states income taxes.--No credit shall be allowed 
under this section for any taxable year to any 
individual to whom a credit is allowable against taxes 
imposed by a possession of the United States with a 
mirror code tax system by reason of the application of 
this section in such possession for such taxable year.
``(C) Mirror code tax system.--For purposes of this 
paragraph, the term `mirror code tax system' means, 
with respect to any possession of the United States, 
the income tax system of such possession if the income 
tax liability of the residents of such possession under 
such system is determined by reference to the income 
tax laws of the United States as if such possession 
were the United States.
``(2) Cross references related to application of credit to 
residents of puerto rico.--
``(A) For application of refundable credit to 
residents of Puerto Rico, see subsection (d).
``(B) For application of advance payment to 
residents of Puerto Rico, see section 7527B(b)(2).
``(3) American samoa.--
``(A) In general.--The Secretary shall pay to 
American Samoa amounts estimated by the Secretary as 
being equal to the aggregate benefits that would have 
been provided to residents of American Samoa by reason 
of the application of this section for taxable years 
beginning in calendar years after 2026 if the 
provisions of this section had been in effect in 
American Samoa (applied as if American Samoa were the 
United States and without regard to the application of 
this section to residents of Puerto Rico under 
subsection (d)).
``(B) Distribution requirement.--Subparagraph (A) 
shall not apply unless American Samoa has a plan, which 
has been approved by the Secretary, under which 
American Samoa will promptly distribute such payments 
to its residents.
``(C) Coordination with credit allowed against 
united states income taxes.--
``(i) In general.--In the case of a taxable 
year with respect to which a plan is approved 
under subparagraph (B), this section (other 
than this subsection) shall not apply to any 
individual eligible for a distribution under 
such plan.
``(ii) Application of section in event of 
absence of approved plan.--In the case of a 
taxable year with respect to which a plan is 
not approved under subparagraph (B), subsection 
(d) shall be applied by substituting `, Puerto 
Rico, or American Samoa' for `or Puerto Rico'.
``(4) Treatment of payments.--For purposes of section 1324 
of title 31, United States Code, the payments under this 
subsection shall be treated in the same manner as a refund due 
from a credit provision referred to in subsection (b)(2) of 
such section.
``(i) Regulations.--The Secretary shall issue such regulations or 
other guidance as the Secretary determines necessary or appropriate to 
carry out the purposes of this section.''.
(b) Monthly Payment of Young Adult Tax Credit.--Chapter 77 of such 
Code is amended by inserting after section 7527A the following new 
section:

``SEC. 7527B. MONTHLY PAYMENTS OF YOUNG ADULT TAX CREDIT.

``(a) In General.--The Secretary shall establish a program for 
making payments to taxpayers with respect to each calendar month equal 
to the monthly advance young adult payment determined with respect to 
such taxpayer for such month.
``(b) Monthly Advance Young Adult Payment.--
``(1) In general.--For purposes of this section and except 
as otherwise provided in this section, the term `monthly 
advance young adult payment' means, with respect to any 
taxpayer for any calendar month, the amount (if any) which is 
estimated by the Secretary as being equal to the monthly 
specified young adult allowance which would be determined under 
section 24A(b) with respect to such taxpayer for such calendar 
month.
``(2) Residence requirement.--Unless determined by the 
Secretary based on any information known to the Secretary, no 
monthly specified young adult allowance shall be determined 
with respect to such taxpayer for a calendar month unless the 
taxpayer (in the case of a joint return, either spouse) has a 
principal place of abode (determined as provided in section 32) 
in the United States or Puerto Rico for more than one-half of 
the month.
``(c) On-Line Information Portal.--
``(1) On-line information portal.--The Secretary shall 
establish an on-line portal which allows taxpayers to--
``(A) subject to such restrictions as the Secretary 
may provide, elect to begin or cease receiving payments 
under this section,
``(B) provide information to the Secretary which is 
relevant in determining the monthly advance young adult 
payment and the taxpayer's eligibility for such 
payment, including changes in expected dependent status 
for the following tax year, and
``(C) subject to such restrictions as the Secretary 
may provide, elect to begin or cease an annual lump sum 
in lieu of monthly payments.
``(2) Availability in multiple languages.--The Secretary 
shall ensure that the on-line portal described in paragraph (1) 
is available in multiple languages.
``(3) Administration.--The Secretary shall identify and 
allocate the resources necessary to administer the on-line 
portal described in paragraph (1) and will create an internal 
review process to ensure the portal is frequently updated for 
efficiency, accuracy, and ease-of-use.
``(4) Mobile device compatibility.--The on-line portal 
described in paragraph (1) shall be compatible with mobile 
devices.
``(5) Determination of dependent status for purposes of 
advance payment.--
``(A) In general.--For purposes of determining the 
recipient of any monthly advance young adult payment 
under this section, a specified young adult shall be 
treated as a dependent of a taxpayer if such young 
adult was claimed as a dependent of the taxpayer on the 
return of tax filed by such taxpayer for the reference 
year.
``(B) Reference year.--The term `reference year' 
means, with respect to any taxpayer for any calendar 
year, the most recent of--
``(i) in the case of a taxpayer who filed a 
return of tax for the last taxable year ending 
before the taxable year in which a payment is 
made, such taxable year, or
``(ii) in the case of a taxpayer who filed 
a return of tax for the taxable year preceding 
the taxable year described in subparagraph (A), 
such preceding taxable year.
``(C) Resolution of multiple claims relating to 
same dependent.--In the case of multiple returns of tax 
claiming a payment with respect to the same specified 
young adult as a result of a change in dependent 
status, the Secretary shall--
``(i) establish procedures under which the 
Secretary expeditiously adjudicates taxpayers' 
competing claims with respect to such payment,
``(ii) notify any taxpayer of the 
termination of eligibility for a payment 
pursuant to this subparagraph, and
``(iii) treat any error as arising due to a 
clerical error and assessed according to 
section 6213(b)(1) unless information indicates 
that such error is due to fraud or determined 
on the basis of fraud or a reckless or 
intentional disregard of rules and regulations.
``(d) Provisions Related to Form, Manner, and Treatment of 
Payments.--
``(1) Application of electronic funds payment 
requirement.--The payments made by the Secretary under 
subsection (a) shall be made by electronic funds transfer to 
the same extent and in the same manner as if such payments were 
Federal payments not made under this title.
``(2) Delivery of payments.--Notwithstanding any other 
provision of law, the Secretary may certify and disburse 
refunds payable under this section electronically to--
``(A) any account to which the payee authorized, on 
or after January 1, 2026, the delivery of a refund of 
taxes under this title or of a Federal payment (as 
defined in section 3332 of title 31, United States 
Code),
``(B) any account belonging to a payee from which 
that individual, on or after January 1, 2026, made a 
payment of taxes under this title, or
``(C) any Treasury-sponsored account (as defined in 
section 208.2 of title 31, Code of Federal 
Regulations).
``(3) Waiver of certain rules.--Notwithstanding section 
3325 of title 31, United States Code, or any other provision of 
law, with respect to any payment of a refund under this 
section, a disbursing official in the executive branch of the 
United States Government may modify payment information 
received from an officer or employee described in section 
3325(a)(1)(B) of such title for the purpose of facilitating the 
accurate and efficient delivery of such payment. Except in 
cases of fraud or reckless neglect, no liability under section 
3325, 3527, 3528, or 3529 of title 31, United States Code, 
shall be imposed with respect to payments made under this 
paragraph.
``(4) Exception from reduction or offset.--Any applicable 
payment (as defined in paragraph (5)(E)(iii)) shall not be--
``(A) subject to reduction or offset pursuant to 
section 3716 or 3720A of title 31, United States Code,
``(B) subject to reduction or offset pursuant to 
subsection (c), (d), (e), or (f) of section 6402, or
``(C) reduced or offset by other assessed Federal 
taxes that would otherwise be subject to levy or 
collection.
``(5) Assignment of benefits.--
``(A) In general.--The right of any person to any 
applicable payment shall not be transferable or 
assignable, at law or in equity, and no applicable 
payment shall be subject to execution, levy, 
attachment, garnishment, or other legal process, or the 
operation of any bankruptcy or insolvency law.
``(B) Encoding of payments.--In the case of an 
applicable payment described in subparagraph 
(E)(iii)(I) that is paid electronically by direct 
deposit through the Automated Clearing House (ACH) 
network, the Secretary of the Treasury (or the 
Secretary's delegate) shall--
``(i) issue the payment using a unique 
identifier that is reasonably sufficient to 
allow a financial institution to identify the 
payment as an applicable payment, and
``(ii) further encode the payment pursuant 
to the same specifications as required for a 
benefit payment defined in section 212.3 of 
title 31, Code of Federal Regulations.
``(C) Garnishment.--
``(i) Encoded payments.--In the case of a 
garnishment order that applies to an account 
that has received an applicable payment that is 
encoded as provided in subparagraph (B), a 
financial institution shall follow the 
requirements and procedures set forth in part 
212 of title 31, Code of Federal Regulations, 
except--
``(I) notwithstanding section 212.4 
of title 31, Code of Federal 
Regulations (and except as provided in 
subclause (II)), a financial 
institution shall not fail to follow 
the procedures of sections 212.5 and 
212.6 of such title with respect to a 
garnishment order merely because such 
order has attached, or includes, a 
notice of right to garnish Federal 
benefits issued by a State young adult 
support enforcement agency, and
``(II) a financial institution 
shall not, with regard to any 
applicable payment, be required to 
provide the notice referenced in 
sections 212.6 and 212.7 of title 31, 
Code of Federal Regulations.
``(ii) Other payments.--In the case of a 
garnishment order (other than an order that has 
been served by the United States) that has been 
received by a financial institution and that 
applies to an account into which an applicable 
payment that has not been encoded as provided 
in subparagraph (B) has been deposited 
electronically on any date during the lookback 
period or into which an applicable payment that 
has been deposited by check on any date in the 
lookback period, the financial institution, 
upon the request of the account holder, shall 
treat the amount of the funds in the account at 
the time of the request, up to the amount of 
the applicable payment (in addition to any 
amounts otherwise protected under part 212 of 
title 31, Code of Federal Regulations), as 
exempt from a garnishment order without 
requiring the consent of the party serving the 
garnishment order or the judgment creditor.
``(iii) Liability.--A financial institution 
that acts in good faith in reliance on clause 
(i) or (ii) shall not be subject to liability 
or regulatory action under any Federal or State 
law, regulation, court or other order, or 
regulatory interpretation for actions 
concerning any applicable payments.
``(D) No reclamation rights.--This paragraph shall 
not alter the status of applicable payments as tax 
refunds or other nonbenefit payments for purpose of any 
reclamation rights of the Department of the Treasury or 
the Internal Revenue Service as per part 210 of title 
31, Code of Federal Regulations.
``(E) Definitions.--For purposes of this 
paragraph--
``(i) Account holder.--The term `account 
holder' means a natural person whose name 
appears in a financial institution's records as 
the direct or beneficial owner of an account.
``(ii) Account review.--The term `account 
review' means the process of examining deposits 
in an account to determine if an applicable 
payment has been deposited into the account 
during the lookback period. The financial 
institution shall perform the account review 
following the procedures outlined in section 
212.5 of title 31, Code of Federal Regulations, 
and in accordance with the requirements of 
section 212.6 of title 31, Code of Federal 
Regulations.
``(iii) Applicable payment.--The term 
`applicable payment' means--
``(I) any payment made to an 
individual under this section (other 
than any payment made pursuant to 
paragraph (6)),
``(II) any advance payment made by 
a possession of the United States with 
a mirror code tax system (as defined in 
section 24(h)) pursuant to an election 
under paragraph (6)(B) which 
corresponds to a payment described in 
subclause (I), and
``(III) any advance payment made by 
American Samoa pursuant to a program 
for making such payments which is 
described in paragraph (6)(C)(ii).
``(iv) Garnishment.--The term `garnishment' 
means execution, levy, attachment, garnishment, 
or other legal process.
``(v) Garnishment order.--The term 
`garnishment order' means a writ, order, 
notice, summons, judgment, levy, or similar 
written instruction issued by a court, a State 
or State agency, a municipality or municipal 
corporation, or a State young adult support 
enforcement agency, including a lien arising by 
operation of law for overdue young adult 
support or an order to freeze the assets in an 
account, to effect a garnishment against a 
debtor.
``(vi) Lookback period.--The term `lookback 
period' means the two month period that begins 
on the date preceding the date of account 
review and ends on the corresponding date of 
the month two months earlier, or on the last 
date of the month two months earlier if the 
corresponding date does not exist.
``(6) Application of advance payments in the possessions of 
the united states.--
``(A) Puerto rico.--
``(i) For application of young adult tax 
credit to residents of Puerto Rico, see section 
24A(d).
``(ii) For application of monthly advance 
young adult payments to residents of Puerto 
Rico, see subsection (b)(2).
``(B) Mirror code possessions.--In the case of any 
possession of the United States with a mirror code tax 
system (as defined in section 24A(h)(1)(C)), this 
section shall not be treated as part of the income tax 
laws of the United States for purposes of determining 
the income tax law of such possession unless such 
possession elects to have this section be so treated.
``(e) Notice of Payments.--
``(1) In general.--Not later than January 31 of the 
calendar year following any calendar year during which the 
Secretary makes one or more payments to any taxpayer under this 
section, the Secretary shall provide such taxpayer with a 
written notice which includes--
``(A) the taxpayer's taxpayer identity (as defined 
in section 6103(b)(6)),
``(B) the aggregate amount of such payments made to 
such taxpayer during such calendar year, and
``(C) such other information as the Secretary 
determines appropriate.
``(2) Certain payments subject to recapture.--In the case 
of any payments made to a taxpayer which the Secretary has 
determined are subject to recapture, the notice provided under 
paragraph (1) to such taxpayer shall include the amount of such 
payments.
``(f) Notification of Certain Events.--With respect to any taxpayer 
receiving monthly advance young adult payments under this section with 
respect to any specified young adult, the Secretary shall, to the 
maximum extent practicable, provide reasonable advance notice of each 
of the following:
``(1) Any month with respect to which such monthly advance 
young adult payment will increase (relative to the preceding 
month) by reason of an inflation adjustment under section 
24A(b)(2).
``(2) Any month with respect to which such monthly advance 
young adult payment will be reduced (relative to the preceding 
month) by reason of such young adult ceasing to be a specified 
young adult by reason of attaining age 25.
``(g) Regulations.--The Secretary shall issue such regulations or 
other guidance as the Secretary determines necessary or appropriate to 
carry out the purposes of this section.''.
(c) Conforming Amendments.--
(1) Section 26(b)(2) is amended by striking ``and'' at the 
end of subparagraph (Y), by striking the period at the end of 
subparagraph (Z) and inserting ``, and'', and by adding at the 
end the following new subparagraph:
``(AA) section 24A(f)(2) (relating to recapture of 
certain monthly advance young adult payments).''.
(2) Section 3402(f)(1)(C) is amended by inserting ``or 
section 24A (determined after application of subsection (g) 
thereof)'' after ``section 24 (determined after application of 
subsection (j) thereof)''.
(3) Section 6211(b)(4)(A) is amended by inserting ``24A by 
reason of subsection (d) thereof,'' after ``24 by reason of 
subsections (d) and (i)(1) thereof,''.
(4) Section 6213(g)(2)(I) is amended by inserting ``or 
section 24A(f) (relating to monthly young adult tax credit)'' 
after ``section 24(f) (relating to young adult tax credit)''.
(5) Section 6213(g)(2)(L) is amended by inserting ``24A,'' 
after ``24,''.
(6) Section 6695(g)(2) is amended by inserting ``24A,'' 
after ``24,''.
(7) Paragraph (2) of section 1324(b) of title 31, United 
States Code, as amended by the preceding provisions of this 
Act, is amended--
(A) by inserting ``24A,'' after ``24,'', and
(B) by striking ``or 6433'' inserting ``6433, or 
7527B''.
(8) The table of sections for subpart A of part IV of 
subchapter A of chapter 1 is amended by inserting after the 
item relating to section 24 the following new items:

``Sec. 24A. Monthly young adult tax credit.''.
(9) The table of sections for chapter 77 is amended by 
inserting after the item relating to section 7527A the 
following new item:

``Sec. 7527B. Monthly payments of young adult tax credit.''.
(d) Effective Dates.--
(1) In general.--Except as otherwise provided in this 
subsection, the amendments made by this section shall apply to 
taxable years beginning after December 31, 2026.
(2) Monthly advance young adult payments.--The amendments 
made by subsection (b) shall apply to calendar months beginning 
after December 31, 2026.

SEC. 3. OUTREACH CAMPAIGN.

(a) In General.--The Secretary of the Treasury, in coordination 
with local community-based organizations, shall conduct an outreach 
campaign to--
(1) provide information to the public regarding the young 
adult tax credit under section 24A of the Internal Revenue Code 
of 1986, as added by this Act, and
(2) assist individuals with claiming such credit.
(b) Methods.--With respect to the outreach campaign described in 
paragraph (1), the Secretary shall--
(1) provide relevant information on the public website of 
the Internal Revenue Service, and
(2) send direct mailings to individuals who have been 
identified as eligible for such credit for the taxable year.
(c) Outreach to Underrepresented Populations.--In carrying out the 
outreach campaign described in paragraph (1), the Secretary shall 
prioritize outreach to members of populations which are less likely 
than the general population to file taxes or have bank accounts.
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