Summary#
This bill adds an "individual tariff refund credit" to the tax code and creates an excise tax on certain tariff refunds to businesses. If a final court order requires repayment of tariff money that was unlawfully collected after January 20, 2025, the federal tax code will treat a share of the repaid tariff revenues as a refundable tax credit for eligible individuals. The credit amount equals the total covered tariff revenues divided by the total number of individuals in households of eligible individuals, then multiplied by an individual's household size (1, or 2 for joint filers, plus dependents). The bill defines who is an eligible individual and which court orders and tariff revenues are covered. The Treasury must pay or credit the refund to eligible individuals as quickly as possible, send a notice within 15 days, and may treat the payment as an advance against the individual’s tax for the covered year. The bill also requires payments to U.S. possessions to offset losses from the change and limits administrative-payment amounts (including a higher limit for Puerto Rico).
Separately, the bill imposes an excise tax equal to 100% of certain tariff refunds received by large businesses ("covered taxpayers") after a covered court order. A covered taxpayer can avoid the excise tax if it shows that price increases to its customers during the covered period did not exceed half of the tariff amounts on relevant inputs. The excise tax provision applies to amounts received after December 31, 2025. The individual credit provisions apply to taxable years beginning after December 31, 2024.
What it means for you#
- Individuals: If you are an eligible individual (not a nonresident alien, not claimed as a dependent by someone else, and not an estate or trust) you may receive a refundable tax credit based on your household size if a covered court order requires tariff repayments. The payment is treated as a payment against your tax for the covered taxable year and the IRS will send a notice after making the payment. No interest is paid on these refunds.
- Households: The per-person share is calculated by dividing total covered tariff revenues by the total number of individuals in eligible households and then multiplying by your household size.
- Businesses: Large businesses that receive tariff repayments in the course of business may face an excise tax equal to the repayment amount unless they can show they did not pass most of the tariff cost to customers during the covered period.
- Residents of U.S. possessions: The Treasury will pay amounts to possessions to offset any losses under their local tax systems; some possessions must distribute those payments to residents under an approved plan.
Expenses#
- The bill requires federal payments to individuals (refunds or credits) equal to the calculated individual shares of covered tariff revenues. It also requires Treasury payments to U.S. possessions to offset losses and to cover certain administrative expenses (up to $500,000 per possession, and up to $10,000,000 for Puerto Rico). The bill does not include a total estimated federal cost or budget score in the text.
- No publicly available information on the total federal cost or on projected revenue changes from the excise tax is included in the bill text.
Proponents' View#
No publicly available information.
Opponents' View#
No publicly available information.