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To amend the Social Security Act and the Internal Revenue Code of 1986 to include net investment income tax imposed in the Federal Hospital Insurance Trust Fund and to modify the net investment income tax.
2/11/2025, 9:00 AM
Summary of Bill HR 609
The net investment income tax is a tax that is imposed on certain types of investment income, such as interest, dividends, and capital gains. This tax is currently used to help fund the Federal Hospital Insurance Trust Fund, which provides funding for Medicare.
The proposed changes in this bill would impact how the net investment income tax is calculated and collected. It would also make adjustments to how the tax revenue is allocated to the Federal Hospital Insurance Trust Fund. Overall, Bill 119 hr 609 is focused on making changes to the net investment income tax in order to better support the Federal Hospital Insurance Trust Fund and ensure that it has the necessary funding to continue providing Medicare benefits to eligible individuals.
Congressional Summary of HR 609
Assuring Medicare’s Promise Act of 2025
This bill increases the net investment tax for certain taxpayers and appropriates revenue from the net investment tax to the Federal Hospital Insurance Trust Fund (which finances Medicare Part A). The bill also requires the Internal Revenue Service (IRS) to issue additional guidance on the net investment tax.
The bill requires individuals with a modified adjusted gross income (MAGI) exceeding $400,000 ($500,000 for joint filers and $250,000 for married individuals filing separately), estates, and trusts to pay a tax of 3.8% on the greater of their specified net income or net investment income, subject to limitations. (Under current law, individuals with a MAGI exceeding $200,000 [or $250,000 for joint filers], estates, and trusts pay a 3.8% tax on net investment income.)
The bill defines specified net income by expanding the definition of net investment income to
- include gross income from any trade or business (unless subject to employment taxes), including interest, dividends, annuities, royalties, and rents;
- include net gain from the disposition of business property;
- eliminate the exclusion of income from the investment of working capital; and
- eliminate the exception related to certain active partnership or S corporation interests.
The bill also
- expands the net investment tax definition of a trade or business,
- disallows net operating losses in calculating net investment income,
- includes certain foreign-sourced income in net investment income, and
- requires the IRS to issue guidance on the treatment of certain corporate distributions for purposes of the net investment tax.
