Cost of Living Tax Cut Act

Laura Gillen

Democrat · NY · Representative

Source: Congress.gov · FEC

• Michael Lawler (R-NY-17)Original· 2026-06-08

Referred to the House Committee on Ways and Means.

2026-06-08

Source: Congress.gov

The proposal would adjust federal income tax rates based on how expensive it is to live in different regions of the country, so that people in high-cost areas like New York City or San Francisco wouldn't pay the same tax rate as people in lower-cost areas. This would mean some workers might owe less in federal taxes if they live in places with higher housing, food, and other living expenses. The change would affect millions of individual taxpayers across the country depending on where they live.

AI-assisted summary generated from the official bill metadata (title, subjects, actions) sourced from Congress.gov. Cached and reviewed. Always verify against the official text linked below.

[Congressional Bills 119th Congress] [From the U.S. Government Publishing Office] [H.R. 9179 Introduced in House (IH)] <DOC> 119th CONGRESS 2d Session H. R. 9179 To amend the Internal Revenue Code of 1986 to provide for adjustments in the individual income tax rates to reflect regional differences in the cost-of-living. _______________________________________________________________________ IN THE HOUSE OF REPRESENTATIVES June 8, 2026 Ms. Gillen (for herself and Mr. Lawler) 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 provide for adjustments in the individual income tax rates to reflect regional differences in the cost-of-living. 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 ``Cost of Living Tax Cut Act''. SEC. 2. REGIONAL COST-OF-LIVING ADJUSTMENTS IN INDIVIDUAL INCOME TAX RATES. (a) General Rule.--Subsection (f) of section 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraphs: ``(9) Regional cost-of-living adjustments.-- ``(A) In general.--In the case of an individual, for taxable years beginning after 2026 the rate table otherwise in effect under this section for any taxable year (determined after the application of paragraph (1)) shall be further adjusted as provided in subparagraph (B). ``(B) Method of making regional adjustment.--The rate table otherwise in effect under this section with respect to any individual for any taxable year shall be adjusted as follows: ``(i) The minimum and maximum dollar amounts otherwise in effect for each rate bracket shall be multiplied by the applicable multiplier (for the calendar year in which the taxable year begins) which applies to the statistical area in which the individual's primary place of abode during the taxable year is located. ``(ii) The rate applicable to any rate bracket (as adjusted by clause (i)) shall not be changed. ``(iii) The amount setting forth the tax shall be adjusted to the extent necessary to reflect the adjustments in the rate brackets. If any amount determined under clause (i) is not a multiple of $50, such amount shall be rounded to the nearest multiple of $50. ``(10) Determination of multipliers.-- ``(A) In general.--Not later than December 15 of each calendar year, the Secretary shall prescribe an applicable multiplier for each statistical area of the United States which shall apply to taxable years beginning during the succeeding calendar year. ``(B) Determination of multipliers.-- ``(i) For each statistical area where the cost-of-living differential for any calendar year exceeds 125 percent, the applicable multiplier for such calendar year is 90 percent of such differential. ``(ii) For each statistical area where the cost-of-living differential for any calendar year exceeds 97 percent but does not exceed 125 percent, the applicable multiplier for such calendar year is 1.05. ``(iii) For each statistical area where the cost-of-living differential for any calendar year does not exceed 97 percent (and, notwithstanding clauses (i) and (ii), in the case of any statistical area which is outside the United States), the applicable multiplier for such calendar year is 1. ``(C) Cost-of-living differential.--The cost-of- living differential for any statistical area for any calendar year is the percentage determined by dividing-- ``(i) the cost-of-living for such area for the preceding calendar year, by ``(ii) the average cost-of-living for the United States for the preceding calendar year. ``(D) Cost-of-living for area.-- ``(i) In general.--For calendar year 2026 and each calendar year thereafter, the Secretary of Commerce shall determine and publish a cost-of-living index for each statistical area. ``(ii) Methodology.--The cost-of-living index determined under…

clause (i) for any statistical area for any calendar year shall be based on average market prices for the area for the 12-month period ending on August 31 of such calendar year. The market prices taken into account under the preceding sentence shall be selected and used under the same methodology as is used by the Secretary of Commerce in developing Regional Price Parities indexes. ``(E) Statistical area.--For purposes of this subsection, the term `statistical area' means-- ``(i) any metropolitan statistical area as defined by the Secretary of Commerce, and ``(ii) the portion of any State not within a metropolitan statistical area as so defined.''. (b) Effective Date.--The amendment made by this section shall apply to taxable years beginning after December 31, 2026. <all>

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