Sponsors (2)
The bill makes federal tax brackets more geographically tailored—reducing bracket creep and improving fairness for many—at the cost of greater complexity, potential new inequities for some high‑cost or misclassified areas, and increased administrative and enforcement burdens.
Taxpayers in lower-cost areas: pay less federal income tax for the same income because local multipliers raise bracket thresholds relative to a national baseline, reducing bracket creep in cheaper regions.
Residents of high-cost metropolitan areas: receive partial relief from bracket exposure because multipliers scale thresholds to reflect higher local prices, offsetting some cost-of-living pressure.
All taxpayers and the tax system: benefit from a more geographically responsive indexing approach that reduces one-size-fits-all effects and improves perceived fairness between expensive and inexpensive areas.
Taxpayers in very high-cost areas: may face higher effective tax burdens because the formula uses 0.9× the local differential, which can shrink bracket thresholds relative to local prices.
All taxpayers and IRS staff: will face increased administrative complexity and compliance costs from determining and applying annual area multipliers, raising the chance of errors and higher compliance burden.
Rural and small-area taxpayers, and low-income residents: could be disadvantaged if regional definitions or index methodology misstate local price realities, producing mismatches between living costs and tax thresholds.
Based on analysis of 2 sections of legislative text.
Requires area-specific multipliers based on regional price parities to scale individual income tax bracket dollar thresholds for taxable years beginning after 2026.
Official title: 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.
Introduced June 8, 2026 by Laura Gillen · Last progress June 8, 2026
Creates a regional cost-of-living adjustment to individual income tax bracket dollar thresholds for taxable years beginning after 2026. The bill directs Commerce to publish a regional price index and Treasury to publish a multiplier for each Metropolitan Statistical Area (or non-metro portion of a State) that will be applied to the dollar minimums and maximums of each tax bracket; statutory multipliers differ for high-cost, mid-cost, and lower-cost areas.