Summary

Excludes from taxable income interest paid on tax overpayments (the interest taxpayers receive when the IRS overcollects taxes) for individuals and for eligible small businesses described in section 44(b)(1). The change creates a new Internal Revenue Code provision, adds a table-of-contents entry, and applies to taxable years beginning after the date of enactment.

• Creates a new IRC provision excluding interest on tax overpayments from gross income.
• Applies to individuals and “eligible small businesses” referenced in section 44(b)(1).
• Adds a table-of-contents entry to the Internal Revenue Code for the new provision.
• Effective for taxable years beginning after enactment.
• Reduces the need to report such interest as taxable income, simplifying filings for affected taxpayers.
• Likely causes a small reduction in federal revenue equal to the excluded interest amounts.
• Changes the statutory tax treatment; it does not automatically change state tax treatment.
• Is narrowly focused and applies only to interest on tax overpayments as defined by existing law (26 U.S.C. § 6611).