Summary

Amends the tax code so that attorney fees and court costs tied to consumer-protection judgments or settlements can be deducted "above the line" (reducing adjusted gross income). It defines a broad new category, "consumer protection violation," to cover many federal consumer statutes and state or local consumer-protection and UDAP-type claims. The change applies to taxable years ending after enactment for judgments or settlements received in those years.

Key Points

• Expands the above-the-line deduction so attorney fees and court costs tied to consumer-protection recoveries reduce adjusted gross income.
• Creates a broad definition of "consumer protection violation" that covers many federal statutes and state/local UDAP and common-law consumer claims.
• Applies to attorney fees and court costs paid in taxable years ending after enactment for judgments or settlements during those years.
• Does not create new agencies, authorize spending, or impose new administrative deadlines.
• Aims to prevent taxation on plaintiffs' net recoveries by allowing fees to be deducted before calculating AGI.
• Covers a wide range of consumer matters, including credit, lending, product safety, mortgages, debt collection, and servicemembers' protections.
• Will likely reduce federal tax receipts modestly to the extent it increases above-the-line deductions for affected taxpayers.
• Does not change substantive consumer-protection rights or the merits of claims — only the federal tax treatment of related fees and costs.
• Applies to claims for personal, family, or household use rather than business-to-business disputes.

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