The Cost of Living Tax Cut Act would adjust federal income tax brackets based on regional differences in the cost of living across the United States. Starting in 2027, the bill would modify tax rates for individuals living in high-cost areas by applying multipliers to tax brackets, meaning residents of expensive regions could potentially pay taxes on higher income thresholds. The adjustment formula would provide multipliers based on how a region's cost of living compares to the national average, with areas significantly above average (125 percent or more) receiving a 90 percent adjustment factor, moderate areas getting a 1.05 multiplier, and lower-cost areas receiving a 1.0 multiplier. The Secretary of Commerce would publish annual cost-of-living indexes for each metropolitan statistical area and non-metropolitan region of each state, and the Secretary of the Treasury would set the applicable multipliers by December 15 each year for the following tax year. The bill contains no explicit funding mechanism, as it operates through the existing tax code rather than direct appropriations.
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