INFLATION ADJUSTMENTS BASED ON CHAINED CPI.

SEC. 11002. INFLATION ADJUSTMENTS BASED ON CHAINED CPI.(a) In General.—Subsection (f) of section 1 is amended by striking paragraph (3) and by inserting after paragraph (2) the following new paragraph:“(3) Cost-of-living adjustment.—For purposes of this subsection—“(A) In general.—The cost-of-living adjustment for any calendar year is the percentage (if any) by which—“(i) the C-CPI-U for the preceding calendar year, exceeds“(ii) the CPI for calendar year 2016, multiplied by the amount determined under subparagraph (B).“(B) Amount determined.—The amount determined under this clause is the amount obtained by dividing—“(i) the C-CPI-U for calendar year 2016, by“(ii) the CPI for calendar year 2016.“(C) Special rule for adjustments with a base year after 2016.—For purposes of any provision of this title which provides for the substitution of a year after 2016 for ‘2016’ in subparagraph (A)(ii), subparagraph (A) shall be applied by substituting ‘the C-CPI-U for calendar year 2016’ for ‘the CPI for calendar year 2016’ and all that follows in clause (ii) thereof.”.(b) C-CPI-U.—Subsection (f) of section 1 is amended by striking paragraph (7), by redesignating paragraph (6) as paragraph (7), and by inserting after paragraph (5) the following new paragraph:“(6) C-CPI-U.—For purposes of this subsection—“(A) In general.—The term ‘C-CPI-U’ means the Chained Consumer Price Index for All Urban Consumers (as published by the Bureau of Labor Statistics of the Department of Labor). The values of the Chained Consumer Price Index for All Urban Consumers taken into account for purposes of determining the cost-of-living adjustment for any calendar year under this subsection shall be the latest values so published as of the date on which such Bureau publishes the initial value of the Chained Consumer Price Index for All Urban Consumers for the month of August for the preceding calendar year.“(B) Determination for calendar year.—The C-CPI-U for any calendar year is the average of the C-CPI-U as of the close of the 12-month period ending on August 31 of such calendar year.”.(c) Application to Permanent Tax Tables.—(1) In general.—Section 1(f)(2)(A) is amended to read as follows:“(A) except as provided in paragraph (8), by increasing the minimum and maximum dollar amounts for each bracket for which a tax is imposed under such table by the cost-of-living adjustment for such calendar year, determined—“(i) except as provided in clause (ii), by substituting ‘1992’ for ‘2016’ in paragraph (3)(A)(ii), and“(ii) in the case of adjustments to the dollar amounts at which the 36 percent rate bracket begins 131 STAT. 2060 or at which the 39.6 percent rate bracket begins, by substituting ‘1993’ for ‘2016’ in paragraph (3)(A)(ii),”.(2) Conforming amendments.—Section 1(i) is amended—(A) by striking “for ‘1992’ in subparagraph (B)” in paragraph (1)(C) and inserting “for ‘2016’ in subparagraph (A)(ii)”, and(B) by striking “subsection (f)(3)(B) shall be applied by substituting ‘2012’ for ‘1992’ ” in paragraph (3)(C) and inserting “subsection (f)(3)(A)(ii) shall be applied by substituting ‘2012’ for ‘2016’ ”.(d) Application to Other Internal Revenue Code of 1986 Provisions.—(1) The following sections are each amended by striking “for ‘calendar year 1992’ in subparagraph (B)” and inserting “for ‘calendar year 2016’ in subparagraph (A)(ii)”:(A) Section 23(h)(2).(B) Paragraphs (1)(A)(ii) and (2)(A)(ii) of section 25A(h).(C) Section 25B(b)(3)(B).(D) Subsection (b)(2)(B)(ii)(II), and clauses (i) and (ii) of subsection (j)(1)(B), of section 32.(E) Section 36B(f)(2)(B)(ii)(II).(F) Section 41(e)(5)(C)(i).(G) Subsections (e)(3)(D)(ii) and (h)(3)(H)(i)(II) of section 42.(H) Section 45R(d)(3)(B)(ii).(I) Section 55(d)(4)(A)(ii).(J) Section 62(d)(3)(B).(K) Section 63(c)(4)(B).(L) Section 125(i)(2)(B).(M) Section 135(b)(2)(B)(ii).(N) Section 137(f)(2).(O) Section 146(d)(2)(B).(P) Section 147(c)(2)(H)(ii).(Q) Section 151(d)(4)(B).(R) Section 179(b)(6)(A)(ii).(S) Subsections (b)(5)(C)(i)(II) and (g)(8)(B) of section 219.(T) Section 220(g)(2).(U) Section 221(f)(1)(B).(V) Section 223(g)(1)(B).(W) Section 408A(c)(3)(D)(ii).(X) Section 430(c)(7)(D)(vii)(II).(Y) Section 512(d)(2)(B).(Z) Section 513(h)(2)(C)(ii).(AA) Section 831(b)(2)(D)(ii).(BB) Section 877A(a)(3)(B)(i)(II).(CC) Section 2010(c)(3)(B)(ii).(DD) Section 2032A(a)(3)(B).(EE) Section 2503(b)(2)(B).(FF) Section 4261(e)(4)(A)(ii).(GG) Section 5000A(c)(3)(D)(ii).(HH) Section 6323(i)(4)(B).(II) Section 6334(g)(1)(B).(JJ) Section 6601(j)(3)(B).(KK) Section 6651(i)(1).(LL) Section 6652(c)(7)(A).(MM) Section 6695(h)(1).131 STAT. 2061(NN) Section 6698(e)(1).(OO) Section 6699(e)(1).(PP) Section 6721(f)(1).(QQ) Section 6722(f)(1).(RR) Section 7345(f)(2).(SS) Section 7430(c)(1).(TT) Section 9831(d)(2)(D)(ii)(II).(2) Sections 41(e)(5)(C)(ii) and 68(b)(2)(B) are each amended—(A) by striking “1(f)(3)(B)” and inserting “1(f)(3)(A)(ii)”, and(B) by striking “1992” and inserting “2016”.(3) Section 42(h)(6)(G) is amended—(A) by striking “for ‘calendar year 1987’ ” in clause (i)(II) and inserting “for ‘calendar year 2016’ in subparagraph (A)(ii) thereof”, and(B) by striking “if the CPI for any calendar year” and all that follows in clause (ii) and inserting “if the C-CPI-U for any calendar year (as defined in section 1(f)(6)) exceeds the C-CPI-U for the preceding calendar year by more than 5 percent, the C-CPI-U for the base calendar year shall be increased such that such excess shall never be taken into account under clause (i). In the case of a base calendar year before 2017, the C-CPI-U for such year shall be determined by multiplying the CPI for such year by the amount determined under section 1(f)(3)(B).”.(4) Section 59(j)(2)(B) is amended by striking “for ‘1992’ in subparagraph (B)” and inserting “for ‘2016’ in subparagraph (A)(ii)”.(5) Section 132(f)(6)(A)(ii) is amended by striking “for ‘calendar year 1992’ ” and inserting “for ‘calendar year 2016’ in subparagraph (A)(ii) thereof”.(6) Section 162(o)(3) is amended by striking “adjusted for changes in the Consumer Price Index (as defined in section 1(f)(5)) since 1991” and inserting “adjusted by increasing any such amount under the 1991 agreement by an amount equal to—“(A) such amount, multiplied by“(B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, by substituting ‘calendar year 1990’ for ‘calendar year 2016’ in subparagraph (A)(ii) thereof”.(7) So much of clause (ii) of section 213(d)(10)(B) as precedes the last sentence is amended to read as follows:“(ii) Medical care cost adjustment.—For purposes of clause (i), the medical care cost adjustment for any calendar year is the percentage (if any) by which—“(I) the medical care component of the C-CPI-U (as defined in section 1(f)(6)) for August of the preceding calendar year, exceeds“(II) such component of the CPI (as defined in section 1(f)(4)) for August of 1996, multiplied by the amount determined under section 1(f)(3)(B).”.(8) Subparagraph (B) of section 280F(d)(7) is amended to read as follows:131 STAT. 2062 “(B) Automobile price inflation adjustment.—For purposes of this paragraph—“(i) In general.—The automobile price inflation adjustment for any calendar year is the percentage (if any) by which—“(I) the C-CPI-U automobile component for October of the preceding calendar year, exceeds“(II) the automobile component of the CPI (as defined in section 1(f)(4)) for October of 1987, multiplied by the amount determined under 1(f)(3)(B).“(ii) C-CPI-U automobile component.—The term ‘C-CPI-U automobile component’ means the automobile component of the Chained Consumer Price Index for All Urban Consumers (as described in section 1(f)(6)).”.(9) Section 911(b)(2)(D)(ii)(II) is amended by striking “for ‘1992’ in subparagraph (B)” and inserting “for ‘2016’ in subparagraph (A)(ii)”.(10) Paragraph (2) of section 1274A(d) is amended to read as follows:“(2) Adjustment for inflation.—In the case of any debt instrument arising out of a sale or exchange during any calendar year after 1989, each dollar amount contained in the preceding provisions of this section shall be increased by an amount equal to—“(A) such amount, multiplied by“(B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, by substituting ‘calendar year 1988’ for ‘calendar year 2016’ in subparagraph (A)(ii) thereof.Any increase under the preceding sentence shall be rounded to the nearest multiple of $100 (or, if such increase is a multiple of $50, such increase shall be increased to the nearest multiple of $100).”.(11) Section 4161(b)(2)(C)(i)(II) is amended by striking “for ‘1992’ in subparagraph (B)” and inserting “for ‘2016’ in subparagraph (A)(ii)”.(12) Section 4980I(b)(3)(C)(v)(II) is amended by striking “for ‘1992’ in subparagraph (B)” and inserting “for ‘2016’ in subparagraph (A)(ii)”.(13) Section 6039F(d) is amended by striking “subparagraph (B) thereof shall be applied by substituting ‘1995’ for ‘1992’ ” and inserting “subparagraph (A)(ii) thereof shall be applied by substituting ‘1995’ for ‘2016’ ”.(14) Section 7872(g)(5) is amended to read as follows:“(5) Adjustment of limit for inflation.—In the case of any loan made during any calendar year after 1986, the dollar amount in paragraph (2) shall be increased by an amount equal to—“(A) such amount, multiplied by“(B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, by substituting ‘calendar year 1985’ for ‘calendar year 2016’ in subparagraph (A)(ii) thereof.Any increase under the preceding sentence shall be rounded to the nearest multiple of $100 (or, if such increase is a multiple 131 STAT. 2063 of $50, such increase shall be increased to the nearest multiple of $100).”.(e) Effective Date.—The amendments made by this section shall apply to taxable years beginning after December 31, 2017.