EXTENSIONS OF INDIVIDUAL INCOME TAX REDUCTIONS.

SEC. 401. EXTENSIONS OF INDIVIDUAL INCOME TAX REDUCTIONS. (a) General Tax Credit.— (1) 1-tear extension of credit.— Section 3(b) of the Revenue Adjustment Act of 1975 is amended by striking out “December 31, 1976” and inserting in lieu thereof “December 31, 1977”. (2) Technical amendments.— (A) The heading and subsection (a) of section 42 (relating to allowance of taxable income, credit) are. amended to read as follows: “SEC. 42. GENERAL TAX CREDIT. “(a) Allowance of Credit.— In the case of an individual, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the greater of— “(1) 2 percent of so much of the taxpayer’s taxable income for the taxable year as does not exceed $9.000; or “(2) $35 multiplied by each exemption for which the taxpayer is entitled to a deduction for the taxable year under subsection (b) or (e) of section 151.” (B) Paragraph (1) of section 42(c) (relating to special rule for married individuals filing separate returns) is amended to read as follows: “(1) In general.— Not withstanding subsection (a), in the case of a married individual who files a separate return for the taxable year, the amount of the credit allowable under subsection (a) for the taxable year shall be equal to either— “(A) the amount determined under paragraph (1) of subsection (a); or “(B) if this subparagraph applies to the individual for the taxable year, the amount determined under paragraph (2) of subsection (a). For purposes of the preceding sentence, paragraph (1) of subsection (a) shall be applied by substituting ‘$4,500’ for ‘$9,000’.” (C) Section 6096(b) (relating to designation of income tax payments to Presidential Election Campaign Fund), as in effect on the day before the date of the enactment of the Tax Reduction Act of 1975, is amended by striking out “and 41” and inserting in lieu thereof “41, and 42”. (D) The table of sections for subpart A of part IV of subchapter A of chapter 1 is amended by striking out the item relating to section 42 and inserting in lieu thereof the following: “Sec. 42. General tax credit.” 90 STAT. 1556 (b) Standard Deduction.— (1) Low Income Allowance.— Subsection (c) of section 141 (relating to low income allowance) is amended to read as follows: “(c) Low Income Allowance.— The low income, allowance is— “(1) $2,100 in the case of— “(A) a joint return under section 6013, or “(B) a surviving spouse (as defined in section 2(a)), “(2) $1,700 in the case of an individual who is not married and who is not a surviving spouse (as so defined), or “(3) $1,050 in the case of a married individual filing a separate return.”. (2) Percentage standard deduction.— Subsection (b) of section 141 (relating to percentage standard deduction) is amended to read as follows: “(b) Percentage Standard Deduction.— The percentage standard deduction is an amount equal to 16 percent of adjusted gross income, but not more than— “(1) $2,800 in the case of— “(A) a joint return under section 6013, or “(B) a surviving spouse (as defined in section 2(a)), “(2) $2,400 in the case of an individual who is not married and who is not a surviving spouse (as so defined), or “(3) $1,400 in the case of a married individual filing a separate return.” (3) Filing requirements.— So much of paragraph (1) of section 6012(a) (relating to persons required to make returns of income) as precedes subparagraph (C) thereof is amended to read as follows: “(1) (A) Every individual having for the taxable year a gross income of $750 or more, except that a return shall not be required of an individual (other than an individual referred to in section 142(b))— “(i) who is not married (determined by applying section 143), is not a surviving spouse (as defined in section 2(a)), and for the taxable, year has a gross income of less than $2,450, “(ii) who is a surviving spouse (as so defined) and for the taxable year has a gross income of less than $2,850, or “(iii) who is entitled to make a joint return under section 6013 and whose gross income, when combined with the gross income of his spouse, is, for the taxable year, less than $3,600 but only if such individual and Ills spouse, at the close of the taxable year, had the same household as their home. Clause (iii) shall not apply if for the taxable year such spouse makes a separate return or any other taxpayer is entitled to an exemption for such spouse under section 151(e). “(B) The amount specified in clause (i) or (ii) of subparagraph (A) shall be increased by $750 in the case of an individual entitled to an additional personal exemption under section 151 (c)(1). and the amount specified in clause (iii) of subparagraph (A) shall be increased by $750 for each additional personal exemption to which the individual or his spouse is entitled under section 151(c);”. (c) Earned Income Credit.— (1) Extension of credit.— 90 STAT. 1557 (A) Section 209(b) of the Tax Reduction Act of 1975 is amended by striking out “January 1, 1977” and inserting in lieu thereof “January 1, 1978”. (B) Subsections (a) and (b) of section 43 (relating to earned income credit.) are amended to read as follows: “(a) Allowance of Credit.— In the case of an eligible individual, there is allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to 10 percent of so much of the earned income for the taxable year as does not exceed $4,000. “(b) Limitation.— The amount of the credit allowable to a tax-payer under subsection (a) for any taxable year shall be reduced (but not below zero) by an amount equal to 10 percent of so much of the adjusted gross income (or, if greater, the earned income) of the taxpayer for the taxable year as exceeds $4,000.” (2) Definition of eligible individual.— Subparagraph (A) of section 43(c)(1) (relating to definition of eligible individual) is amended to read as follows: “(A) maintains a household (within the meaning of section 44A(f)(1)) in the United States which is the principal place of abode of that individual and— “(i) a child of that individual if such child meets the requirements of section 151(e)(1)(B) (relating to additional exemptions for dependents), or “(ii) a child of that individual who is disabled (within the meaning of section 72(m)(7)) and with respect to whom that individual is entitled to claim a deduction under section 151; and”. (d) Withholding Amendments.— (1) Subsection (a) of section 3402 (relating to income tax collected at source) is amended to read as follows: “(a) Requirement of Withholding.— Except as otherwise provided in this section, every employer making payment of wages shall deduct and withhold upon such wages a tax determined in accordance with tables prescribed by the Secretary. With respect to wages paid prior to January 1, 1978, the tallies so prescribed shall be the same as the tables prescribed under this section which were in effect on January 1, 1976. With respect to wages paid after December 31, 1977, the Secretary shall prescribe new tables which shall be the same as tile tables prescribed under this subsection which were in effect on January 1, 1975, except that such tables shall be modified to the extent necessary to reflect the amendments made to subsections (b) and (c) of section 141 by the Tax Reform Act of 1976. For purposes of applying such tables, the term ‘the amount of wages’ means the amount by which the wages exceed the number of withholding exemptions claimed, multiplied by the amount, of one such exemption as shown in the table in subsection (b)(1).” (2) Paragraph (6) of section 3402(c) (relating to wage bracket withholding), as such paragraph was in effect on the day before the date of the enactment of the Tax Reduction Act of 1975, is amended by striking out “table 7 contained in subsection (a)” and inserting in lieu thereof “the table for an annual payroll period prescribed pursuant to subsection (a)”. (3) Subparagraph (B) of section 3402(m)(1) (relating to withholding allowance based on itemized deductions) is amended to read as follows: “(B) an amount equal to the lesser of (i) 16 percent of his estimated wages, or (ii) $2,800 ($2,400 in the case of an individual 90 STAT. 1558who is not married (within the meaning of section 143) and who is not a surviving spouse (as defined in section 2(a))).” (e) Effective Dates.— The amendments made by subsections (a) and (c) shall apply to taxable years ending after December 31, 1975, and shall cease to apply to taxable years ending after December 31, 1977, The amendments made by subsection (b) shall apply to taxable years ending after December 31, 1975. The amendments made by subsection (d) shall apply to wages paid after September 14, 1976.