Assuring Medicare’s Promise Act of 2025

Key Points

• The bill redirects revenue from the existing 3.8% Net Investment Income Tax (NIIT) into the Federal Hospital Insurance Trust Fund, which pays for Medicare Part A hospital coverage. Currently, this tax revenue goes to the general Treasury rather than being earmarked for Medicare.
• High earners would face an expanded version of the 3.8% tax. Individuals making over $400,000 and married couples making over $500,000 would pay the tax on more of their business and trade income, closing a loophole that currently lets some wealthy people avoid the tax on certain pass-through business income.
• The bill includes a phase-in provision so the expanded tax kicks in gradually for incomes just above the threshold, rather than hitting all at once. The phase-in range is $100,000 (or $50,000 for married individuals filing separately).
• The new rules would also capture certain foreign income, including amounts from controlled foreign corporations and passive foreign investment companies, making it harder for high earners to shelter offshore income from the Medicare-related tax.
• If enacted, all changes would take effect for tax years beginning after December 31, 2025, meaning the first affected tax year would be 2026.