H.R. 25 is the FairTax legislation introduced in the 119th Congress by Representative Earl “Buddy” Carter, Republican of Georgia’s 1st District.
As of today, Congress.gov lists the bill as introduced and referred to the House Committee on Ways and Means. It has not passed the House or Senate.
What the bill would do
H.R. 25 would impose a national sales tax on taxable property and services used or consumed in the United States. In exchange, it would repeal federal:
- Individual income taxes
- Corporate income taxes
- Payroll taxes
- Estate and gift taxes
The bill exempts used and intangible property, business and investment purchases, exports, and state government functions.
The family consumption allowance
Lawful U.S. resident households would be eligible for a monthly sales tax rebate based on family size and federal poverty guidelines. FairTax supporters call this the prebate.
Its purpose is to offset the tax on spending through the poverty level before those purchases are made.
Administration and federal programs
States would administer, collect, and remit the national sales tax to the Treasury. Revenue would be allocated among general federal revenue and the trust funds for:
- Old-Age and Survivors Insurance
- Disability Insurance
- Hospital Insurance
- Supplementary Medical Insurance
The bill authorizes no funding for Internal Revenue Service operations after fiscal year 2027.
The Sixteenth Amendment safeguard
H.R. 25 contains a sunset safeguard: the national sales tax terminates if the Sixteenth Amendment, which authorizes a federal income tax, is not repealed within seven years after enactment.
Supporters view this as protection against having both a national sales tax and a federal income tax in the future.
Follow the bill
Bill status can change. Use the official congressional record for the current text, actions, and cosponsor list.