HR-4184-119
Referred to the House Committee on Ways and Means.
Sponsored by Mike Kelly (R-PA)
What it does
This bill would exclude from federal taxable income any compensation or expense reimbursement paid to individuals (or their dependents) for participating in an approved clinical trial. It would also require that such payments not be counted as income or resources when determining eligibility for federal benefit programs or state/local programs funded with federal money. The change would apply to payments made after December 31, 2025.
Who benefits
Individuals and family members who participate in clinical trials, particularly those with chronic or serious health conditions who rely on trial compensation to cover lost wages or expenses; low-income participants who might otherwise lose eligibility for programs like Medicaid, SNAP, or SSI because trial payments counted as income; pharmaceutical and biotech companies that sponsor trials, who may find it easier to recruit and retain participants; research institutions and universities running trials.
Who is hurt
No group bears a direct, concrete burden, though federal and state governments would collect slightly less tax revenue and would need to adjust program eligibility calculations, a modest administrative cost for agencies like the Social Security Administration and state Medicaid offices. Taxpayers generally could see a marginal reduction in overall federal revenue.
Supporters argue
Supporters argue that clinical trials are essential to developing new treatments, yet participants — often people with serious illnesses — currently face taxation on compensation meant to offset travel, lost wages, and other burdens of participation. They contend that counting these payments against eligibility for programs like Medicaid or SNAP creates a perverse disincentive that discourages low-income and chronically ill patients from joining trials, ultimately slowing medical research and shrinking the diversity of trial populations.
Opponents argue
Opponents argue that carving out a new income tax exclusion adds complexity to the tax code and could be exploited if "reasonable and necessary expenses" are broadly interpreted, allowing disguised compensation to escape taxation. They contend that any narrow tax preference reduces federal revenue at the margin and that Congress should weigh whether targeted grants or direct program funding would more efficiently address participation barriers than a permanent tax carve-out.
Constitutional context
Congress has broad authority under the Sixteenth Amendment to define what counts as taxable income, including creating exclusions like this one; because the bill originated in the House, it also satisfies the Origination Clause (Art. I, §7, cl. 1) requirement for revenue-related legislation.
Checks and balances
Congress defines the tax exclusion and eligibility rule directly in statute, leaving the IRS and federal/state benefit agencies to implement it through regulation with no significant shift in power between branches.
Historical precedent
Congress has previously excluded specific categories of payments from gross income and from federal benefit eligibility calculations, such as certain disaster relief payments and combat pay, though no directly analogous clinical-trial-specific exclusion has been enacted before.