by striking the exemption amount (as defined in section 151(d)) and inserting $4,150 . (B) Section 7706(d), as redesignated by this section, is amended by adding at the end the following new paragraph: (6) Inflation adjustment In the case of any calendar year beginning after 2018, the $4,150 amount in paragraph (1)(B) shall be increased by an amount equal to— (A) such dollar amount, multiplied by (B) the cost-of-living adjustment determined under section 1(c)(2)(A) for such calendar year, determined by substituting calendar year 2017 for calendar year 2016 in clause (ii) thereof. If any increase determined under the preceding sentence is not a multiple of $100, such increase shall be rounded to the next lowest multiple of $100. . (51) The table of sections for chapter 79 is amended by adding at the end the following new item: Sec. 7706. Dependent defined. . (h) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2017. 1004. Maximum rate on business income of individuals (a) In general Part I of subchapter A of chapter 1 is amended by inserting after section 3 the following new section: 4. 25 percent maximum rate on business income of individuals (a) Reduction in tax to achieve 25 percent maximum rate The tax imposed by section 1 shall be reduced by the sum of— (1) 10 percent of the lesser of— (A) qualified business income, or (B) the excess (if any) of— (i) taxable income reduced by net capital gain (as defined in section 1(h)(11)(A)), over (ii) the maximum dollar amount for the 25-percent rate bracket which applies to the taxpayer under section 1 for the taxable year, and (2) 4.6 percent of the excess (if any) of— (A) the lesser of— (i) qualified business income, or (ii) the excess (if any) determined under paragraph (1)(B), over (B) the excess of— (i) the maximum dollar amount for the 35-percent rate bracket which applies to the taxpayer under section 1 for the taxable year, over (ii) the maximum dollar amount for the 25-percent rate bracket which