amended to read as follows: (b) Limitations based on modified adjusted gross income (1) Initial reduction (A) In general The amount of the credit allowable under subsection (a) shall be reduced (but not below zero) by 5 percent of the excess (if any) of the taxpayer’s modified adjusted gross income for the applicable taxable year over the initial threshold amount in effect for such applicable taxable year. (B) Limitation on initial reduction The amount of the reduction under subparagraph (A) shall not exceed the lesser of— (i) the excess (if any) of— (I) the credit allowable under subsection (a) for the taxable year determined without regard to this paragraph, over (II) the amount which would be described in subclause (I) if subsection (a)(1) were applied by substituting $166.67 for $250 ($300 in the case of a qualifying child who has not attained age 6 as of the close of the taxable year) and subsection (i) did not apply, or (ii) 5 percent of the excess of the secondary threshold amount over the initial threshold amount. (2) Secondary reduction The amount of the credit allowable under subsection (a), determined after the application of paragraph (1), shall be further reduced (but not below zero) by 5 percent of the excess (if any) of the taxpayer’s modified adjusted gross income for the applicable taxable year over the secondary threshold amount. (3) Threshold amounts For purposes of this subsection— (A) Initial threshold amount The term initial threshold amount means— (i) $150,000, in the case of a joint return or surviving spouse (as defined in section 2(a)), (ii) 1/2 the dollar amount in effect under clause (i), in the case of a married individual filing a separate return, and (iii) $112,500, in any other case. (B) Secondary threshold amount The term secondary threshold amount means— (i) $400,000, in the case of a joint return or surviving spouse (as defined in section 2(a)), (ii) $300,000, in the case of a head of household (as defined in section 2(b)), and (iii) $200,000, in any other case. (4) Other terms