calendar month beginning before January 1, 2026, the monthly specified child allowance otherwise determined under paragraph (1) with respect to any taxpayer for such calendar month (determined after the application of subparagraphs (A) and (B)) shall be reduced (but not below zero) by 1/12 of 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. (D) Definitions related to limitations based on modified adjusted gross income For purposes of this paragraph— (i) 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 subclause (I), in the case of a married individual filing a separate return, and (III) $112,500, in any other case. (ii) 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. (iii) Applicable taxable year The term applicable taxable year means, with respect to any taxable year for which the credit under this section is determined— (I) such taxable year, or (II) if the taxpayer elects the application of this subclause (at such time and in such form and manner as the Secretary may provide), the preceding taxable year or the second preceding taxable year (as specified in such election). (iv) Modified adjusted gross income The term modified adjusted gross income means adjusted gross income increased by any amount excluded from gross income under section 911, 931, or 933. (3) Inflation adjustments (A) Monthly specified child allowance In the case of any month beginning after December 31, 2023, each dollar amount in paragraph (1) shall be increased by an amount equal to— (i) such dollar amount, multiplied by— (ii) the percentage (if any) by