This bill, titled the "Innovate Less Lethal to De-Escalate Tax Modernization Act," amends the Internal Revenue Code of 1986 to exempt certain less-than-lethal projectile devices and their associated ammunition from federal firearms and ammunition taxes. A less-than-lethal projectile device is specifically defined as one not designed to expel ammunition commonly used in handguns, rifles, or shotguns, nor any projectile exceeding 500 feet per second. Furthermore, these devices must be intended for use in a manner not likely to cause death or serious bodily injury and cannot accept ammunition feeding devices loaded through a pistol grip or commonly used in semiautomatic firearms. Beyond tax exemptions, the legislation also removes these defined less-than-lethal projectile devices from the purview of the National Firearms Act . The Secretary is mandated to make determinations on device classifications within 90 days of a request and to annually publish a list of qualifying less-than-lethal devices. Additionally, the Secretary must annually report to Congress on devices that would qualify but for their projectile velocity exceeding 500 feet per second, detailing the rationale for their inclusion or exclusion.