WASHINGTON — The House of Representatives on Wednesday set out to accomplish something unusual with broad bipartisan support: a roughly $79 billion tax cut package that would expand the child tax credit and boost three business tax breaks, a combination that would provide lawmakers on both sides of the political aisle with coveted opportunities. gives. policy wins.
The measure’s prospects for becoming law are uncertain because the Senate has yet to pass it, but for a House that has struggled to get bills across the finish line, the tax legislation could represent a rare breakthrough. The debate and final vote on the measure are scheduled for tonight.
Speaker Mike Johnson, R-La., supported the bill Wednesday morning. He spent part of the previous day meeting with Republican lawmakers concerned about the bill’s features, namely the expanded child tax credit. Some also expressed dissatisfaction with its failure to address the $10,000 limit on the total amount of property taxes or state or local taxes that consumers can deduct on their federal returns. Raising the limit is a top priority of lawmakers from members of New York’s congressional delegation.
Johnson promised to introduce a bill addressing the cap, but there is no text yet and the legislation would have to go through the House Rules Committee, leaving the timing very much in flux. Athina Lawson, a spokeswoman for Johnson, said the speaker and the chairman of the House Ways and Means Committee, Rep. Jason Smith, R-Mo., agreed to work with members to “find a path forward.”
Johnson called the tax cut in the House of Representatives important, bipartisan legislation that would revive “conservative tax reform for growth.” He also said it would prematurely end a “wasteful COVID-era program” plagued by fraud. Moving up the deadline for claiming the employee retention tax credit is expected to largely offset the cost of the tax cuts in the legislation.
Johnson also emphasized the importance of passing the bill through the House Ways and Means Committee before it came to the full House for a vote, saying it was a good example of how Congress should work.
House Republicans were eager to restore full, immediate deductions that companies can use to purchase new equipment and machinery and for domestic research and development costs. They argue that such investments grow the economy and encourage American companies to maintain their manufacturing facilities and operations in the United States. The bill also gives businesses more flexibility in determining how much loans can be deducted.
“Each of these policies will help American businesses grow, create jobs and increase their competitive advantage against China,” Smith said as the debate began in the House of Representatives.
Democrats focused on increasing the child tax credit. The tax credit is $2,000 per child, but not all of that is refundable. The bill would incrementally increase the amount of the credit available as a refund, up to $1,800 for 2023 tax returns, $1,900 for the following year, and $2,000 for 2025 tax returns. The bill also adjusts the topline credit amount so that it temporarily grows with inflation.
Households that take advantage of the changes to the child tax credit would see an average tax cut of $680 in the first year, according to estimates from the nonpartisan Tax Policy Center.
Democrats pushed to restore the more generous tax credit they passed in President Joe Biden’s first year in office in 2021, with payments made monthly. The credit was $3,600 per year for children under the age of six and $3,000 for children aged six to seventeen. But most lawmakers were willing to take advantage of the gains they could make from the compromise bill.
“I will continue to do what I can to fight for more,” said Rep. Suzan DelBene, D-Wash. “…We are not reaching all the families who can really make the most use of the child tax credit.”
The bill would also strengthen a rental housing construction or renovation tax credit for lower-income households, adding an estimated 200,000 housing units nationwide. And it would ensure that victims of certain wildfires and train derailments in East Palestine, Ohio, are not hit with a large tax bill for payments they received to compensate for their losses.