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Child tax credit increase baked into new bill: What else changed?

Child tax credit increase baked into new bill: What else changed?


A bipartisan proposal was announced on Tuesday to expand the child tax credit and extend business tax deductions in an effort to get Congressional approval before the start of tax season on January 29.

Sen. Ron Wyden (D., Ore.) and Rep. Jason Smith (R., Mo.) said the plan includes a phased increase to the refundable portion of the child tax credit (CTC) for 2023, 2024, and 2025 and adjust the tax credit for inflation starting in 2024. Work requirements would remain, but low-income families who don’t pay income taxes could get up to $1,800 refunded of the $2,000 per-child credit instead of the current $1,600.

The amount would rise to $1,900 in 2024 and $2,000 in 2025. The bill would also “ensure the child tax credit phase-in applies fairly to families with multiple children,” it said.

“Fifteen million kids from low-income families will be better off as a result of this plan, ” Senator Wyden said in a release, adding “my goal remains to get this passed in time for families and businesses to benefit in this upcoming tax filing season, and I’m going to pull out all the stops to get that done.”

Ailen Arreaza, executive director of ParentsTogether Action, a national family advocacy group with more than 3 million parents nationwide, said in a statement: “Between rising food prices, the high cost of child care, and the resumption of student loan payments, millions of parents are finding it harder than ever to make ends meet. These families, who often don’t meet the income requirements to receive the full Child Tax Credit, must be prioritized in the program’s expansion. This agreement takes a crucial first step in doing just that by expanding the CTC for some of the lowest income families. If passed, this bill could lift 400,000 children out of poverty.”

Child tax credit increase baked into new bill: What else changed?

Also in the deal, businesses would retroactively from 2022 and through 2025 get to immediately deduct the cost of their U.S.-based R&D investments instead of deducting them over five years. The bill would also restore full, immediate deductions for many capital expenses and allow more interest deductions.

Other provisions would expand the low-income housing tax credit and extend tax breaks to victims of natural disasters, increase the threshold to $1,000 from $600 for businesses to send informational tax forms for subcontractors, accelerate the deadline for filing backdated claims to January 31 for the fraud-ridden employee retention credit.

Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.



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