Senate Finance Committee Chairman Ron Wyden, an Oregon Democrat, and House Ways and Means Committee Chairman Jason Smith, a Missouri Republican, unveiled the agreement as a “common sense, bipartisan, bicameral tax framework that promotes the financial security of working families, boosts growth and American competitiveness, and strengthens communities and Main Street businesses.”
“American families will benefit from this bipartisan agreement that provides greater tax relief, strengthens Main Street businesses, boosts our competitiveness with China, and creates jobs,” Smith said in a statement.
The agreement would bolster the child tax credit, aiming to give relief to lower-income families. An enhanced version of the child tax credit was distributed in monthly increments during the pandemic and greatly reduced child poverty. Those monthly payments ended at the end of 2021, and Democrats have pushed to resurrect the assistance ever since.
“Fifteen million kids from low-income families will be better off as a result of this plan, and given today’s miserable political climate, it’s a big deal to have this opportunity to pass pro-family policy that helps so many kids get ahead,” Wyden said, adding that his goal is to get the legislation passed in time for families and businesses to see benefits in the upcoming tax season.
Under current law, the maximum child tax credit for is $1,600 per child. The legislation would increase that amount to $1,800 in 2023, $1,900 in 2024 and $2,000 in 2025. It would also adjust the limit in future years to account for inflation.
The path forward on the bill is not without its pitfalls. And amid an already high-stress government funding process, with little time to avert a government shutdown, the issue is unlikely to be a top priority for lawmakers in the days ahead.
Adding to the difficulty, some Republicans may be reluctant to back the expansion of the child tax credit and give the Biden administration what it would see as a major win heading into the presidential campaign. But the deal also includes some revived tax cuts for businesses, which may motivate Republicans to back its timely passage.
