A new bipartisan bill, introduced by Sen. Ron Wyden (D., Ore.) and Rep. Jason Smith (R., Mo.), aims to enhance the child tax credit (CTC) and extend business tax deductions. The proposal, announced on Tuesday, seeks Congressional approval before the commencement of the tax season on January 29.
Key highlights of the proposal include a phased increase to the refundable portion of the child tax credit for 2023, 2024, and 2025, with adjustments for inflation starting in 2024. While work requirements would persist, low-income families not paying income taxes could receive up to $1,800 refunded from the $2,000 per-child credit, compared to the current $1,600. The amounts are set to rise to $1,900 in 2024 and $2,000 in 2025. The bill also emphasizes fair application of the child tax credit phase-in for families with multiple children.
Senator Wyden expressed optimism about the plan, stating, “Fifteen million kids from low-income families will be better off as a result of this plan,” with the goal to pass it in time for families and businesses to benefit during the upcoming tax filing season.
Ailen Arreaza, executive director of ParentsTogether Action, applauded the proposal, stating it could lift 400,000 children out of poverty if passed. The plan addresses the financial challenges faced by families dealing with rising food prices, high childcare costs, and the resumption of student loan payments.
In addition to the CTC expansion, the bill features provisions benefiting businesses, including the immediate deduction of U.S.-based R&D investments from 2022 to 2025. Businesses would also see the restoration of full, immediate deductions for many capital expenses and increased interest deductions.
Other notable provisions encompass the expansion of the low-income housing tax credit, tax breaks for victims of natural disasters, a threshold increase for businesses to send informational tax forms for subcontractors, and an accelerated deadline for filing backdated claims related to the employee retention credit.
The bipartisan effort aims to address both family and business financial challenges, providing support during a time of economic uncertainty.
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