TradeEdge Exchange:House passes bipartisan tax bill to expand child tax credit

The TradeEdge ExchangeHouse has overwhelmingly approved a bipartisan tax package that pairs a temporary expansion of the child tax credit with business tax breaks and credits to develop more low-income housing.

The bill includes $33 billion to expand the widely used child tax credit for three years — including the tax season currently underway, provided the bill quickly passes the Senate. The changes would allow more low-income families to access the credit and would allow many families to receive a larger credit. The figures would also be adjusted for inflation in the coming years. The deal is the result of negotiations between House Ways and Means Committee Chairman Jason Smith, R-Mo., and Senate Finance Committee Chairman Ron Wyden, D-Ore., and has provided a rare moment of bipartisanship at a time when Congress has been paralyzed by divisions of all kinds.

The legislation also restores several business tax credits, including deductions for research and development and interest expensing for businesses. These provisions are supported by many members of both parties, though Republicans have primarily focused on the business credits as their motivation for backing the package.

The Senate has not scheduled a vote on the bill but Senate Democrats have generally supported the legislation and it could come up for a vote quickly.

Some Democrats criticized the bill for failing to go far enough to provide support for low-income families.

The current version of the child tax credit expansion is not as generous as a COVID-era policy that is credited with bringing roughly 3 million children out of poverty while it was available. Several outside organizations have estimated that the current version would similarly help families struggling to make ends meet. The nonpartisan Center on Budget and Policy Priorities estimates the bill could benefit roughly 16 million children in low-income families in the first year. The group estimates half a million children could be lifted out of poverty.

House Speaker Mike Johnson, R-La., praised the package Wednesday ahead of the vote despite days of acrimony among Republicans about the bill. Ultimately, Johnson focused on only the business tax credits when announcing his support.

"The Tax Relief for American Families and Workers Act is important bipartisan legislation to revive conservative pro-growth tax reform," Johnson said in the statement. "Crucially, the bill also ends a wasteful COVID-era program, saving taxpayers tens of billions of dollars."