U.S. lawmakers revealed a $78 billion tax deal on Tuesday that would expand the child tax credit and revive Trump-era tax breaks for businesses.
A three-year bipartisan agreement made possible through months of negotiation is set to go before Congress. If passed, small business owners will see their expensing cap enlarged to $1.29 million, the refundable portion of the child tax credit will be increased and adjusted for inflation, and businesses of all sizes will no longer have to wait five years to deduct their U.S.-based research and development expenses. These are just some of the elements of the deal.
“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,” said Rep. Jason Smith (R-MO), according to a press release.
As chair of the House Ways and Means Committee, Smith negotiated the deal with Ron Wyden (D-OR), the chair of the Senate Committee on Finance.
“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.
The deal includes some Republican policy goals, like giving American businesses a boost by reenacting some of the tax cuts implemented by former President Donald Trump in 2017 and ending the COVID-era employee retention tax credit, which has reportedly been plagued with fraud.
The deal also enhances both the child tax credit and the low-income housing tax credit, which advance stated Democratic goals like reducing child poverty and helping low-income families secure housing.
“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,” Wyden said.
Getting the tax deal passed before January 29, which marks the beginning of tax filing season, might be a tall order. Congress is currently entrenched in deliberations over how to avoid a partial government shutdown, as covered by The Dallas Express.
Funding expires for some key federal agencies on January 19, but there has been considerable debate surrounding the top-line spending limit of $1.66 trillion revealed by Senate Majority Leader Chuck Schumer (D-NY) and House Speaker Mike Johnson (R-LA) last week. Rep. Chip Roy (R-TX) called the deal “garbage” and suggested it could cost the speaker his job. He and other House Republicans have been very vocal about how any government funding deal needs to include measures that will get the ongoing unlawful migration crisis at the southern border under control.
