The House passed a major bipartisan bill on Wednesday that would expand the child tax credit and renew key business investment deductions.
The vote was 357-70, with members of both parties supporting the $78 billion legislation, H.R. 7024, the Tax Relief for American Families and Workers Act.
The bill faces some obstacles in the Senate. The White House, though, has indicated that President Joe Biden supports the plan.
Lawmakers have been rushing to get this bill signed into law in time for tax season, which begins at about the end of January.
The Wednesday vote was preceded by deal-making in the lower chamber. On Tuesday, four New York Republicans threatened to tank an unrelated procedural vote to protest GOP leaders’ decision not to include in the tax legislation any changes to federal deductions for state and local taxes paid.
In response, House leadership corralled support for the main tax bill by committing to a vote on a second tax bill that involves relief for SALT deductions, two people familiar with the negotiations confirmed to the Washington Examiner. Few other details about the second deal and what else it might include are available.
The main tax legislation notably expands the child tax credit by changing the calculation of the credit on a per-child basis to make it more generous. It would also increase the maximum refundable amount per child from $1,600 to $1,800 in tax year 2023, $1,900 in 2024, and $2,000 in 2025, a change that will benefit lower-income families.
It also indexes the child tax credit to inflation, a provision long sought by child tax credit advocates.
The bipartisan bill renews a tax deduction for research and development costs for businesses, a measure that business groups have been lobbying for and the GOP has prioritized. Since the break expired, companies have had to amortize R&D expenses, meaning they faced a higher tax burden.
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The agreement also temporarily pauses the phaseout of bonus depreciation. That was a provision in the 2017 Trump tax cuts that allowed companies to write off certain capital expenditures immediately instead of having those deductions written off over the “useful life” of the asset.
It is unclear how the bipartisan legislation will fare in the Senate and what changes might be made. For instance, Sen. Bill Cassidy (R-LA) is advocating that changes to a controversial $600 IRS reporting requirement be included in the tax bill.
