Bipartisan tax deal could expand Child Tax Credit and extend business tax breaks

Top lawmakers on the Senate and House tax writing committees announced a deal on a temporary expansion of the child tax credit alongside a series of business tax breaks.

Senate Finance Committee Chairman Ron Wyden and House Ways and Means Committee Chairman Jason Smith negotiated the framework, which would still need to be approved by both chambers of Congress. They face a tight deadline to implement any changes to the tax code with the 2023 tax filing season beginning on January 29.

The committees have been discussing the package for months, and hope to move it soon as a stand alone bill, or potentially attached to a stopgap spending bill. The independent Joint Committee on Taxation estimates the plan could roughly $70 - 80 billion. Aides expect they could cover the cost by overhauling a COVID relief tax credit to save about the same amount in revenue for the government.

"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 in a written statement on Monday.

The legislation, dubbed the Tax Relief for American Families and Workers Act of 2024, expands the child tax credit for three years, and allows families with multiple children to take advantage of the credit. The current cap for the refundable child tax credit is $1,600. Under the bill it would lift the amount to $1,800 in tax year 2023, $1,900 in tax year 2024, and $2,000 in tax year 2025, and begin adjusting for inflation in 2024.

The U.S. Census bureau found that the child tax credit included in the 2021 COVID relief bill, the American Rescue Plan, significantly