Could the child tax credit be expanded in 2024?

(NEXSTAR) – If the bipartisan bill passed Tuesday becomes law, American parents will be among the main beneficiaries.

Nearly $78 billion in tax cuts would go toward expanding the child tax credit, as well as corporate tax breaks, but the bill faces a potentially difficult path to passage.

The announcement was made by the chairs of the top tax policy committees, Sen. Ron Wyden (D-Ore.), Chairman of the Senate Finance Committee, and Rep. Jason Smith (R-Mo.), Chairman of the House Ways and Means Committee. A committee.

How will I benefit?

The current child tax credit is $2,000, but just over 75% of it, or $1,600, is refundable at tax time.

Refundable tax credits are still paid in cash once the tax bill is reduced to zero, while non-refundable tax credits can only be used to pay off tax debt and any remaining credit will be forfeited.

Under the proposed legislation, the child tax credit would increase the maximum refundable child tax credit to $1,800 for 2023 tax returns, $1,900 for the following year, and $2,000 for 2025 tax returns.

You can claim the child tax credit as long as you have a child who has a valid Social Security number to work in the United States, according to the IRS. To file 2023 taxes, an eligible dependent must:

• Be under 17 years of age at the end of the year
• Be your son, daughter, stepchild, eligible foster child, brother, sister, half-brother, half-sister, half-brother, half-sister, or a descendant of one of these (e.g. Grandchild, niece or nephew)
• Not providing more than half of their financial support during the year
• I’ve lived with you for more than half the year
• You can properly claim that you are dependent on your tax return
• Failure to file a joint return with their spouse for the tax year or File it only to claim a refund of income tax withheld or estimated tax paid
• Be a US citizen, US citizen, or US resident alien

The child tax credit also has an earnings cap — parents who earn more than $200,000 ($400,000 if filing jointly) will not be eligible for the full child tax credit for 2023, but may get a partial credit.

The bill would primarily benefit low-income families.

“Sixteen million children from low-income families will be better off as a result of this plan, and given today’s dystopian political climate, it is great that we have this opportunity to pass a pro-family policy that helps so many children get ahead.” Wyden said in a statement.

During the COVID-19 pandemic, the American Rescue Plan boosted the child tax credit from $2,000 to $3,000 for children over 6, and from $2,000 to $3,600 for children under 6. Lawmakers allowed the enhanced benefits, which were widely adopted. Reducing child poverty in 2021, to end at the end of that year.

Besides parents, business owners will also benefit from the new draft law, which will allow companies of all sizes to deduct R&D costs immediately instead of deducting them over five years. Companies will also be allowed to fully deduct the purchase of equipment, machinery and technology. The draft law also provides greater flexibility in determining the amount of borrowing that can be deducted.

The money needed to pay for the deal will come from the accelerated end of a coronavirus-era program that rewards companies with tax breaks to keep employees on their paychecks.

Could I see a tax break this year?

Wyden said his goal is to get the measure approved in time for businesses and families to benefit during the upcoming filing season.

The Internal Revenue Service will begin accepting and processing tax returns on January 29, so lawmakers are looking to move the bill along as quickly as possible.

Achieving this goal may be difficult because lawmakers are already racing to finalize spending bills and are considering a bill focused on aid to Israel and Ukraine, and stemming the flow of migrants entering the country at the US-Mexico border.

One option is for leaders in the House and Senate to attach the measure to one of their highest priority bills.

The Associated Press contributed to this report.