[UPDATE: January 31, 10:00pm] The House vote 357-70 tonight to approve a bipartisan bill which would expand the child tax credit and extend some business tax credits.
88 Democrats joined 169 Republicans in voting to approve the bill, while 23 Democrats and 47 Republicans voted against it. The legislation now heads to the Senate.
If it passes, the new provisions, which includes expanding the refundable portion of the Child Tax Credit, would be in effect for the 2023 tax year, due later this year, through the 2025 tax year.
Original story below:
A bipartisan deal has been reached today by senior member of both parties in Congress on a deal to expand the Child Tax Credit (CTC).
The CTC expansion, which is part of a larger $78 billion tax agreement, would increase the maximum credit per child to $2,000 from $1,600 by 2025.
Under current law, the maximum child tax credit which is refundable is $1,600 per child.
The proposed deal would increase the refundable amount to $1,800 for the 2023 tax year, $1,900 in 2024 and $2,000 in 2025. It would also adjust the limit in future years to account for inflation.
Additionally, half the credit would be distributed on a monthly basis.
New Jersey Senator Cory Booker, who played a key role in expanding the Child Tax Credit for 2021, and has been pushing for a renewal of the expansion ever since, released a statement praising the deal, which he described as a “meaningful step forward.”
“Today’s announced bipartisan tax deal is a meaningful step forward in fixing our broken tax code, putting more money in the pockets of families with kids, and eliminating the moral obscenity of child poverty,” Booker said.
Under current law, 19 million children receive partial or no Child Tax Credit. This proposed deal includes provisions for expanding refundability, phasing in benefits more quickly for multi-child families, allowing the use of prior-year income, and indexing the maximum value of the credit to inflation.
The deal also includes increased funding for the Low-Income Housing Tax Credit, our most important resource in creating and expanding affordable housing across the country; tax relief for the victims of several recent natural disasters; and billions of dollars for businesses to expand research and development in the United States.
“This bipartisan proposal is a step towards a tax code that better reflects our values—for every dollar spent on tax cuts to businesses, we are putting an equal amount back into the pockets of families with kids and extending lifelines for those who need it the most, helping families struggling to pay for gas, groceries, medicine, and other basic necessities,” Booker added.
The agreement comes after an earlier expanded CTC — $3,600 a year for children under 6 and $3,000 for those 6-17 — expired on December 31, 2021.
An earlier attempt by Congress to expand the credit for 2022 failed in the Senate after the House passed a 10-year, $1.75 trillion bill and was not included in the Inflation Reduction Act following opposition from Republicans.
In New Jersey, the state Legislature passed their own version of a Child Tax Credit in 2022 and then passed a separate bill last year which further expanded the credit.