Tax bill advanced in rare bipartisan House vote

Democrats and Republicans in Congress both showed strong support for the Child Tax Credit and some business tax breaks as the House voted to send a bipartisan tax bill package to the Senate on Wednesday.

On Jan. 16, Senate Finance Committee Chairman Ron Wyden, D-Ore., and House Ways and Means Committee Chairman Jason Smith, R-Mo., jointly announced what they called “a commonsense, bipartisan, bicameral tax framework that promotes the financial security of working families, boosts growth and American competitiveness, and strengthens communities and Main Street businesses.”

“The Tax Relief for American Families and Workers Act is pro-growth, pro-jobs, pro-America,” Smith said. “It’s a strong commonsense bipartisan step forward in providing tax relief for working families and small businesses.”

“Most prognosticators would have told you as recently as a month ago that this bill was destined to die in negotiations or collect dust on a shelf if it ever got introduced,” said Wyden. “Given the sorry state of our political climate, it’s a real victory to have such strong momentum behind this bill that will help 16 million American kids from low-income families get ahead.”

The Tax Relief for American Families and Workers Act of 2024 generally proposes to revive expired breaks for businesses and increase the child tax credit for low-income families. However, the tax bill also includes disaster relief provisions and other tax relief measures. The agreed-to framework proposes to pay for the tax breaks by cutting off new claims for the COVID-19 era employee retention credit program filed after Jan. 31, 2024.

The bill would amend portions of the Internal Revenue Code of 1986, and would

• Increase refunds under, expand eligibility for, and adjust the child tax credit to account for inflation for tax years 2023 through 2025.
• Allow businesses to deduct expenses for domestic research and experimentation and to depreciate certain equipment more quickly than under current law.
• Increase the amount of interest that businesses can deduct as an expense.
• Increase the threshold for businesses to report certain payments to contractors and subcontractors.
• Stop claims of the employee retention tax credit and increase penalties for promoters’ violations.

The $78 billion tax package passed the House on a 357-70 vote, with strong support from members of both parties. From there, it moves to the Senate, where some Republicans are calling for hearings on the bill while others want to make changes to it.