Policy Backgrounder : Bipartisan Congressional Tax Bill

Expansion of Child Tax Credit: The bill increases the child tax credit for three years (beginning with 2023) by changing the calculation of the refundable credit to be on a per-child basis (instead of simply multiplying the taxpayer’s earned income by 15 percent) and gradually raising the additional per-child credit to $2,000 by 2025. [...] The bill also indexes the child tax credit to inflation for 2024 and 2025 and allows the use of prior-year earned income to calculate the maximum child tax credit. [...] Representative Bob Good (R-VA), chairman of the House Freedom Caucus, said, “I’m not going to support something that expands the child tax credit, which is expanding the welfare state massively.” Another member of the Caucus, Representative Chip Roy (R-TX), stated that the tax bill “undermines the kind of economic activity and incentive to work and incentive to. [...] These Members received a commitment from Speaker Johnson to try to advance legislation on the issue, with a plan to bring a bill to the floor of the House that would increase the SALT deduction cap for joint filers from $10,000 to $20,000, but only for households earning up to $500,000 and only for the 2023 tax year. [...] Given that the House and the Senate are only in session at the same time for three days in February, the passage of the tax bill may struggle to gain momentum in the Senate in the coming weeks.