BREAKING: The U.S. House approved a bipartisan tax agreement to expand the child tax credit


BREAKING: The U.S. House of Representatives approved a bipartisan tax agreement to expand the child tax credit

The U.S. House of Representatives approved a bipartisan tax deal to expand the child tax credit. Next: Senate.

The nearly $80 billion bipartisan tax deal, which combines a temporary expansion of the child tax credit with long-awaited provisions for businesses, took a significant step forward Wednesday evening when it passed the U.S. House of Representatives.

The 357-70 vote showed strong bipartisan support for the agreement, with a deal now heading to the Senate. The political arena in the Senate may be more difficult, and a final vote to send it to Biden's desk is still being determined. However, Wednesday's overwhelming vote will likely encourage advocates of the deal to push for quick action to ensure the bill's provisions take effect before the current tax filing season begins in earnest.

In a statement before the vote on Wednesday, House Speaker Mike Johnson helped advance the deal through his support of the agreement.

"This bottom-up process is a good example of how Congress makes law," he wrote.

The bipartisan vote also came after days of behind-the-scenes debate among members of Johnson's Republican caucus over whether the compact should be amended to address issues such as the deduction for state and local taxes (SALT) — a key issue in states with higher taxes — and immigration.

But in the end, the 83-page bill passed using a procedural maneuver known as suspending the rules, allowing Republican leadership to block all proposed amendments and quickly pass it with two-thirds majority support in the House.

The introduction of the bill, officially known as the Tax Relief for American Families and Workers Act of 2024, was a notable win for the GOP leader of the House Ways and Means Committee, Jason Smith of Missouri. He negotiated the deal, sold it to his colleagues, and helped push it over the finish line in the final days. He called it a "strong, common-sense, bipartisan step forward" during the House's final debate on Wednesday evening.

The agreement now heads to the Senate, which will be endorsed by the Democratic Chairman of the Senate Finance Committee, Ron Wyden of Oregon, who negotiated the agreement with Smith.

What's in the tax relief bill?

Republicans hope to renew three business deductions from Trump's 2017 tax cuts that have been phased out in recent years. These provisions would allow companies to deduct more for things like research and development, investments in equipment, and interest costs.

For Democrats, the child tax credit would get a new expansion, allowing low-income families greater access to the credit. One progressive Center on Budget and Policy Priorities report estimates that 16 million children in low-income families would benefit from the boost, with half a million raised above the poverty line.

The deal includes other provisions on issues such as double taxation for companies operating in Taiwan and additional aid for disaster-stricken communities. The bill would be paid for by implementing changes to the pandemic-era employee retention tax credit.

If passed, this bill would serve as a stopgap before the tax debate in 2025, which will revolve around a set of provisions in Trump's 2017 tax cuts that are set to expire on December 31, 2025.

This week's progress represents a rare point of bipartisanship in Washington on a deal that has won support from much of the business community.

Recently, the Business Roundtable, an association representing top executives in Washington, said that uncertainty surrounding the provision of R&D means that "America's role as a global leader in innovation is at risk."

A group of critics persist.

Wednesday's vote also demonstrated the agreement's ability to withstand criticism.

  On the right, some Republicans have been wary of expanding the child tax credit.

  House Freedom Caucus Chairman Bob Good (R-Va.) led an effort to amend the bill to change the base credit and prevent illegal immigrants from collecting the credit entirely. It was an idea that had it been considered and passed, would have certainly been a deal-breaker.

Rep. Chip Roy (R-Texas) organized the final opposition to the bill Wednesday night on the House floor, focusing on the debate over immigration and claiming that the child tax credit provisions "will continue to expand the welfare state."

Wednesday's vote also saw opposition from the left, with 23 Democrats casting no votes, largely due to concerns that the child tax credit expansion did not go far enough to offset the business world's allowance.

However, the most persistent area of opposition came from moderate House Republicans who were unhappy that the deal did not address the deduction caps on state and local taxes (SALT) imposed in the Tax Cuts and Jobs Act of 2017. The maximum deduction that payers could Tax in high-tax states could take a $10,000 cut on their federal returns in a 2017 law and has been a concern for Republicans in high-tax states ever since.

The issue came to a head on Tuesday when Some of these moderate Republicans would hold the floor on an unrelated issue to register their opposition. The breakthrough that led to Wednesday's vote reports was House Speaker Johnson's commitment to hold a separate vote next week on adjustments to the SALT deduction limits for married couples.

Next, the newly passed bill heads to the Senate, where it has yet to take a vote but has powerful supporters like Sen. Wyden pushing for quick action, largely to make the provisions felt during the upcoming tax filing season.

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