(NewsNation) — Two top lawmakers Tuesday announced they reached a deal on a tax framework that includes expanding the child tax credit among other provisions.
Rep. Jason Smith, R-Mo., chair of the House Ways and Means Committee, and Democratic Sen. Ron Wyden of Oregon, who heads the Senate Finance Committee, announced what they called a “bipartisan, bicameral” framework in a news release after monthslong negotiations on the package.
“Fifteen million kids from low-income families will be better off as a result of this plan, and given today’s miserable political climate, it’s a big deal to have this opportunity to pass pro-family policy that helps so many kids get ahead,” Wyden said in a statement.
An analysis by the Center on Budget and Policy Priorities was even more optimistic, saying 16 million children would benefit.
“In the first year, the expansion would lift as many as 400,000 children above the poverty line. Three million more children would be made less poor as their incomes rise closer to the poverty line,” the analysis said.
The proposed expansion would increase the maximum credit parents get to $1,800 for 2023 tax returns, $1,900 for 2024 returns and $2,000 for 2025 returns. Currently, that maximum credit is $1,600.
Enhancing the child tax credit had been a move Democrats wanted, though the framework unveiled by Wyden and Smith has items like business tax breaks that Republicans were aiming for.
“American families will benefit from this bipartisan agreement that provides greater tax relief, strengthens Main Street businesses, boosts our competitiveness with China and creates jobs,” Smith said.
Under the bill, companies of all sizes can deduct research and development costs immediately rather than over the course of five years. Businesses could also fully deduct equipment, machinery and technology purchases.
“By incentivizing R&D, this plan is also going to promote innovation and help sharpen our economic competitiveness with China and the rest of the world,” Wyden said.
Altogether, the deal is about $80 billion in tax cuts, NewsNation partner The Hill wrote. It’s being paid for by more quickly ending a tax break Congress approved during the COVID-19 pandemic that encouraged businesses to keep employees on their payroll.
Although businesses initially had until April 15 of next year to claim their employee retention tax credit, the new legislation bars additional claims after Jan. 31 of this year and increases penalties for tax preparers who fail to do their due diligence in submitting COVID-19-related claims.
Wyden added he wants this framework to be passed by the upcoming tax filing season, which officially begins Jan. 29.
“I’m going to pull out all the stops to get that done,” Wyden said.
However, this could be easier said than done, as lawmakers are already racing to finish other top-priority bills, including ones to give aid to Israel and Ukraine and also to stem the flow of migrants entering the U.S. through the southern border.