A bipartisan bill introduced in the U.S. Congress would increase the child tax credit and provide tax breaks for businesses.
The roughly $78 billion in tax cuts would be 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, according to the Associated Press.
The agreement was announced by Sen. Ron Wyden, the Democratic chairman of the Senate Finance Committee, and Rep. Jason Smith, the Republican chairman of the House Ways and Means Committee. The lawmakers have been negotiating for months on a tax package that would address an array of priorities before lawmakers turn their focus to election season.
Wyden said his goal is to gain approval of the measure in time for businesses and families to benefit during the upcoming filing season. The Internal Revenue Service will begin accepting and processing tax returns on Jan. 29.
Democratic negotiators were focused on boosting the child tax credit. The tax credit is $2,000 per child, but only $1,600 is refundable. The bill would incrementally increase the maximum refundable child tax credit to $1,800 for 2023 tax returns, $1,900 for the following year and $2,000 for 2025 tax returns.
Republicans were focused on tax breaks for businesses that they said would help grow the economy. The tax breaks in the bill would generally align their expiration date — the end of 2025 — with many of the other tax cuts that were approved in 2017.
Most notably, the bill would give companies of all sizes the ability to deduct research and development costs immediately rather than over the course of five years. It would also allow businesses to fully deduct the purchase of equipment, machinery and technology. And, the bill also provides more flexibility in determining how much borrowing can be deducted.
