House, Senate tax chiefs announce deal on business deductions, low-income credits on January 16, 2024 at 3:01 pm Business News | The Hill

Top tax writers in Congress announced a deal Tuesday morning to beef up the child tax credit (CTC) and reinstate business deductions that were taken away to pay for the reduction of the corporate tax rate in the 2017 Tax Cuts and Jobs Act.

The CTC expansion would increase the maximum credit per child to $2,000 from $1,600 through 2025 while restoring business deductions for research and development costs, interest payments and capital investments.

The deal also has provisions on increasing the low-income housing tax credit and a carve-out for Taiwanese companies following an effort by the U.S. to reshore segments of the high-end semiconductor industry, much of which is based there.

To pay for the $80 billion deal, tax writers want to nix the employment retention tax credit, which they say has been aggressively marketed within the tax industry and has been a locus of fraudulent business activity.

“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,” House Ways and Means Committee Chair Jason Smith (R-Mo.) said in a Tuesday morning statement.

Senate Finance Committee Chair Ron Wyden (D-Ore.) said the proposal could help as many as 15 million children who are close to the poverty line and would increase the stock of low-income housing across the country.

“At a time when so many people in Oregon and all across America are getting clobbered by rising rents and home prices, the improvements this plan makes to the Low-Income Housing Tax Credit will build more than 200,000 new affordable housing units,” he said in a statement.

“By incentivizing R&D, this plan is also going to promote innovation and help sharpen our economic competitiveness with China.”

Some policy experts welcomed news of the deal, which surfaced in various forms at the end of 2023 and 2022.

“Once the proposal is fully in effect in 2025, it would lift some half a million children or more above the poverty line and make about 5 million more children less poor,” the left-leaning nonprofit Center on Budget and Policy Priorities wrote in an analysis.

“This proposal would benefit more than 80 percent of the 19 million children who get a partial credit or none at all because their families’ incomes are too low.”

​Business, Child Tax Credit, Jason Smith, Ron Wyden, Taiwan, tax deduction, Ways and Means Committee Top tax writers in Congress announced a deal Tuesday morning to beef up the child tax credit (CTC) and reinstate business deductions that were taken away to pay for the reduction of the corporate tax rate in the 2017 Tax Cuts and Jobs Act. The CTC expansion would increase the maximum credit per child to…