What The New Child Tax Credit Could Mean For Your Family

In a rare victory for bipartisan legislation, the House of Representatives overwhelmingly passed the Tax Relief for American Families and Workers Act (HB 7024), a sweeping tax cut bill that seeks to benefit low-income families and businesses, scoring wins for Democrats and Republicans alike. The final vote was an impressive 357 to 70 and five abstentions, with the majority of “Nay” votes coming from the far ends of the left and right for (predictably) disparate reasons.

Sponsored by Republican Rep. Jason Smith of Missouri, the bill, if passed — and its fate in the Senate remains unclear — would go into effect through 2025. House Speaker Mike Johnson (R, LA) applauded the outcome of the vote, noting, “This bottom-up process is a good example of how Congress is supposed to make law.” Under this new legislation — which also includes provisions that would increase or improve 200,000 units of low-income housing, increases tax relief for victims of natural disasters, and special rules for the taxation of residents of Taiwan who earn money in the U.S. — two key issues stand out as “wins.”

Republicans primarily tout the provision that will allow businesses to deduct expenses incurred by paying for new equipment and domestic research and development, claiming this cut will promote innovation and growth, effectively a restoration of some Trump-era corporate tax benefits. “This bipartisan bill will strengthen American manufacturing, reduce burdens on our small businesses, and put more money back into the pockets of hardworking Central Valley families,” tweeted Rep. David Valadau (R, CA).

Democrats laud the bill’s provision to increase the child tax credit incrementally over the next three tax years, with families being able to claim $1,800 per child on their 2023 taxes, $1,900 in 2024, and $2,000 in 2025. These figures, however, are pared down from the Dem’s original proposal to reinstate a child tax credit akin to what existed under the American Rescue Plan, allowing families to claim between $3,000 and $3,600 per child.

“I voted yes on the tax framework on behalf of the parents of 16 million children nationwide and 50,000 kids right here and Georgia's Fifth Congressional district who will benefit from the expanded child tax credit,” said Rep. Nikema Williams (D, GA) in a statement. However, she went on to explain that while she’s glad for the progress, she is disappointed by the compromise. “This is a far cry from the 61 million children who benefited when Democrats passed the American Rescue Plan and cut the child poverty rate in half but I refuse to leave any help on the table. This tax framework represents real progress for families, but because Republicans refused to support key provisions, it can only be considered a first step. I won't stop fighting for permanent, fully expanded credits so that no child lives in poverty.”

And indeed, of the 23 Democrats to vote “Nay,” most did so because they said the bill did not go far enough in regard to the child tax credit. “I could not in good conscience vote for a deal that so lopsidedly benefits the biggest corporations while failing to ensure a substantial tax cut for American families,” tweeted Rep. Rose DeLauro (D, CT), who earlier today categorized the passage of HR 7024 as a “missed opportunity.”

“This deal is deeply inequitable. It delivers massive tax cuts for huge corporations while denying middle class families the economic security they received from the expanded, monthly #ChildTaxCredit,” DeLauro added.

Speaking on the floor earlier today, Rep. Greg Casar (D, TX) noted, “For every dollar going to kids in the bill, five dollars goes to corporations ... I oppose the bill because we can do so much better.”

Republicans to vote “Nay” (47 in total) were a combination moderate-New York Republicans displeased that the bill did not increase in the state and local tax (SALT) deduction (which increases the tax burden on those living in states with higher state taxes) and far-right Conservatives, who balked at the idea of individual tax credits, incorrectly claiming that undocumented immigrants would be among the beneficiaries.

Rep. Thomas Massie (R, KY) categorized the credits as “welfare by a different name,” on the floor of Congress. “We are going to give cash payments, checks to people who don't even pay taxes. The hard-working constituents that I represent in Kentucky are tired of getting up at 6 AM, driving an hour or two to work, working their hind ends off to watch their neighbors collect these checks, of which ther will be more after this bill. It's just wrong.”

The bill now moves to the Senate. While Senate Leader Chuck Schumer (D, NY) has voiced support for HB 7024, experts have not determined whether it will pass a Senate vote.