Congress announces huge tax deal to extend child tax credit and renew incentives for companies

Senior members of Congress revealed a bipartisan agreement Tuesday to boost the child tax credit and provide a number of tax advantages for companies.

The $78 billion tax accord reached by House Ways and Means Chair Jason Smith, R-Mo., and Senate Finance Chair Ron Wyden, D-Ore., culminates months of haggling and seeking common ground in a divided Congress.

It still needs to be codified into legislation and passed by both the Republican-controlled House and the Democratic-controlled Senate, which is not assured. However, senior tax writers hope it will pass soon, before individuals pay their taxes this year.

"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 in a press release.

The arrangement, which was first reported by NBC News, would increase refundable child tax credits in an effort to help financially struggling families and those with multiple children. It would also increase the tax credit's $1,600 refundable limit and adjust it for inflation.

"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 stated in a press release.

According to a report by the leftist Centre on Budget and programme Priorities, the new child tax credit programme would help approximately 16 million low-income children. "The expansion would meaningfully reduce child poverty," the CBPP stated in its letter. "In the first year, the expansion would lift up to 400,000 children out of poverty." 3 million additional children would become less poor as their wages rose closer to the poverty threshold."

Democrats had called for a greater child tax credit after an earlier version they passed for less than a year expired, leading child poverty to decline and then climb again. The new arrangement would offer less benefits than the monthly payments under the American Rescue Plan.

According to White House spokesman Michael Kikukawa, Biden "remains committed to fighting for the full expanded Child Tax Credit" that was included in the 2021 law.