The House passed an enhanced child tax credit bill. What does it mean?

A bill calling for an expanded version of the child tax credit — which could increase the number of low-income families receiving the credit and the amount they get — has passed in the House with bipartisan support.

The bill — which passed in a 357-70 vote — was praised by House Speaker Mike Johnson (R., La.), who announced his support publicly, and marked a rare moment of bipartisanship at a time where Congress has been largely polarized.

“The Tax Relief for American Families and Workers Act is important bipartisan legislation to revive conservative pro-growth tax reform,” Johnson said in a statement. “Crucially, the bill also ends a wasteful COVID-era program, saving taxpayers tens of billions of dollars.”

Now, for it to become law, the Senate would need to pass its version of the bill.

Here’s what you need to know.

The bill focuses on a $79 billion tax cut package that includes $33 billion to expand the widely used child tax credit for three years. The changes would allow more low-income families to access the credit and would allow many families to receive a larger credit. The figures would also be adjusted for inflation in the coming years.

The tax credit is $2,000 per child, but not all of that is refundable. It would incrementally raise the amount of the credit available as a refund, increasing it to $1,800 for 2023 tax returns, $1,900 for the following year, and $2,000 for 2025 tax returns.

The bill also adjusts the topline credit amount to temporarily grow at the rate of inflation.

Households benefiting as a result of the changes in the child tax credit would see an average tax cut of $680 in the first year, according to estimates from the nonpartisan Tax Policy Center.

The bill keeps a threshold of a household having at least $2,500 in income to be eligible for refundable child tax credit payments.

The bill would boost certain tax breaks for businesses. It would also enhance a tax credit for the construction or rehabilitation of rental housing targeted to lower-income households, adding an estimated 200,000 housing units around the country. That was a key priority of lawmakers from states with acute housing shortages and soaring prices.

And it would ensure victims of certain natural disasters and the East Palestine, Ohio, train derailment don’t get hit with a big tax bill for payments they received as compensation for their losses.

Reactions were mixed.

Some conservatives said the benefits are too high, while liberal members said they aren’t enough.

“This bill provides billions of dollars in tax relief for the wealthy, pennies for the poor,” said Rep. Rosa DeLauro, (D., Conn.). “Big corporations are richer than ever. There is no even split.”

The chief critics of the expanded child tax credit likened it to “welfare.”

“What is a refundable tax credit? It’s welfare by a different name. We’re going to give cash payments, checks, to people who don’t even pay taxes,” said Rep. Thomas Massie, (R., Ky.).

Rep. Drew Ferguson (R., Ga.) responded: “We all believe on this side of the aisle that you should work in order to receive federal benefits. That is something that this bill does.”

Ultimately, a significant majority from each party voted for the bill.

According to the House voting transcript, of the 17 Pennsylvania House representatives who voted, all supported the bill except Republicans John Joyce of Hollidaysburg, Blair County, and Scott Perry of Dillsburg, York County.

The tax credit could go into effect as soon as this tax season if the Senate schedules a vote and passes it quickly.

The Senate hasn’t scheduled a vote on the bill yet, but Senate Democrats have already expressed general support for the legislation. Proponents of the bill hope its strong show of support will inspire the Senate to take action fast.

With the Senate still needing to take up the bill, uncertainty continues to loom. But for a House that has struggled to get bills of consequence over the finish line, the tax legislation could represent a rare breakthrough.

This article contains information from the Associated Press.