H.R. 7024 would amend portions of the Internal Revenue Code of 1986.
The revisions discussed in this estimate include those concerning the child tax credit, the employee retention tax credit (ERTC), and various business tax deductions. The bill also would provide tax relief to some people affected by federally declared disasters, make changes to the federal Low-Income Housing Tax Credit (LIHTC) program, and raise the threshold for businesses to report payments to some contractors and subcontractors. In addition, H.R. 7024 would modify the tax treatment of income from U.S. sources that is earned or received by qualified residents of Taiwan and establish a bilateral process for tax agreements between the United States and Taiwan.
One of the central components of this legislation entails a noteworthy augmentation of the child tax credit, poised to bring substantial benefits to families with children nationwide. This enhancement is underscored by the incorporation of a refundable portion individually calculated for each child, presenting a distinct advantage for growing families.
The proposed bill introduces a singular modification pertaining to the child tax credit. Currently set at $2,000 per child for taxpayers below specific income thresholds, a portion of this credit, up to $1,600, can be refunded in 2023. The refundable segment is subject to limitations based on the number of qualifying children and the taxpayer's earned income. Under the proposed legislation, the refundable amount will be determined on a per-child basis, resulting in a comprehensive refundable sum. This adjustment is applicable for the tax years 2023-2025. Furthermore, the maximum refundable credit will escalate to $1,800 in 2023, $1,900 in 2024, and $2,000 in 2025. Commencing from 2024, the overall child tax credit will be subject to inflationary adjustments.
Conspicuously absent from this legislative initiative is a provision addressing a facet of the state and local tax deduction, which the Tax Cuts and Jobs Act of 2017 capped at $10,000. This cap applies to both single and married filing jointly taxpayers. Advocates had anticipated a provision to elevate the married filing joint cap to twice the single cap, thus eliminating the marriage penalty, but this provision was notably omitted from the legislation.
The bill has since been passed in the House of Representatives, and awaits the Senate.