House Passes a Sweeping, Bipartisan Bill with Business Tax Breaks and Expanded Child Tax Credit

The House of Representatives passed a bipartisan, sweeping tax bill on Wednesday that would reinstate some business tax cuts and expand the child tax credit for American families.

The bill, negotiated between Democrat Senator Ron Wyden of Oregon, chair of the Senate Ways and Means Committee, and GOP Representative Jason Smith of Missouri, chair of the House Ways and Means Committee, cleared the House by a 357-70 bipartisan vote.

The broad support in the lower chamber was crucial for the legislation because the GOP fast-tracked it using a tactic known as “suspension.” Any legislation that passes under suspension requires the support of two-thirds instead of a simple majority. It means the proposal required bipartisan support in the Republican-controlled House.

But the roughly $79 billion package faces an uphill climb in the Senate, where the GOP demands the legislation clear additional hurdles.

“There are issues that need to be fixed,” said GOP Senator Mike Crapo of Idaho, the leading Republican on the Senate Finance Committee that handles tax legislation.

What should you know about the legislation that faces significant challenges in the Senate? 

How the new deal will impact you

Although the new tax legislation wouldn’t rise to the level of the pandemic-era child tax credit, it would raise it to $1,800 per child in 2023, $1,900 per child in 2024, and $2,000 per child in 2025. It would also be adjusted for inflation in 2024 and 2025.

However, the newly passed legislation extends beyond benefits for parents. It would also benefit people impacted by natural disasters and strengthen the low-income housing tax credit. 

The legislation is also set up to extend business tax breaks through 2025 and implement benefits to help support trade with Taiwan.

Eliminating the employee retention tax credit would fund the agreement’s tax breaks. The tax credit was a pandemic-era provision to help businesses keep employees on their payroll, but it has been littered with fraud.

Which legislators are against the bill?

Far-right legislators strongly opposed the bill over the expansion of child tax credit. Those opposed claimed the child tax credit would be given out to undocumented immigrants.

However, the child tax credit wouldn’t provide new benefits for undocumented migrants and would only boost existing benefits for families receiving the credits. Only children with social security numbers will benefit from the legislation.

On the other end of the spectrum, progressive legislators also raised concerns with the legislation, arguing it doesn’t go far enough to unduly expand tax credits and benefits companies.

“The tax deal fails on equity,” said Democrat House Appropriations Chair Rosa DeLauro of Connecticut in a statement earlier in the week. “At a time when a majority of American voters believe a tax on big corporations should be increased, there is no reason we should be providing corporations a tax cut while only giving families pennies.”

Drama in the House

The legislation didn’t pass without drama in the lower chamber. A small group of moderate GOP House members from New York set off alarms over the legislation’s lack of reform for a local and state tax deduction popular with their constituents.

Moderates borrowed the playbook from their conservative colleagues — who have often brought the chamber to a standstill in recent months — and threatened to freeze legislative action and bury an unrelated vote. But legislators backed off when GOP leaders promised discussions on any program reforms.

The group met with Republican House Speaker Mike Johnson of Louisiana for hours on Tuesday night and agreed to “continue working with members to find a path forward for legislation related to” the tax deductions, said a spokesperson for Johnson.