House passes  billion tax bill expanding child tax credit, its fate in Senate remains to be seen

House passes $78 billion tax bill expanding child tax credit, its fate in Senate remains to be seen

Credible House passes 78 billion tax bill expanding the child tax credit its fate in the Senate remains to be seen iStock 1186689610

The tax bill will help lift millions of families out of poverty. (iStock)

The House recently passed a $78 billion tax bill that would temporarily expand the child tax credit. The bill will move to the Senate next but has seen support from Democrats and Republicans.

Currently, the tax credit is $2,000 per child but is not fully refundable. The new bill would increase the refund amount to $1,800 for 2023 returns. The amount will increase to $1,900 for 2024 returns and $2,000 in 2025.

“Last night, I voted to pass a tax package that would expand the Child Tax Credit for 79,000 children in Memphis and TN-9, lifting many of them out of poverty,” said Congressman Steve Cohen in a press release. “The bill would also increase the Low Income Housing Tax – which would benefit many families in my district and help alleviate the nationwide affordable housing crisis – and restore the R&D tax break that encourages businesses to innovate and create real, local jobs. .”

If passed by the Senate, the tax bill would initially help lift an estimated 400,000 children out of poverty and provide financial support to three million low-income children and their families.

With the increase in the credit refund limit, by 2025, more than half a million children will be removed from the poverty line and about five million families currently living below the poverty line will receive additional financial support.

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The standard deduction is adjusted for inflation

Other tax changes are on the horizon this year, namely an increase in the standard deduction to keep up with inflation.

The IRS recently announced that single taxpayers and married filing separately will see a $750 increase in their standard deduction, now $14,600 for 2024.

For married couples filing jointly, the standard deduction will increase by $1,500 for 2024 to $29,200. Heads of households will also see their standard deduction increase by $1,100 to $21,900 for the 2024 tax year.

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The electric vehicle tax credit includes fewer vehicles this year

The $7,500 electric vehicle credit for new and used EV purchases is limited to certain vehicles. Now only 13 vehicles are eligible for the credit.

In an attempt to reduce reliance on Chinese manufacturers, electric vehicles that use Chinese-made parts are no longer eligible for the tax credit, according to the IRS.

For new EV purchases, qualifying vehicles get the full $7,500 credit. Used vehicles purchased before or in 2023 may qualify for up to $4,000. The car buyer must also not exceed certain income limits and must only use the car for personal use.

Some of the vehicles still eligible for the tax credit include the Model Y Tesla, the R1T Truck, NV’s Jeep Wrangler 4xe and the Ford F-150 Lightning truck.

“I was waiting for it [list] will increase over time,” said Kate Whitefoot, an associate professor of engineering and public policy at Carnegie Mellon University. “This is because it will take time for automakers to set up domestic batteries and mineral supply chains needed to meet tax credit requirements. — which is relatively new.”

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NUMBER OF ELECTRIC VEHICLES ELIGIBLE FOR NEW ELECTRIC VEHICLE TAX CREDIT LESS THAN 13

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