Child tax credit expansion passes House

The bill passed the House by a vote of 357 to 70. It would expand eligibility for the child tax credit among the lowest-income families and adjust payments for inflation for the 2024 and 2025 filing years.

It would also bolster certain business tax credits — including deductions for research and development, interest expenses and investments in equipment — that were limited in an effort to cap the total costs of President Donald Trump’s 2017 tax cut law.

But in the Senate, where Republicans can block the bill with a filibuster, the measure began losing momentum Wednesday afternoon, even as it moved toward House passage.

Sen. Chuck Grassley (R-Iowa) criticized the measure, which nonpartisan estimates say could lift 400,000 children out of poverty, because it could help Biden’s reelection campaign. He said he would evaluate the bill after the House vote.

“I think passing a tax bill that makes the president look good — may allow checks before the election — means that he can be reelected and then we won’t extend the 2017 tax cuts,” Grassley said.

Sen. Mitt Romney (R-Utah), who supported previous child-tax-credit expansions, called the new legislation “excessive” and said it would turn into “another entitlement program which is massively expensive.”

Sen. Thom Tillis (R-N.C.), another conservative whom Democrats hoped to win over, said he hated elements of the bill, including the way authors Sen. Ron Wyden (D-Ore.) and Rep. Jason T. Smith (R-Mo.) proposed to pay for the tax cuts, the structure of credits for families, the bill’s timing at the start of tax season and that it left out other corporate tax cuts the GOP hopes to include in legislation in 2025.

The bill also risks losing steam on the left. Rep. Rosa DeLauro (D-Conn.), a major child tax credit booster, voted against the legislation, saying it did not go far enough to balance families’ interests with corporate tax relief.

Some liberal lawmakers say the legislation would give Democrats leverage to expand the child tax credit again in future debates, but DeLauro said Wednesday’s bill was a missed opportunity.

“Don’t tell me next year that you’re going to do this,” she said. “You had a chance to do it now. That’s the way the place works.”

The child tax credit expansion would ensure that more of the poorest families — who traditionally can’t claim the credit because they don’t owe any income tax — would qualify for at least some assistance. It would allow the lowest-income families to claim the credit for each child; the current credit allows those at the lowest end of the income spectrum only to receive payments for one child. The expansion would also permit some recipients to submit the previous year’s tax return to the IRS to receive a larger credit.

Treasury Department officials and Senate negotiators speaking on the condition of anonymity because they were not authorized to comment publicly said taxpayers would not be required to file amended tax returns to claim the larger credit.

Trump’s 2017 tax law doubled the existing child tax credit from $1,000 to $2,000 per child. In 2021, Biden’s American Rescue Plan increased it to $3,000 for kids under 17, or $3,600 for kids under 6. That helped cut child poverty significantly. Democrats sought to extend it, but most GOP lawmakers — and Sen. Joseph Manchin III (D-W.Va.) — opposed the move, and it expired at the end of 2021.

The expanded child tax credit kept 3 million children out of poverty, according to research conducted by Columbia University’s Center on Poverty and Social Policy. The poverty rate for children during the final month of expanded child tax credit payments under the American Rescue Plan Act was 12.1 percent, the center reported. The month after it expired, the child poverty rate jumped to 17 percent. It stood at 17.8 percent in November, the last month for which data is available.

That version also raised the amount of credit parents could claim, unlike the current bill, and it sent monthly checks for a portion of the credit to taxpayers for part of 2021.

Disputes among House Republicans on Tuesday threatened to derail the legislation. Politically vulnerable New York Republicans threatened to block House business over the bill because they wanted it to allow taxpayers to deduct more of their state and local taxes from federal returns. The deduction, known as SALT, is popular in high-tax states, but the 2017 Trump tax law imposed a $10,000 limit.

The Republican New Yorkers — Reps. Anthony D’Esposito, Nick LaLota, Michael Lawler and Andrew R. Garbarino — met Tuesday with House Speaker Mike Johnson (R-La.) and agreed that the House would work to find a way to vote on a bill to adjust the SALT deduction cap, and they dropped their protest.

So Johnson pressed forward to put the bill up for a vote under a suspension of House rules, which requires a two-thirds majority to pass.

“This is a win for millions of small businesses, a win for millions of working families, a win for America,” Smith said during debate on the House floor.

The vote followed weeks of internal discussions among Republicans in both the House and Senate about whether to advance the legislation.

On social media, conservative and right-wing accounts circulated a false claim that the legislation would enable undocumented immigrants to claim the child tax credit. That is not true — the law does nothing to alter a provision requiring Social Security numbers to access the benefit — but the concerns reached far-right lawmakers in the Capitol, with House Freedom Caucus Chairman Bob Good (R-Va.) telling reporters that he would not support “child tax credits going to illegals.” House Ways and Means Chairman Smith responded to these criticisms, emphasizing in social media posts to his fellow Republicans that the legislation would do nothing to change the number of immigrants who claim the credit.

Heritage Action, a conservative advocacy group, urged lawmakers to oppose the legislation in an email Monday, arguing that it would give too much money to families who do not work. “The bill’s cash welfare benefits are socially harmful and provide a steppingstone to President Biden’s work-free ‘child allowance,’” the email said.

But momentum grew from outside groups and the business lobby to enact the changes. At a private meeting earlier this week of the Republican Study Committee, a group of House GOP conservatives, some advocacy organizations voiced their support for the measure.

“There’s no real good reason to vote against it,” Grover Norquist, president of the anti-tax group Americans for Tax Reform, said. “This is a powerful, pro-growth tax cut. … What’s not to like for Republicans?”

Antiabortion groups also rallied to support the bill. Newsportual Association of Evangelicals said the child tax credit expansion “will make abortion less thinkable.”

“This is a win for millions of small businesses, a win for millions of working families, a win for America,” Smith said during debate on the House floor.

Also crucial was the decision of one particularly prominent Republican not to oppose the legislation, at least so far. Trump appears to have helped sink an emerging bipartisan Senate compromise on immigration and Ukraine, and if he had come out against the tax deal, too, many Republicans might have opposed it. An unsigned, eight-page PDF circulating among congressional GOP offices appeared to be written to persuade Trump supporters not to back the deal, according to a copy of the memo obtained by The Washington Post.

“Don’t undercut President Trump and his ability to provide bigger and better tax relief,” it says.

But Norquist and other supporters argued to Trump’s advisers that the deal represents a victory for the former president, saying it amounts to Democrats joining Republicans to extend a key Trump policy initiative. As of Wednesday evening, the former president had not weighed in on the measure.

Marianna Sotomayor, Liz Goodwin and Theodoric Meyer contributed to this report.