Tax Relief Act of 2024 Could Save Thousands of American Children from Poverty
In a significant legislative move, the House of Representatives recently passed the Tax Relief for American Families and Workers Act of 2024. This comprehensive bill, now awaiting Senate approval, promises to bring about substantial changes in the tax landscape, directly impacting American families and the broader economy.
The Tax Relief for American Families and Workers Act of 2024 was passed by the House of Representatives.
Child Tax Credit: A Beacon of Hope
At the core of the legislation is the enhancement of the Child Tax Credit (CTC), a provision set to offer a much-needed financial reprieve to families across the nation. As Thomson Reuters Tax & Accounting reports, the bill proposes to index the CTC to inflation, with the refundable portion set to increase incrementally through 2025. This adjustment allows families to use either their current or prior year’s income to calculate the credit, providing flexibility and immediate relief to those grappling with the economic challenges of raising children in today’s environment.
Senator Kirsten Gillibrand has been a vocal advocate for this change, emphasizing its potential to lift nearly 900,000 children out of poverty.
“How we choose to support them and their families says a lot about our nation… In the richest country in the world, no child should have to grow up in poverty,” Gillibrand said.
The legislation proposes indexing the Child Tax Credit to inflation.
Empowering Businesses for Economic Growth
Beyond family support, the Act introduces several incentives aimed at spurring business growth and innovation. Notably, it allows for the immediate deduction of costs related to U.S.-based research and development (R&D), a departure from the previous five-year amortization requirement, reports America First Policy Institute. This provision is designed to stimulate investment in new technologies and processes, thereby fostering job creation and economic expansion.
The bill also reinstates full and immediate expensing for investments in machinery, equipment, and vehicles, further incentivizing businesses to upgrade their operations and increase productivity, as reported by the United States House Committee on Ways and Means Committee.
The refundable portion of the Child Tax Credit will increase through 2025.
Addressing Disaster Relief and Affordable Housing
The legislation does not stop at tax credits and business incentives; it also extends a helping hand to those affected by natural and man-made disasters. Tax relief measures for recent hurricanes, floods, wildfires, and other calamities are included, offering solace to individuals and businesses facing the daunting task of rebuilding in the aftermath of such events.
According to the Bipartisan Policy Center, the Act tackles the pressing issue of affordable housing by enhancing the Low Income Housing Tax Credit (LIHTC). By restoring an allocation increase and reducing the private activity bond financing requirement, the bill aims to finance over 200,000 affordable homes, addressing a critical need and providing much-needed relief to individuals and families struggling to find affordable housing.
The Act aims to finance over 200,000 affordable homes by enhancing the LIHTC.
Looking Ahead: The Senate’s Role
As the bill moves to the Senate, its future hangs in the balance. The bipartisan support it received in the House bodes well, yet the outcome remains uncertain due to the Senate’s narrow divide. The implications of the Tax Relief for American Families and Workers Act are far-reaching, with the potential to significantly alleviate financial burdens, stimulate economic growth, and enhance the well-being of American families and communities.
The Tax Relief for American Families and Workers Act of 2024 represents a concerted effort to reshape the tax code in favor of American families and businesses. By addressing critical issues such as child poverty, business growth, disaster recovery, and housing affordability, the legislation has the potential to effect meaningful change in society.
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