On November 16, the House approved, 227-205, H.R. 1, the Tax Cuts and Jobs Act. The bill cleared the House Ways and Means Committee on November 9 (see The Source, 11/10/17). In addition to consolidating individual tax brackets, the bill would increase the value of the child tax credit and establish nonrefundable non-child dependent and family flexibility tax credits.
The bill would repeal the business credit for child care expenses and the Work Opportunity Tax Credit, which currently allows employers to claim credit for wages paid to employees from certain groups, including low-income individuals and veterans, in the first year of their employment.
Senate Finance Committee
On November 16, the Senate Finance Committee approved, 14-12, its version of the measure (as-yet-unnumbered), as amended.
According to a description of the chairman’s amendment, the bill would increase the child tax credit from $1,000 to $2,000; the House bill would increase the credit to $1,600. The credit would begin to phase out at $500,000 for married taxpayers; the current threshold is $110,000. The expanded credit would expire in 2026.
As is the case under H.R. 1, the refundable portion of the credit would be indexed to inflation. In order to receive the refundable portion of the credit, taxpayers must include a Social Security number for each qualifying child for whom the credit is claimed. A $500 nonrefundable credit would be available for non-child dependents.
The legislation would repeal the individual mandate provision of the Patient Protection and Affordable Care Act (ACA, also known as Obamacare) (P.L. 111-148). The mandate requires individuals to purchase health insurance or be assessed a tax penalty if they fail to do so.