Some Republican lawmakers are seeking an increase in the child tax credit while scrapping other controversial tax benefits.
The “Family First Act,” sponsored by Sen. Jim Banks, R-Iowa, and Rep. Blake Moore, R-Utah, would raise the credit to $4,200 for children under 6 years old and $3,000 for older children. Families can claim the credit for up to six children and would be “fully refundable.”
Notably, the legislation would add a $2,800 credit for pregnant women starting at 20 weeks. The credit amounts are expected to rise with inflation over time.
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However, the bill would also scrap the “head of household” filing status and end the “additional exemption for dependents” and the State and Local Income Tax Deduction, which is often used by those in high-tax states.
Filers can deduct up to $10,000 from state and local taxes based on the 2017 federal law. Some Republican and Democratic lawmakers in high-tax states support the SALT deduction, whereas other lawmakers oppose it.
“Strong nations are made of strong families. My bill delivers real relief by cutting taxes, removing marriage penalties and making it easier for parents to support their kids and build a better future,” Banks told FOX Business in a statement Thursday.
The credit reduces “by $50 for each $1,000” if somebody’s “modified adjusted gross income” is above $200,000 or $400,000 for joint filers.
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Currently, the child tax credit is $3,600 for children under 6 and $3,000 for those 6 and older, which changed under the American Rescue Plan Act of 2021, according to the IRS.
Congress has been out of session the past two weeks, but conversations on tax policy are at the forefront as the 2017 Tax Cuts and Jobs Act is scheduled to expire this year if its provisions are not made permanent.
Specifically, it would end the Child and Dependent Care Tax Credit that helps some parents pay for daycare, but it is only used by a small percentage of parents, according to American Enterprise Institute Senior Fellow Timothy Carney. The legislation also makes changes to the earned income tax credit.
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“This year, with the expiration of provisions from the Tax Cuts and Jobs Act, we have a historic opportunity to champion pro-family policies,” Moore said in a statement.
“The Family First Act will streamline antiquated federal tax policies into an enhanced child tax credit for working families and a new tax credit for pregnant mothers. This fiscally responsible approach affirms the dignity of work and promotes marriage, supporting families as they build stronger and more prosperous communities for the next generation,” the Utah Republican continued.
The legislative proposal comes as the Trump administration floats the possibility of a $5,000 incentive for having a baby.
“Sounds like a good idea to me,” Trump told the New York Post.
Fox Business recently reported on other tax proposals being made for families, including a bipartisan push to make the adoption tax credit refundable again.
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