On February 11, the House Ways and Means Committee finished marking up draft legislative text in the Fiscal 2021 budget resolution reconciliation, which contains tax law proposals based on President Joe Biden’s COVID relief package, the American Rescue Plan.
The legislation now goes to the House Budget Committee where the budget resolution process requires its passage to the floor be done without substantive revision. After expected passage on the House floor, it will move to the Senate for committee action. and then to the full Senate for consideration. Only a simple majority will be required for approval in the Senate under the reconciliation rules.
Tax provisions include:
- A $1,400 direct stimulus payment to taxpayers, subject to income limitations;
- Expanding the Earned Income Tax Credit for workers without children, by nearly tripling the maximum credit and extending eligibility;
- Raising the Child Tax Credit to $3,000 per child ($3,600 for children under 6 years old), and making it fully refundable and advanceable (the Tax Foundation explained that the credit would be advanced to families monthly, at $250/month for older children and $300/month for younger children);
- Expanding the Child and Dependent Tax Credit to allow families to claim up to half of their child care expenses;
- Increasing the Affordable Care Act’s (ACA) premium tax credits for 2021 and 2022; and
- Extending business tax credits for paid sick and family leave through September 30, 2021, and the Employee Retention Tax Credit to December 31, 2021.