Introduced in early 2025, the Tax Relief for American Families and Workers Act is a bipartisan effort designed to support working-class Americans and businesses. The bill focuses on expanding the Child Tax Credit (CTC), restoring certain business tax breaks, and boosting affordable housing efforts.
If passed, this legislation could have a major impact on tax filings for millions of Americans in the coming years.
Key Provisions of the Act
- Expansion of the Child Tax Credit (CTC)
One of the most talked-about aspects of the bill is the increase in the Child Tax Credit. Here’s what it includes:
- Higher Maximum Credit – The current credit of $2,000 per child would rise over the next few years to adjust for inflation.
- More Support for Low-Income Families – Families who previously received only partial credit due to income limits would now qualify for full benefits.
- Faster Refunds – The bill accelerates the process for taxpayers to receive the full credit amount sooner.
This expansion is intended to lift more children out of poverty while easing financial burdens for working parents.
- Restoration of Corporate Tax Deductions
While families will see direct relief, businesses are also set to benefit from the act. Some key tax breaks from the 2017 Tax Cuts and Jobs Act are making a comeback, including:
- Immediate Deductions for Research & Development (R&D) Costs – Companies will once again be allowed to write off R&D expenses in the year they occur, rather than spreading them out over multiple years.
- Business Interest Deduction Expansion – Companies will regain the ability to deduct more of their interest expenses from taxable income.
By restoring these provisions, the bill aims to encourage innovation and investment, particularly in tech and manufacturing industries.
- Boosting Affordable Housing
With rising housing costs across the country, this bill also strengthens the Low-Income Housing Tax Credit (LIHTC). This program incentivizes developers to build and maintain affordable rental housing, increasing the supply of lower-cost housing units.
For families struggling with high rents, this measure could provide more opportunities for stable, affordable housing in the coming years.
- Tax Adjustments for Taiwan Trade
One lesser-known but important part of the bill is a new tax agreement between the U.S. and Taiwan. The goal? To eliminate double taxation on businesses operating between the two countries. This move is seen as a strategic effort to strengthen U.S.-Taiwan economic ties while making it easier for American companies to expand abroad.
- Ending the Employee Retention Tax Credit (ERTC)
To help fund these new tax breaks, the act proposes phasing out the Employee Retention Tax Credit (ERTC). The ERTC was originally designed to help businesses keep employees on payroll during the COVID-19 pandemic, but lawmakers believe it is no longer necessary.
Who Benefits the Most?
Families with Children
With an expanded Child Tax Credit, millions of low- and middle-income families stand to gain extra financial relief, particularly those who previously couldn’t claim the full benefit.
Small & Large Businesses
By restoring key tax deductions, companies—especially those in research-heavy industries—will find it easier to invest and grow.
Renters Seeking Affordable Housing
With an increase in funding for low-income housing projects, renters in high-cost cities may see more affordable options in the future.
What’s Next?
The Tax Relief for American Families and Workers Act still needs to pass both the House and Senate before becoming law. While it has bipartisan support, debates over funding sources and the impact on the federal deficit could slow down progress.
If passed, some provisions—like the expanded Child Tax Credit—could go into effect as early as 2025, impacting next year’s tax filings.
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