The House recently passed a $78 billion tax bill that would temporarily expand the child tax credit. The bill will then pass the Senate, but has seen support from both Democrats and Republicans.
The tax credit currently amounts to $2,000 per child, but is not fully refundable. The new bill would increase the refund amount to $1,800 for 2023 returns. The amount increases to $1,900 for 2024 returns and $2,000 in 2025.
“Last night I voted to pass a tax package that would expand the Child Tax Credit for 79,000 children in Memphis and TN-9, lifting many of them out of poverty,” Rep. Steve Cohen said in a press release. “The bill would also increase the low-income housing tax credit — which would benefit many families in my district and help alleviate the national affordable housing crisis — and restore the research and development tax credit that incentivizes businesses to innovate and create real local jobs.”
If passed in the Senate, the tax bill could initially help lift about 400,000 children out of poverty and provide financial support to three million low-income children and their families.
By raising the credit repayment limit, by 2025, more than half a million children will be lifted above the poverty line and around five million families currently living below the poverty line will receive increased support financial.
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IRS WAIVES $1 BILLION IN PENALTIES, WILL START 2024 TAX SEASON IN JANUARY. 29
Standard deduction adjusted for inflation
More tax changes are on the horizon this year, most notably an increase in the standard deduction to keep pace with inflation.
The IRS recently announced that single and married taxpayers filing separate returns will see a $750 increase in their standard deduction, which now stands at $14,600 for 2024.
For married couples filing jointly, the standard deduction increases by $1,500 for 2024 to $29,200. Heads of households will also see their standard deduction increase by $1,100 to $21,900 for the 2024 tax year.
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NEW IRS TAX FRAMEWORKS GO INTO EFFECT IN 2023, MEANING YOUR PAY COULD BE BIGGER
The EV tax credit includes fewer vehicles this year
The $7,500 EV credit for the purchase of new and used EVs has been limited to certain vehicles. Now only 13 vehicles are eligible for the credit.
In an effort to reduce dependence on Chinese manufacturers, electric vehicles that use Chinese-made parts are no longer eligible for the tax credit, according to the IRS.
For new EV purchases, eligible vehicles will receive the full $7,500 credit. Used vehicles purchased before or in 2023 are eligible for up to $4,000. The car buyer also must not exceed certain income limits and must use the car only for personal use.
Some of the vehicles still benefiting from the tax credit include the Tesla Model Y, R1T truck, NV’s Jeep Wrangler 4xe and the Ford F-150 Lightning truck.
“I expect it [list] will increase over time,” said Kate Whitefoot, associate professor of engineering and public policy at Carnegie Mellon University. “That’s because it will take time for automakers to establish the domestic supply chains of batteries and minerals needed to meet the requirements of the tax credits — which are still relatively new.”
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THE NUMBER OF ELECTRIC VEHICLES THAT CAN QUALIFY FOR THE NEW ELECTRIC VEHICLE TAX CREDIT DROPS TO 13
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