Two New Bills Propose Tax Changes

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The House and Senate announced two proposed bills earlier this summer, The American Family Act and The Tax Cuts for Working Families Act. These bills include tax changes such as the return of the child tax credit and a potential increase to the standard deduction.

Here is a brief overview of some of the proposed tax changes included in the bills.

American Family Act

The Senate proposed the American Family Act in June of 2023, which focuses primarily on reviving the Child Tax Credit (CTC). The CTC was initially introduced during the pandemic and expired at the end of 2021.

The bill would create a new $300 per month per child credit for children under 6 years of age and a $250 per month per child credit for children under 17 years of age—increasing the credit for all children. In addition, the credit would be fully refundable.

Tax Cuts for Working Families Act

The House Committee on Ways and Means recently passed a new bill called The Tax Cuts for Working Families Act. If it is passed by the Senate and signed into law, this bill would increase the standard deduction by providing a new Guaranteed Deduction Bonus for the next two years.

The proposed guaranteed deduction bonus for the 2024 tax year would be:

• $2,000 for an unmarried individual (other than a head of household or a surviving spouse) and a married individual filing a separate return

• $3,000 for a head of household

• $4,000 for married individuals filing a joint return and a surviving spouse

The bill proposed that for the 2025 tax year, the amounts would be indexed for inflation, but the bonus would not apply to tax years after 2025.

What’s Next?

Right now, the American Family Act is in the House, and the Tax Cuts for Working Families Act is in the Senate. We’ll continue to monitor the situation and bring updates as they emerge. Have questions about the proposed bills or how they may impact your unique tax situation? Contact us to meet with one of our tax planning experts.