Bipartisan tax deal framework released

This morning, Senate Finance Committee Chair Ron Wyden (D - OR) and House Ways and Means Committee Chair Jason Smith (R - MO) announced the framework of a bipartisan, bicameral tax package. The plan, titled The Tax Relief for American Families and Workers Act of 2024 (the Act), provides low-income families additional access to the Child Tax Credit, addresses three critical business tax breaks curtailed by the Tax Cuts and Jobs Act (TCJA) of 2017, and several other tax provisions.

Prospects for passage

While the compromise contains several provisions with significant bipartisan support, the prospects for the deal’s passage are unknown. Senate Finance Committee Chair Wyden is advocating for swift action, as he’d like the bill to be signed into law before the start of the 2023 tax filing season, which is set to begin on Jan. 29, 2024.

The bill does not yet have the momentum it needs to be signed into law. Notably, the ranking members of the bicameral committees, Senate Finance Committee ranking member Mike Crapo (R - ID) and Ways and Means Committee ranking member Richard Neal (D - MA), have not signed on to the compromise. Additionally, the bipartisan state and local tax (SALT) caucus is likely to take issue with the current proposal, as it does not provide any relief for the $10,000 SALT cap. Even if negotiators can secure widespread support, the bill will either need to pass as a standalone measure, which would likely require two-thirds approval in the House, or it would need to attach to another legislative vehicle.

Congress’ immediate priority is passing a short-term continuing resolution (CR) to avoid a government shutdown. The current CR funds four of the 12 appropriations bills through Jan. 19 and the other eight through Feb 2. Leaders have agreed on a plan that would extend funding at current levels through March 1 and March 8, respectively.

2026 sunsets

Most of the proposed adjustments are effective through the 2025 tax year. Enactment of the current proposal will dial up the pressure on lawmakers next year, as there are numerous additional TCJA individual tax provisions in effect that are currently set to expire after the 2025 tax year. 

What is included in the deal

Child tax credit

Currently, taxpayers can claim a refundable Child Tax Credit (CTC), the maximum computed as the