Sponsors (2)
Official title: To amend the Internal Revenue Code of 1986 to enhance the child tax credit, and for other purposes.
Introduced January 13, 2025 by Blake D. Moore · Last progress January 13, 2025
The bill increases and protects refundable tax credits for many low‑income workers and tightens preparer penalties, but it simultaneously overhauls filing statuses and exemptions in ways that likely raise taxes for many families and create administrative and compliance burdens during the transition.
Low-income workers with children would see larger EITC payments and some childless single filers could receive a modest refundable credit, increasing after‑tax incomes for many lower‑income households.
The bill clarifies how credit amounts are inflation‑indexed, helping preserve the real value of credits over time and reducing unplanned erosion of benefits.
A tighter $500 due‑diligence penalty on preparers could reduce improper EITC claims and protect taxpayer funds by discouraging low‑quality or fraudulent tax preparation.
Removing the head‑of‑household filing status and eliminating the dependent exemption would raise taxable income and likely increase taxes or reduce refunds for single parents and many families with dependents.
Changes to filing categories and credit references could make some taxpayers ineligible for other credits (e.g., portions of the Premium Tax Credit) or reduce amounts they receive.
Complex changes across multiple code sections and deleted filing categories will increase administrative burden for taxpayers and the IRS in the transition year after 2025, likely raising compliance costs and processing delays.
Based on analysis of 2 sections of legislative text.
Revises EITC caps, earned-income thresholds, phaseouts, joint-return adjustments, and inflation indexing effective after 2025.
Changes the Earned Income Tax Credit (EITC) by raising and revising credit limits, earned-income thresholds, phaseout amounts, joint-return adjustments, and inflation-indexing rules for tax years beginning after December 31, 2025. The bill updates multiple dollar amounts for taxpayers with and without qualifying children and alters how joint returns and inflation adjustments are calculated. These revisions amend 26 U.S.C. § 32 (the EITC statute) with new tables and numeric caps, replace certain calendar-year references, and make the new calculations effective for taxable years after 2025, directly changing eligibility and benefit sizes for low- and moderate-income workers and families.