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Congressional tax committee leaders have announced a tentative bipartisan agreement on a nearly $80 billion package to enhance tax breaks for businesses and low-income families through 2025.

Senate Finance Committee Chairman Ron Wyden, a Democrat, and House Ways and Means Committee Chair Jason Smith, a Republican, outlined the $78 billion proposal. This plan includes temporary expansions of the child tax credit and the low-income housing tax credit and the restoration of full business tax deductions for research and development expenses and capital expenditures.

Child Tax Credit Deal

Under the deal, the maximum refundable child tax credit would rise by $200 per child, reaching $1,800 in 2023, $1,900 in 2024, and $2,000 in 2025. Although Democrats have sought to reinstate a more substantial COVID-era expansion of the child tax credit, Wyden emphasized that this plan would benefit 15 million children from low-income families and facilitate the construction of over 200,000 affordable housing units.

The proposed extensions are set to last until the end of 2025, coinciding with the expiration of personal tax cuts passed in 2017.

Wyden and Smith aim to rapidly pass the package to ensure that families and businesses can benefit from these tax breaks during the current tax filing season, which begins on January 29. However, the legislative agenda is currently clouded by deep disagreements over government spending, including debates over temporary measures to prevent a federal shutdown.

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