On January 1, the House approved, 257-167, the American Taxpayer Relief Act (H.R. 8). The bill would prevent the tax increases and spending cuts enacted in the Budget Control Act (P.L. 112-25) from taking effect. The Senate overwhelmingly approved H.R. 8 on December 31 by a vote of 89-8; President Obama is expected to sign the bill into law.
According to the Senate Finance Committee summary, the bill permanently extends the tax rates enacted by the Economic Growth and Tax Relief Reconciliation Act of 2001 (P.L. 107-16) and the Jobs and Growth Tax Relief Reconciliation Act of 2003 (P.L. 108-27) for individuals earning less than $400,000 and couples earning less than $450,000 annually. Tax rates for those earning more than $400,000 would increase from 35 percent to 39.6 percent.
The measure permanently extends changes to the child tax credit enacted in P.L. 107-16. The legislation also extends permanently the 2001 modifications to the dependent care tax credit and to the credit for qualified adoption expenses. The employer credit for child care assistance also is extended permanently.
The American Recovery and Reinvestment Act (P.L. 111-5) further modified the child tax credit so that earnings above $3,000 would count towards refundability. The legislation extends those changes through 2017. The measure also extends through 2017 the ability of families to claim the Earned Income Tax Credit (EITC) for three or more children, a change also enacted by P.L. 111-5. The measure permanently extends the provision of P.L. 111-5 that prevents the EITC and the child tax credit from being used when calculating eligibility for means-tested benefit programs.
H.R. 8 extends for two years the Work Opportunity Tax Credit, which allows businesses to claim a credit equal to 40 percent of the first $6,000 in wages paid to new hires in targeted groups, including recipients of Temporary Assistance for Needy Families (TANF) long-term family assistance benefits, and food and nutrition programs.
Emergency unemployment compensation is extended for one year. The measure also continues the Family-to-Family Health Information Centers, which assist families of children with special needs in making informed health decisions.
The legislation extends through September 30, 2013, the 2008 Food, Conservation, and Energy Act, also known as the Farm Bill (P.L. 110-246). The Farm Bill, which is due to be reauthorized, authorizes food and nutrition programs, including the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) and the Supplemental Nutrition Assistance Program (SNAP), formerly known as the Food Stamp program, among several other programs.
The automatic across-the-board cuts to spending programs, also known as sequestration, enacted in the Budget Control Act and scheduled to take place on January 2 are postponed for two months.
