skip to main content

Tax Cut Extension Bills Pass House, Senate

On August 1, the House passed, 256-171, the Job Protection and Recession Prevention Act (H.R. 8). The bill would extend for all income levels the tax cuts established in 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). The cuts would be extended through 2013.

Under H.R. 8, the $1,000 maximum child tax credit, first established in 2001, would be extended through 2013. The measure also would extend the rule that prohibits the refundable portion of the child tax credit from being considered income when determining eligibility for other federal programs.

The bill would extend through 2013 the maximum tax credit of $12,650 for expenses relating to adopting a child. Current law permits use of the credit for the adoption of a child with special needs; H.R. 8 would permit the credit to be claimed regardless of whether the child has special needs. The legislation also would extend for one year the employee tax credit for employee child care and the tax credit for dependent care.

The measure would extend for two years several rules that simplify and expand eligibility for the Earned Income Tax Credit (EITC), a refundable tax credit designed to decrease the tax burden for lower-income workers.

On July 25, the Senate approved, 51-48, the Middle Class Tax Cut Act (S. 3412). The bill would extend through 2013 the 2001 (P.L. 107-16) and 2003 (P.L. 108-27) tax cuts for those making less than $250,000. In addition, unlike its House counterpart, the measure would extend changes to the child tax credit, EITC, and American Opportunity Tax Credit enacted in 2009 under the American Recovery and Reinvestment Act (ARRA) (P.L. 111-5).

The ARRA increased eligibility for the refundable portion of the child tax credit by reducing the “floor” that adjusted gross income must exceed to claim the refundable credit. Enactment of P.L. 111-5 in 2009 reduced the “floor” from $10,000 to $3,000. In addition, the ARRA increased by $5,000 the phase-out range for all married couples filing a joint return under the EITC. The law also provided an expanded and partially refundable tax credit that would help families pay for postsecondary education. S. 3412 would extend these provisions through 2013.

The adoption tax credit, employee tax credit for child care, and the dependent care tax credit would be extended through 2013 under S. 3412.