WASHINGTON — The House Ways and Means Committee advanced the highly anticipated tax portion of President Donald Trump’s agenda early Wednesday morning after a marathon meeting, approving an extension of current tax cuts due to expire by the end of the year.
The committee voted 26-19 along party lines to advance the tax measure, officially dubbed the “One, Big, Beautiful Bill,” that would make some of the tax cuts originally passed in Trump’s Tax Cuts and Jobs Act of 2017 (TCJA) permanent before they expire. In doing so, the bill halts an estimated $1,700 tax increase for working families that would kick in if the tax cuts were not extended.
“This process has been years in the making, and we are nearing the finish line to deliver real results for Utahns and all Americans,” Rep. Blake Moore, R-Utah, said in a statement. “This bill expands the child tax credit, provides critical tax breaks for small businesses and the working class, and makes America more competitive on the global stage.”
Child tax credit, adoption credit included in reconciliation bill
The tax measure includes a number of provisions first introduced by Moore, such as a permanent increase of the child tax credit, raising it from the $2,000 set in TCJA to $2,500.
The legislation would also increase access to the adoption tax credit partially refundable up to $5,000 to offset some of the costs of adoption such as court and attorney fees, travel expenses and other costs that are directly related to the “legal adoption of an eligible child,” according to the Internal Revenue Service.
The bill would increase the contribution limit for those with Health Savings Accounts, allowing individuals who make less than $75,000 to contribute an additional $4,300 each year and an additional $8,550 for families who make less than $150,000 a year.
Notably, the bill would create a new kind of savings account for children known as the Money Accounts for Growth and Advancement, or MAGA Accounts. The pilot program would allow any parent to open a MAGA Account for their child with a one-time credit of $1,000. Parents and friends of the child could then contribute up to $5,000 a year in separate investments until the child turns 18.
To be eligible for an account, the child must be a U.S. citizen with a Social Security number provided by at least one of the parents. The Social Security number must be considered “work eligible” in order for the account to be approved.
The 389-page framework includes a number of other tax cuts and corresponding tax hikes for certain groups, which will later be combined with other policies on energy, border and national defense as part of Trump’s massive reconciliation package.
However, the complete package could still face some obstacles when it comes to the floor next week due to lingering disagreements on certain tax measures.
Will Republicans agree on SALT deduction?
One of the most complicated matters still being hashed out is how much to expand federal deductions for state and local taxes paid, also known as SALT. While the issue does not affect a large number of constituents for most Republican lawmakers, there are several in blue-majority states who have made it a crucial issue — even going so far as to threaten final passage if a higher deductible is not included.
During a closed-door meeting on Monday, Republican leaders offered to increase the current deduction cap to $30,000 — up from the current $10,000 limit — and incorporate a new $400,000 income limit. Those parameters were advanced in the tax measure on Wednesday, but some New York Republicans have said they would vote against the package if those numbers don’t change.
“Obviously, we want to come to a resolution so that we can get a bill across the finish line,” Rep. Mike Lawler, R-N.Y., said on Wednesday. “But the fact is that as this is written, there is 0% chance that I would support it.”