Tax impacts of the stimulus: Democrats’ plan would cut taxes by an average of $3,100

The tax savings for individuals would come from four major provisions in the legislation advanced by the House Ways and Means Committee last week:

The House could pass a bill as soon as next week, but it might face hurdles in the Senate, where Democrats have a slim majority and can’t afford to lose the vote of even one member of the party. Sen. Joe Manchin of West Virginia, a key Democratic moderate, has said he wants new relief spending to target those Americans who are struggling the most.
The Tax Policy Center analysis found that most of the tax relief from the House proposal would go to low- and middle-income families. Households earning less than about $91,000 a year would receive about two-thirds of the benefits. But the rich would get some relief, too. About 11% of the benefits would go to the highest 20% of families — those earning at least $164,000.

More low-income parents could take advantage of the child tax credit under the House plan, which makes it fully refundable. It also expands the credit from $2,000 to $3,600 for children under 6 and to $3,000 for children under age 18 for 2021. Low and middle-income parents would receive nearly 80% of expanded benefits.

The Tax Policy Center found that the lowest-income families would receive most of the benefits from the enhanced earned income tax credit, too. The proposal would boost the credit for workers without children by nearly tripling the maximum credit and extending eligibility to more people. Yet the analysis also said that the stimulus payments and child care tax credit could be even more targeted.

Democratic leaders tweaked the eligibility for the stimulus payments, excluding individuals who earn more than $100,000 and families earning more than $200,000. In previous rounds, more wealthy households could have received the payments depending on how many children they have.
The Tax Policy Center’s analysis considered only four major provisions in the bill. There are other possible changes, like an enhanced premium tax credit for Affordable Care Act health insurance, that could also affect a family’s tax bill.

CNN’s Tami Luhby contributed to this report.

Source: CNNPolitics – Breaking News

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