Since the House-Senate conference committee was formed last week, the Tax Cuts and Jobs Act conferees have been working to reconcile the House and Senate bills to develop a final package of historic tax reform. And today, the conference committee is holding a meeting on the insert space legislation. Two of the most important provisions in both the House and Senate versions of Tax Cuts and Jobs Act are the increased standard deduction and the increased child tax credit.
What do these provisions mean? More money for hardworking American families.
The standard deduction is money that is not taxed by the federal government at all—also known as the “zero bracket.” Under current law, the standard deduction for individuals is $6,350 and the standard deduction for joint filers is $12,700.
The House plan nearly doubles the standard deduction for individuals and families—to $24,000 for joint filers—significantly growing people's "zero bracket." The Senate plan takes the same approach.
Child Tax Credit
It’s safe to say that having kids costs money. Diapers, clothes, education . . . we don’t need to go into it. A family of five—two parents and three kids— living off an $80,000 income is significantly less wealthy than a couple without children living off an $80,000 income. And our tax code should reflect that disparity more.
That’s why the Tax Cuts and Jobs Act increases the child tax credit. It’s pretty simple: Parents doing the hard, costly work of raising kids should get some extra relief come April 15. The House plan increases the child tax credit by $600 per child, and adds a new family credit of $300 for each parent and non-child dependent. The Senate plan also increases the child tax credit.
No matter where the conference committee lands on the exact numbers in the final text, the Tax Cuts and Jobs Act will be significantly increasing both the standard deduction and the child tax credit. These two provisions are the heart of the tax cut for middle-income families. Together, they spell relief for people and families at all income levels. The Joint Committee on Taxation (JCT) Chief reinforced this point as well, "There is a tax benefit to all income categories as we measure them."