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Here’s what’s in the new bill to expand the child tax credit
Senior lawmakers on Tuesday January 17, 2024 announced a $78 billion bipartisan tax agreement — including retroactive boosts to the child tax credit that could affect families filing this season. But the proposed legislation could still face hurdles, experts say.
Retroactive to 2023, the plan would expand the child tax credit by broadening access, increasing the refundable credit and adding future inflation adjustments, according to an outline released Tuesday by House Ways and Means Committee Chairman Jason Smith, R-Mo., and Senate Finance Committee Chairman Ron Wyden, D-Ore. The proposal also restores expired business tax breaks.
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2024 tax filing season set for January 29, 2024
The Internal Revenue Service today announced Monday, Jan. 29, 2024, as the official start date of the nation's 2024 tax season when the agency will begin accepting and processing 2023 tax returns.
The IRS expects more than 128.7 million individual tax returns to be filed by the April 15, 2024, tax deadline.
Although the tax rates didn't change, the income tax brackets for 2023 are much wider than for the previous tax year. The difference is due to the rising inflation during the year, which is used to calculate the adjustments.
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When can I expect my refund?
The IRS says taxpayers who file electronically and are due a refund can expect it within 21 days -- if they choose direct deposit and there are no issues with their return.
By law, the IRS must wait until mid-February to issue refunds to taxpayers who claimed the earned income tax credit or additional child tax credit. According to the agency, those payments should be received by Feb. 27, 2024, for taxpayers who use direct deposit and have no other issues.
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2023 Federal Income Tax Brackets and Rates for Single Filers, Married Filing Jointly, and Heads of Households.
Tax Rate Single Filers Joint Returns Heads of Households
10% $0 to $11,000 $0 to $22,000 $0 to $15,700
12% $11,000 to $44,725 $22,000 to $89,450 $15,700 to $59,850
22% $44,725 to $95,375 $89,450 to $190,750 $59,850 to $95,350
24% $95,375 to $182,100 $190,750 to $364,200 $95,350 to $182,100
32% $182,100 to $231,250 $364,200 to $462,500 $182,100 to $231,250
35% $231,250 to $578,125 $462,500 to $693,750 $231,250 to $578,100
37% $578,125 or more $693,750 or more $578,100 or more
The standard deduction increased slightly
After an inflation adjustment, the 2023 standard deduction increases to $13,850 for single filers and married couples filing separately and to $20,800 for single heads of household, who are generally unmarried with one or more dependents. For married couples filing jointly, the standard deduction rises to $27,700.
Itemized deductions remain mostly the same
For most filers, taking the higher standard deduction is more practical and saves the hassle of keeping track of receipts. But if you have enough tax-deductible expenses, you might benefit from itemizing.
The following rules for itemized deductions haven't changed much for 2023, but they're still worth pointing out.
- State and local taxes: The deduction for state and local income taxes, property taxes, and real estate taxes is capped at $10,000.
- Mortgage interest deduction: The mortgage interest deduction is limited to $750,000 of indebtedness. But people who had $1,000,000 of home mortgage debt before December 16, 2017, will still be able to deduct the interest on that loan.
- Medical expenses: Only medical expenses that exceed 7.5% of adjusted gross income (AGI) can be deducted in 2023.
- Charitable donations: In 2023, the annual income tax deduction limits for gifts to public charities1 are 30% of AGI for contributions of non-cash assets—if held for more than one year—and 60% of AGI for contributions of cash. If you give both can and non-cash assets, the overall limit is generally 50% of AGI.
- Miscellaneous deductions: No miscellaneous itemized deductions are allowed.
2023 Earned Income Tax Credit (EITC)
Filing Status No One Two Three or More
Children Child Children More Children
Single or Head Income at Max Credit $7,840 $11,750 $16,510 $16,510
of Household Maximum Credit $600 $3,995 $6,604 $7,430
Phaseout Begins $9,800 $21,560 $21,560 $21,560
Phaseout Ends $17,640 $46,560 $52,918 $56,838
Married Filing Jointly
Income at Max Credit $7,840 $11,750 $16,510 $16,510
Maximum Credit $600 $3,995 $6,604 $7,430
Phaseout Begins $16,370 $28,120 $28,120 $28,120
Phaseout Ends $24,210 $53,120 $59,478 $63,398
Child Tax Credit
The maximum Child Tax Credit is $2,000 per qualifying child and is not adjusted for inflation. The refundable portion of the Child Tax Credit is adjusted for inflation and will increase from $1,500 to $1,600 for 2023
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