Child Tax Credit may go up to $2,500 in 2026

On May 13, 2025, the House Committee on Ways and Means will hold a legislative markup of the Budget Reconciliation Legislative Recommendations Related to Tax. The staff of the Joint Committee on Taxation provides a description of the tax provisions of this legislation.

Summary:

The bill is broadly aimed at extending or making permanent various provisions from the 2017 Tax Cuts and Jobs Act (TCJA) that are set to expire after 2025. It includes changes that impact individuals, families, and businesses.

Key Provisions:

Individual and Family Tax Provisions

Standard Deduction: Extends the TCJA’s increased standard deduction and adds a temporary enhancement.
- Single: $16,000
- Married Filing Jointly: $32,000
- Head of Household $24,000
Child Tax Credit: Temporarily increases the credit to $2,500, makes refundability rules more generous.
Qualified Business Income (QBI) Deduction: Permanently extends and enhances the 20% deduction to 22%.
Estate and Gift Tax Exemption: Permanently sets the exemption at $15 million (indexed for inflation).
Alternative Minimum Tax (AMT): Makes permanent the TCJA’s higher exemption thresholds.
Other Deductions/Exclusions: Repeals or limits several deductions including personal exemptions, moving expenses (except for Armed Forces), and home equity interest.

Other Notable Items

Enhancements and extensions of tax rules for ABLE accounts, student loan forgiveness, and disaster-related casualty losses.
Repeal of exclusion for bicycle commuting reimbursements.
Adjustments for tax treatment in U.S. territories (e.g., Puerto Rico, Guam).

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