Summary
Changes the tax code to help people with high living costs by providing tax credits for housing, energy, child care, education, and healthcare.
What problem does this solve?
Many Americans are struggling with the rising costs of essential needs like housing, energy, child care, and healthcare. This bill provides a wide range of tax credits and deductions to lower these costs and make everyday life more affordable for families and individuals.
Who does this affect?
- Low and middle-income families
- First-time homebuyers and renters
- Businesses in the clean energy and housing sectors
What does this bill do?
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Sec. 31001
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Establishment of refundable child tax credit with monthly advance payment
Establishes a new monthly child tax credit
Replaces the current child tax credit with a larger, fully refundable credit paid in monthly installments. Provides up to $360 per month for children under 6 and $300 per month for children ages 6 to 17.
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Sec. 50001
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Increase in eligibility for health insurance premium assistance tax credit
Makes health insurance subsidies permanent
Permanently expands tax credits for health insurance purchased through the ACA marketplace. Removes the income cap for eligibility, ensuring no one pays more than 8.5% of their income for a benchmark plan.
Creates a new first-time homebuyer credit
Establishes a new refundable tax credit of up to $15,000 for first-time homebuyers to help with the cost of purchasing a primary home.
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Sec. 13002
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Refundable credit for rent paid for principal residence
Creates a new renter's tax credit
Establishes a new refundable tax credit for individuals who pay more than 30% of their income on rent for their main home.
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Sec. 42006
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Permanent extension of earned income credit rules for individuals without qualifying children
Permanently expands the earned income tax credit for childless workers
Increases the size of the tax credit for workers without qualifying children, lowers the minimum eligibility age from 25 to 19, and removes the maximum age limit.
Enhances the child and dependent care tax credit
Makes the tax credit for child and dependent care expenses fully refundable. Increases the amount of qualifying expenses to $8,000 for one child and $16,000 for two or more children.
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Sec. 12004
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Increase of exclusion of gain from sale of principal residence
Doubles the tax-free profit from selling a home
Increases the amount of gain excluded from taxes when selling a primary residence from $250,000 to $500,000 for single filers and from $500,000 to $1,000,000 for joint filers.
Makes the adoption tax credit refundable
Changes the adoption tax credit from nonrefundable to refundable, allowing eligible families to receive the full credit as a tax refund regardless of their tax liability.
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Sec. 41001
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American opportunity credit expanded to 6 years, made temporarily fully refundable
Expands the American opportunity tax credit
Allows students to claim the American Opportunity Tax Credit for up to six years of higher education, instead of four. Also makes the credit fully refundable for one year.
Creates a new tax credit for electric bicycles
Establishes a new refundable tax credit for 30% of the cost of a new electric bicycle, up to a maximum credit of $1,500.
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Sec. 42002
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Allowance of deduction for certain expenses of the trade or business of being an employee
Allows employees to deduct union dues
Creates an above-the-line deduction for union dues and related expenses, allowing employees to lower their taxable income without needing to itemize.
Creates a new tax credit for family caregivers
Establishes a new tax credit of up to $5,000 for working family members who have expenses related to caring for a qualified family member with long-term care needs.
What is the real world impact?
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Addresses widespread voter concerns about affordability
Tackles the high cost of living, a major issue for many voters. By offering financial relief across many areas like housing, energy, and child care, the bill aims to provide direct, noticeable benefits to families and individuals.
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Makes essential goods and services more affordable
Directly targets the high cost of living by using the tax code to lower expenses for housing, energy, child care, education, and healthcare, making these necessities more accessible for American families.
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Could increase national debt and inflation
Creates or expands dozens of tax credits, which could significantly reduce government revenue and increase the national debt. Some economists might argue that putting this much money into the economy could drive up inflation, making the cost-of-living crisis worse.
When does this start?
Most provisions will apply to tax years starting after December 31, 2025, though some take effect upon enactment.
Monthly child tax credit payments
The new monthly child tax credit applies to tax years after December 31, 2025, but the advance monthly payments are set to begin in the months following the bill's enactment.
First-time homebuyer credit
The new refundable credit for first-time homebuyers applies to homes purchased after the date the bill is enacted.
Affordable housing conversion credit
The new tax credit for converting commercial buildings into affordable housing applies to buildings placed in service after the date the bill is enacted.
Protections for domestic abuse victims
Rules requiring low-income housing to protect victims of domestic abuse apply to housing agreements made or changed on or after 30 days after the bill's enactment.