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Temporary Policies Complicate the Child Tax Credit’s Future

Over the next ten years, the structure of the Child Tax Credit (CTC) is scheduled to change, complicating efforts to extend enhanced Child Tax Credit benefits or reform the Child Tax Credit for the long-term. Rather than take an all-or-nothing approach or kick the can down the road by relying on temporary expansions, lawmakers could consider […]

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COVID-19 Tax Relief Added to Increasing Share of Households Paying No Income Tax

On Wednesday, the Tax Policy Center (TPC) released estimates on the portion of households with no federal income tax liability, finding that in 2020, about 60.6 percent of households did not pay income tax, up from 43.6 percent of households in 2019. Much of the 2020 increase was due to pandemic-related factors, but the growing […]

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Evaluating Trade-Offs of Expanded Premium Tax Credits as Enrollment Period Ends

August 15th was the deadline to take advantage of the premium tax credits (PTC) originally provided in the Affordable Care Act (ACA) and recently expanded in the American Rescue Plan Act (ARPA). Future extensions may provide longer-lasting benefits, although the extensions may create trade-offs for consumer choice and program costs. The ACA provided a refundable […]

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Census Data Shows Households Saved Economic Impact Payments

In 2020 and 2021, Congress enacted three rounds of economic impact payments (EIPs) for direct relief to households amidst the pandemic-induced downturn. Survey data from the U.S. Census Bureau indicates that households increasingly saved their EIPs or used them to pay down debt rather than spend them. While the data indicates that debt and saving became more common uses […]

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Unanswered Questions about Upcoming Advance Child Tax Credit Payments

Later this month more than 39 million households are set to receive advance payments of the Child Tax Credit (CTC) that was expanded in the March 2021 American Rescue Plan. Many households are uncertain about how the advance payments will affect their refunds or taxes owed when they file next year, and some questions about […]

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Tax Foundation Comment on Treasury’s State Tax Cuts Limitation Rule

Last month, the U.S. Department of the Treasury promulgated an interim final rule regarding its implementation of the American Rescue Plan Act (ARPA) provision restricting states’ ability to cut taxes. We previously outlined four questions Treasury needed to answer in its guidance and subsequently analyzed the text of the rule when it was promulgated in […]

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Biden Proposals Would Significantly Expand Benefits Administered Through the Tax Code

President Biden’s newly released budget and the Treasury Department’s “Green Book” of revenue proposals outlines a vision of more spending administered through the tax code. The proposals have revived the debate over the proper role of spending in the tax code, and relies on the Internal Revenue Service (IRS) to further expand beyond its revenue […]

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Tax Foundation Webinar Recaps the Complexities of the 2021 Tax Filing Season

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Treasury Rule on State Tax Cuts Limitation Raises New Questions

Today, the U.S. Treasury issued an interim final rule on the $350 billion in State and Local Fiscal Recovery Funds provided under the American Rescue Plan Act (ARPA). The proposed rule resolves several important questions but continues to involve the federal government in state finances at an extraordinary level. Most astonishingly, the rule may functionally […]

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Details and Analysis of Tax Proposals in President Biden’s American Families Plan

The Biden administration’s proposed American Families Plan (AFP) would partially pay for about $1.8 trillion in new federal spending on education and family programs with about $661 billion in additional taxes on higher-income individuals and pass-through businesses like partnerships, sole proprietorships, and S corporations. The tax system would become more progressive than under current law […]