2022-11-25 14:32:24

Stimulus Update: Child Tax Credit in the Middle of New Congressional Deal Making

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By The Motley Fool

Image source: Getty Images

Congress is known to haggle, and that's not necessarily a bad thing. When it works, wheeling and dealing is how everyone gets a little of what they want. Currently, the debate involves a year-end tax package. And tied to that year-end tax package is the reinstatement of an expanded Child Tax Credit and enhancement of the Earned Income Tax Credit (EITC).

What the GOP is asking for

Republicans -- and some Democrats -- want a change to a provision in the package requiring businesses to amortize research and development (R&D) expenses over five years. Businesses typically deduct these expenses from their taxes the year the R&D money is spent.

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Let's say a business spends $50,000 in R&D next year. While they were once able to deduct the entire $50,000, they must now spread the deduction out over five years. Businesses view this as a tax hike and have taken their concerns to Congress.

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