The US House passes the bipartisan tax deal to expand the child tax credit. Up next: The Senate.

A nearly $80 billion bipartisan tax deal, which combines a temporary expansion of the child tax credit with long-sought provisions for business, made a significant step forward Wednesday evening when it was passed by the US House of Representatives.

The vote of 357-70 showed strong bipartisan support for the pact with a deal that now heads to the Senate. The political terrain in the upper chamber may be trickier — and a final vote to send it to Biden’s desk is far from certain. Nonetheless, Wednesday’s overwhelming passage is likely to encourage advocates of the deal to push for quick action in order to ensure that the bill's provisions take effect before the current tax filing season gets underway in earnest.

In a statement ahead of Wednesday's vote, House Speaker Mike Johnson helped push through the deal by throwing his support behind the pact.

"This bottom up process," he wrote, "is a good example of how Congress is supposed to make law."

Read more: Child tax credit: Everything you need to know for the 2023 tax year

The bipartisan vote also came after days of behind-the-scenes wrangling among members of Johnson’s Republican caucus over whether to amend the deal to address issues like the state and local tax (SALT) deduction — a top issue in higher-tax states — and immigration.

But in the end, the passage of the 83-page bill was accomplished using a procedural maneuver known as a suspension of the rules, which allowed Republican leadership to block all proposed amendments and quickly pass it with the support of a two-thirds majority in the House.

The advancement of the bill, formally known as the Tax Relief for American Families and Workers Act of 2024, was a notable win for the House Ways and Means Committee’s GOP leader, Jason Smith of Missouri. He negotiated the deal, sold it to his colleagues, and helped push it over the finish line in recent days. He called it a “strong, common sense, bipartisan step forward” during the final House debate on Wednesday evening.

The pact is now headed to the Senate, where it will be championed by the Senate Finance Committee's Democratic Chair, Ron Wyden of Oregon, who negotiated the deal with Smith.

What’s in the bill

The deal covers priorities for both parties.

Republicans are hoping to renew three business world deductions from the 2017 Trump tax cuts that have begun to be phased out in recent years. Those provisions would allow companies to deduct more for things like research and development, equipment investments, and interest costs.

For the Democrats, the child tax credit would receive a new expansion that would allow poorer families greater access to the credit. One report from the progressive Center on Budget and Policy Priorities estimated that 16 million children in lower-income households would benefit from the enhancement, with half a million of them lifted above the poverty line.

The deal includes a range of other provisions around issues like double taxation for companies that operate in Taiwan and additional assistance for disaster-struck communities; the costs of the bill would be paid for by implementing changes to a pandemic-era employee retention tax credit.

This bill — if enacted — would serve as a stopgap of sorts ahead of a tax debate in 2025, which will center around an array of provisions in the 2017 Trump tax cuts that are set to expire on Dec. 31, 2025.

This week's progress marks a rare spot for bipartisanship in Washington for a deal that has received the backing of much of the business community.

The Business Roundtable, an association representing CEOs in Washington, recently said the uncertainty around the research and development provision meant "America's role as the global leader in innovation is at risk."

A range of critics remain

Wednesday's vote also showed the deal's ability to weather criticism.

From the far-right, some Republicans were wary of the child tax credit expansion portion of the deal. House Freedom Caucus chair Bob Good (R-Va.) spearheaded an effort to amend the bill to change the underlying credit and bar undocumented immigrants from collecting the credit entirely. It was an idea that, had it been considered and passed, would almost surely have sunk the deal.

Rep. Chip Roy (R.-Texas) organized the final opposition to the bill Wednesday night on the House floor, focusing on the immigration controversy — and further claiming the child tax credit provisions would “continue to expand the welfare state.”

Wednesday's vote also saw opposition from the left, with 23 Democrats casting no votes, largely over concerns that the child tax credit expansion didn’t go far enough to offset the business world provisions.

But the most persistent area of opposition came from moderate House Republicans who were unhappy that the deal didn't address the state and local tax (SALT) deduction caps imposed in the 2017 Tax Cuts and Jobs Act. The cap on the deduction that taxpayers in high-tax states are able to take against their federal returns was set at $10,000 in the 2017 law and has been a concern for Republicans in high-tax states ever since.

That issue came to a head Tuesday when some of these moderate Republicans nearly ground the floor to a halt on an unrelated issue as a way to register their opposition. The breakthrough that led to Wednesday’s vote, reports PunchBowl News, was a commitment from Speaker Johnson to hold a separate vote next week on adjustments to SALT deduction limits for married couples.

Next, the freshly passed bill heads to the Senate, where a vote hasn't yet been set but has powerful backers like Sen. Wyden pushing for quick action, largely in order to have the provisions be felt during the coming tax filing season.

Senate Majority Leader Chuck Schumer controls the Senate floor and hasn't announced a vote but has stated his support for the deal calling it "a great opportunity to help working families” as well as businesses.

Ben Werschkul is Washington correspondent for Yahoo Finance.

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