New Tax Bill: How It Affects You in 2025

On February 6, 2025, the U.S. House of Representatives passed a new tax bill called the “Tax Relief for American Families and Workers Act.” This bill makes big changes to taxes, helping families, businesses, and housing developers. It will now move to the Senate for more discussion before it can become law.

Some people think this bill will help the economy and give relief to families. Others worry that it might add to the national debt and mostly help big companies. Let’s look at what this bill does and how it could affect you.

Bigger Child Tax Credit: More Money for Families

One of the biggest changes in this bill is that families will get more money from the Child Tax Credit (CTC).

What’s changing?

• The credit per child is going up to $2,000. (Used to be $500 per child)
• It will increase over time to keep up with inflation.
• More low-income families can get the full credit, even if they don’t pay a lot in taxes.

Why does this matter?

This tax credit helps families pay for food, rent, and child care.

“This is a game-changer for working families,” said Rep. Richard Neal (D-MA). “Parents struggling to cover expenses will get much-needed relief.”

Some experts say that this extra money will help the economy because families will spend more on things they need. A report from the Tax Policy Center found that past Child Tax Credit increases helped reduce child poverty and boosted family savings.

Why are some people against it?

Some lawmakers worry that giving more money to families will increase the national debt.

“We need to help families, but we can’t ignore our country’s rising debt,” said Senator John Barrasso (R-WY).

Business Tax Breaks: Helping Companies Grow?

This bill also brings back tax breaks for businesses.

What’s changing?

Businesses can write off the full cost of new equipment and buildings right away.

• Companies doing research and development will get bigger tax benefits.
• Small businesses will get more tax credits when they invest in new projects.

Why does this matter?

Supporters say these tax breaks will help businesses grow and create more jobs.

“Businesses need stable tax rules to plan for the future,” said Senator Mike Crapo (R-ID). “These changes will help companies expand and hire more workers.”

Affordable Housing Tax Credits: Will They Help?

The U.S. is facing a housing crisis because there aren’t enough affordable homes. This bill increases tax credits to encourage developers to build more low-income housing.

What’s changing?

• The bill increases tax credits for companies building affordable housing.
• It makes it easier for developers to qualify for these tax benefits.
• More private companies will be able to invest in low-cost housing projects.

“Affordable housing is one of the biggest challenges we face,” said Lisa Daniels from the National Low Income Housing Coalition. “This bill won’t solve everything, but it’s a step in the right direction.”

New Tax Rules for Taiwan: What’s Changing?

A smaller part of this bill changes tax rules for Taiwan. It stops businesses from being taxed twice when they work in both the U.S. and Taiwan.

Why does this matter?

Taiwan is one of the world’s biggest tech manufacturers, especially for computer chips. The U.S. wants to keep strong business ties with Taiwan.

“This is an important move for our economy,” said Rep. Kevin Brady (R-TX). “It helps keep trade strong and protects our supply chains.”

Why are some people against it?

China does not support the U.S. making deals with Taiwan because it sees Taiwan as part of its country. This tax agreement could increase tensions between the U.S. and China.

How Will the Government Pay for These Tax Cuts?

To pay for these new tax cuts, lawmakers are ending a COVID-19 relief program called the Employee Retention Tax Credit (ERTC).

What is the ERTC?

The ERTC was a pandemic-era tax credit that helped businesses pay their workers during the COVID-19 shutdowns.

Why is it being cut?

• The government needs money to pay for new tax breaks.
• Officials say the ERTC was abused by businesses that didn’t qualify.
• The IRS found billions of dollars in fraud related to this program.

“The ERTC had to go,” said Rep. Kevin Brady (R-TX). “It was a magnet for fraud and cost way more than expected.”

What Happens Next?

The bill now moves to the Senate, where lawmakers will debate and possibly change parts of it. If it passes, it will go to President Biden for final approval.

Big Questions to Watch:

• Will the Child Tax Credit really help families or just add to the national debt?
• Will the business tax cuts actually create more jobs?
• Will the housing tax credits make homes more affordable?
• How will small businesses handle the loss of the ERTC?

If passed, this bill will change tax rules starting in 2025, affecting families, businesses, and homeowners across the country.

Final Thoughts: Will This Tax Bill Help or Hurt?

This bill makes major tax changes, with clear winners and losers.

• Winners: Families with kids, businesses investing in new projects, housing developers.
• Losers: Businesses losing the ERTC, people worried about the national debt.

Some people believe these tax changes will help the economy grow, while others fear they will benefit the wealthy more than regular workers.

With Senate approval still needed, Americans should stay informed and prepare for possible tax changes in 2025.

FAQs About the 2025 Tax Bill

1. How does the new tax bill change the Child Tax Credit?

The bill increases the Child Tax Credit to $2,000 per child and makes it easier for low-income families to get the full amount. The credit will also increase with inflation each year.

2. Will small businesses benefit from this tax bill?

Small businesses may benefit from tax credits on investments and equipment. However, the bill removes the Employee Retention Tax Credit (ERTC), which some small businesses still rely on.

3. Does this bill help with affordable housing?

Yes. The bill expands tax credits for developers building affordable housing, but experts warn that more policies are needed to fix the housing crisis.

4. How is the U.S. handling taxes on Taiwan businesses?

The bill prevents double taxation on U.S. and Taiwanese businesses to encourage trade and investment. Some experts believe this could cause tension with China.

5. When will this bill go into effect?

The bill still needs Senate approval and the President’s signature. If passed, tax changes would take effect in 2025.