
President Trump Proposes Increasing Child Tax Credit to $2,500 and Offering $1,000 Per Child for Parents Who Open MAGA Savings Accounts in GOP Tax Bill
Share
House Republicans have introduced a new tax plan that will be a key focus of President Donald Trump's legislative agenda during his second term.
Unveiled on May 12, the proposal aims to make the tax cuts from the 2017 Tax Cuts and Jobs Act permanent. It suggests increasing the standard deduction and raising the child tax credit to $2,500 until 2028, then lowering it to $2,000 afterward. Currently, the child tax credit is $2,000 but is set to drop to $1,000 at the end of this year unless extended.
In a post on Truth Social, Trump praised the bill, calling it "GREAT" and urging congressional Republicans to support it without changes: "We have no alternative, WE MUST WIN!"
The plan also introduces a temporary tax deduction for tips and overtime pay until 2028 and provides an additional $4,000 tax deduction for seniors. It raises the limit on state and local tax deductions from $10,000 to $30,000, but those earning over $400,000 would receive a lower deduction. This part of the plan may cause disagreements among House Republicans, especially those from high-tax states who are pushing for an even higher cap.
Additionally, children would receive $1,000 each when their parents open new "MAGA" savings accounts for growth and investment.
The bill proposes a 5% tax on money that foreign workers in the U.S. send back to their families, although U.S. citizens sending money abroad would be exempt.
To avoid a major economic crisis, the plan includes a $4 trillion increase in the debt ceiling, which is necessary as the government is expected to reach its current limit in August.
The proposal also targets several recent Democratic initiatives. It plans to increase taxes on private university endowments, especially large ones like Harvard's, raise taxes on private foundations, and withdraw tax exemptions from organizations that support terrorism, which some see as a move against pro-Palestinian groups.
Moreover, it seeks to eliminate clean energy tax credits introduced under President Biden’s administration, including those for electric vehicles and renewable energy production.
The House Ways and Means Committee will meet on May 13 to discuss the proposal, which Democrats criticize as a tax break for the wealthiest Americans.
Key conservative supporters, including David McIntosh, president of the Club for Growth, have endorsed the plan. He stated that it is "a critical step toward fulfilling the promises conservatives made to voters in the last election."