H.R. 353 — Family First Act

This section permanently expands the child tax credit by replacing IRC §24(a)–(e) to provide a credit equal to the applicable percentage—100% if modified adjusted gross income (AGI) is at least $20,000 (phased in proportionally below that threshold, with inflation adjustments to the threshold after 2026)—of $4,200 per qualifying child under age 6 or $3,000 per child ages 6–17 (from $2,000 per child under age 17), subject to phaseout of $50 for each $1,000 (or fraction thereof) of modified AGI over $200,000 ($400,000 joint return) and limited to six qualifying children (new cap). Qualifying children are defined under IRC §152(c) as under age 18 (previously under age 17), excluding certain noncitizen children; the credit requires social security numbers for the taxpayer, spouse (joint return), and each child (stricter issuance and timing rules); and strikes subsections (h)–(j). It further amends former §24(k) (redesignated as §24(h)) to allow the full credit for bona fide residents of Puerto Rico (previously a limited refundable amount) and adjusts rules for American Samoa. This section also redesignates §24 as new IRC §36C in the refundable credit subpart (immediately after §36B), making the credit fully refundable without prior limitations on the refundable portion (previously up to $1,700, indexed), with conforming and clerical amendments.

This section establishes a new nonrefundable tax credit under new IRC §36D (inserted after §36C) of up to $2,800 (100% applicable percentage) for an eligible taxpayer (the pregnant mother or her spouse filing jointly) with a qualifying unborn child (gestational age of 20 weeks or greater, as certified by a physician via unsworn declaration under penalty of perjury per 28 U.S.C. §1746). The applicable percentage is 100% if modified adjusted gross income (AGI, as defined in IRC §36C(b)(3)) is at least $10,000 (inflation-adjusted after 2026), or otherwise modified AGI divided by $10,000; the credit phases out by $50 for each $1,000 (or fraction thereof) of modified AGI over $200,000 ($400,000 for joint returns). The credit applies to each qualifying unborn child (including multiple pregnancies or twins in a taxable year), is not affected by involuntary death or certain life-saving treatments after 20 weeks gestation (but disallowed for induced abortion deaths), and has no effect on the child tax credit (IRC §36C) after birth; physician and mother certifications (also under 28 U.S.C. §1746) are permissible solely for credit eligibility.

This section revises the earned income tax credit (EIC)—a refundable tax credit for low- and moderate-income workers that phases in based on earned income, plateaus, and phases out at higher income levels—for taxable years beginning after December 31, 2025, by (1) consolidating separate rates and amounts for one, two, and three or more qualifying children into a single tier for one or more qualifying children; (2) increasing the credit percentage to 25% (from 15.98%) and phaseout percentage to 10% (from 7.65%) for taxpayers with one or more qualifying children; (3) increasing the earned income amount to $12,647 (from $6,330) and phaseout amount to $33,000 (from $11,610) for taxpayers with one or more qualifying children, and to $9,150 (from $4,220) earned income amount and $10,000 (from $5,280) phaseout amount for taxpayers with no qualifying children; (4) increasing the joint return phaseout offset to $10,000 (from $5,000) and providing additional earned income amount increases of $2,059 for taxpayers with one or more qualifying children and $9,151 for those with none; and (5) adding a new overall limitation equal to the lesser of the calculated credit amount or $700 ($1,400 for joint returns) for taxpayers with no qualifying children and $4,300 ($5,000 for joint returns) for those with one or more qualifying children. The section updates the EIC inflation adjustment mechanism to use calendar year 2025 amounts as the base (previously 2016) beginning in 2026. Amendments do not apply to qualifying children who are "exempted children" (i.e., those qualifying for dependency under special rules in IRC §152(c)(3)(A)(ii) or (B) relating to separated parents or multiple support agreements), preserving prior-law EIC computation for such children (with separate application if a taxpayer has both exempted and non-exempted qualifying children).

This section eliminates the additional exemption for dependents for taxable years beginning after December 31, 2025, by setting the exemption amount to zero (from the inflation-adjusted amount scheduled under current law). (Thus, the reduction to zero is disregarded for purposes of other Code provisions referencing the exemption amount, such as phaseout thresholds.)

This section eliminates the head of household filing status under IRC §1(b) and makes conforming amendments to related provisions on tax rates, standard and itemized deductions, filing requirements, and eligibility thresholds for tax credits. Specifically, it (1) treats former heads of household as single filers for rate brackets (IRC §1(c), (f), (i), (j)), standard deductions (IRC §63(c), including an inflation-adjusted increase example of $12,000 (from $3,000) in §63(c)(7)(A)), and itemized deduction limits (IRC §68); (2) adjusts credit income limits to single filer levels, such as $75,000 under the previously-owned clean vehicle credit (IRC §25E(b)(2)) and $150,000 under the new clean vehicle credit (IRC §30D(f)(10)(B)) for non-joint filers; and (3) revises other rules including the elective deferral credit (IRC §25B), premium tax credit (§36B), return preparer penalties (§6695), and foreign tax credit (§904). The changes apply to taxable years beginning after December 31, 2025.

This section revises the child and dependent care tax credit by limiting qualifying individuals to physically or mentally incapable dependents and spouses who live with the taxpayer for more than half the year, excluding dependents under age 13 and further limiting incapable dependents to those who have attained age 18 (previously, qualifying individuals included dependents under age 13 and incapable dependents or spouses of any age). It further requires that expenses for care services outside the taxpayer's household be taken into account only if the qualifying individual regularly spends at least eight hours each day in the taxpayer's household (previously, such expenses were allowed only for individuals under age 13). The changes apply to taxable years beginning after December 31, 2025.

This section extends the $10,000 ($5,000 if married filing separately) limitation on the itemized deduction for state and local taxes to taxable years beginning after December 31, 2025 (from tax years beginning before January 1, 2026). (Thus, the limitation, originally enacted in the 2017 Tax Cuts and Jobs Act and scheduled to expire after 2025, applies indefinitely.)