Californians were hoping for two big tax breaks. Why aren’t they getting them?

Thought you might get a bigger child tax credit when you filed your federal income taxes this year? And maybe a larger deduction for state and local taxes?

Forget it for now.

Many members of Congress this year were eager to make both changes. But the state and local tax deduction increase, or SALT, is dead — and the expanded child credit is stalled in the Senate.

Both tax breaks would have meant big savings for millions of California residents. Studies show they could save thousands of dollars from an expanded child credit. Higher income earners could get similar breaks from a bigger SALT deduction.

The future for a larger child credit is more favorable. The House earlier this year passed legislation with strong bipartisan support that included a more generous child tax credit for lower income families. A month later, President Joe Biden proposed a bigger credit.

Talks among members of Congress on a plan continue, though no one is offering a precise timetable about when or if there could be an agreement.

The Biden increase would save eligible California families an average of $2,980, according to the Institute on Taxation and Economic Policy, a liberal research group. ITEP estimated the Biden plan could help 8.1 million California adults and 6.7 million children.

The increase, which restores the credit to the levels available during the COVID pandemic year of 2021, is regarded as a major boost for lifting children out of poverty.

Eligible families this year can get a $2,000 per child credit for children under 17. To receive the maximum credit, income must be less than $200,000 for head of household filers and $400,000 for joint filers.

Biden’s proposal would increase the credit for qualifying families to $3,600 per child under six and $3,000 for children six to 17.

A retroactive break?

The hope in the Biden administration and among congressional supporters was that the bigger child credit could be signed into law in time for people to claim it on their 2023 tax returns. The filing deadline for returns in most states is Monday.

Internal Revenue Service Commissioner Daniel Werfel said earlier this year that the agency would need about six weeks to make adjustments to current benefits.

The child credit passed by the House this year would keep the credit at $2,000, but make it easier for lower income families to qualify and to receive refunds if they have little or no income.

The change could benefit an estimated 2 million California children in lower income families, according to Washington’s Center on Budget and Policy Priorities, a budget analysis group.

Currently, families can get as much as $1,600 as a refund from the credit. The bill would up those amounts to as much as $1,800 on last year’s taxes, which are due Monday in most cases, $1,900 this year and the maximum credit next year.

The plan is languishing in the Senate, where Sen. Mike Crapo, R-Idaho, the finance panel’s top Republican, has questions about the child credit and other provisions of the bill.

Among his concerns was that the bill would permit parents without jobs to be eligible for the credits. The legislation would “represent a significant shift…to transform the child tax credit from primarily working family tax relief into a government subsidy,” Crapo said.

Talks are continuing about a big tax bill this year.

“I’m all for the package. If there are enough votes to move it forward in the right way, yeah, we’ll try to get it on the floor,” Senate Majority Leader Chuck Schumer of New York said last week.

Sen. Ron Wyden, D-Oregon, chairman of the tax-writing Senate Finance Committee, was hopeful, saying it was possible it could eventually be made retroactive to 2023.

“It’s something we can deal with,” he said.

Is SALT dead?

Wyden was less optimistic about the future of the higher state and local tax deduction.

An effort to double the deduction lost in a House vote in February, and the Senate is unlikely to seriously consider it.

“It would be pretty hard to do that,” Wyden said of a SALT increase.

Taxpayers can now deduct up to $10,000 per federal return for state and local taxes they paid last year. They were able to deduct unlimited sums until the Republican-authored 2017 tax bill put a cap on the break.

Republicans saw a political advantage, as most taxpayers impacted lived in predominantly Democratic states such as California, New York and New Jersey.

There’s also concern among Democrats that wealthier taxpayers get most of the benefits.

An ITEP study of the effects on California showed that the lowest 40% and middle 20% of income earners in the state, those earring up to $83,200, would get virtually no benefit from an increased cap, with 96% of the benefit going to the top 20% of earners. The top 1% of incomes, those above $992,500, would get a break averaging $98,650.