Child Tax Credit Relief for Puerto Rican Families Act

Bill Number

H.R. 1697

Origin Chamber

House

Congress

119th Congress, Session 1

Policy Area

Taxation

Status

Introduced

Latest Action

2025-02-27: Referred to the House Committee on Ways and Means.

Last Updated

2026-04-17T08:07:22Z

AI-Generated Summary

Child Tax Credit Relief for Puerto Rican Families Act (H.R. 1697)

Purpose

This bill aims to ensure fair treatment for residents of Puerto Rico under the U.S. tax code by extending the full refundable portion of the Child Tax Credit (CTC) to them. The CTC is a federal tax benefit that helps families with qualifying children by reducing tax liability or providing a refund if the credit exceeds taxes owed.

Key Provisions

• Short Title: The act is named the "Child Tax Credit Relief for Puerto Rican Families Act."
• Equitable Treatment for Refundable CTC: Amends Section 24(d)(1) of the Internal Revenue Code to include income exclusions under Section 933 (which applies to Puerto Rico-sourced income) when calculating eligibility for the refundable CTC.
• Adjustment to Social Security Tax Calculation: Amends Section 24(k)(2)(B) to modify how Social Security taxes factor into the refundable CTC amount:
• Doubles the base amount used in the calculation (by inserting "twice" before the amount).
• Removes the 50% limitation on the credit tied to these taxes.
• Effective Date: Changes apply to tax years beginning after December 31, 2024.

Significant Changes to Existing Law

• Currently, Puerto Rico residents are excluded from the refundable CTC due to how their income is treated under federal tax rules (e.g., Section 933 excludes Puerto Rico-sourced income from U.S. taxation, limiting credit eligibility).
• This bill eliminates that exclusion, allowing Puerto Rico residents to claim the full refundable CTC on the same basis as mainland U.S. residents.
• It also alters the formula for the refundable portion, which is currently limited to 15% of earned income above a threshold and capped by Social Security tax withholdings; the changes increase accessibility by doubling the relevant amount and removing the 50% cap on Social Security-based calculations.

Potential Impacts

• On Citizens: Puerto Rico families with children under 17 could receive up to $1,700 per child in refundable credits (based on current CTC amounts), providing direct financial relief to low- and moderate-income households and potentially reducing child poverty.
• On Government Agencies: The Internal Revenue Service (IRS) would need to update forms, systems, and guidance to process these claims, increasing administrative workload and federal spending (estimated costs not specified in the bill but likely in the billions over time due to expanded eligibility).
• On International Relations: No direct impact, as Puerto Rico is a U.S. territory.

Main Stakeholders Affected

• Puerto Rico Residents: Primary beneficiaries, especially families with dependent children, who gain access to previously unavailable tax refunds.
• U.S. Taxpayers and Families: Indirectly affected through potential increases in federal deficit or shifts in tax equity discussions.
• Federal Government (IRS and Treasury Department): Responsible for implementation, compliance, and revenue adjustments.
• Congress and Advocacy Groups: Involved in oversight, with groups supporting territorial equity (e.g., Puerto Rican representatives) likely to champion the bill.

Notable Legal, Constitutional, or Political Implications

• Legal: Aligns federal tax benefits with equal treatment principles under the Internal Revenue Code, potentially resolving disparities in how territories are treated compared to states (e.g., via Section 933 exclusions).
• Constitutional: Raises questions of equal protection under the Fifth Amendment, as U.S. citizens in territories like Puerto Rico have historically faced unequal access to federal programs; this bill serves as a legislative remedy without challenging court precedents.
• Political: Highlights ongoing debates on U.S. territory status and equity, possibly influencing broader discussions on statehood or federal funding for Puerto Rico, especially post-hurricanes and economic challenges. It promotes bipartisan support for family tax relief while addressing territorial inequities.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Rescom. Hernández, Pablo [D-PR-At Large]

Cosponsors (1)

Rep. Larson, John B. [D-CT-1]

Recent Actions

• 2025-02-27: Referred to the House Committee on Ways and Means.
• 2025-02-27: Introduced in House
• 2025-02-27: Introduced in House

Bill Versions

• Child Tax Credit Relief for Puerto Rican Families Act — issued 2025-02-27 — PDF (3 pages)