Congressional committee chairs reached a deal Tuesday that would expand the federal child tax credit, after three years of pushing by Democrats and progressives.

Why it matters: It's a meaningful expansion that could lift as many as a half-million kids out of poverty and make about 5 million more less poor, according to an estimate from the Center on Budget and Policy Priorities.

• The proposal, which faces an uphill battle in the House, won't bring back the monthly checks that parents got in 2021, but would make it so millions more lower-income parents get a meaningful tax refund.

Catch up fast: The tax credit as written now largely benefits middle- and higher-earning households. That changed for one year in 2021, when it was expanded so that most parents up to a certain income level got monthly checks. Democrats and progressives have been gunning to restore that benefit ever since.

• The deal announced Tuesday is the closest they've gotten. It wouldn't be as impactful as the 2021 checks, which lifted close to 3 million kids out of poverty.
• But the expansion, which would expire in 2025, targets lower-earning households and aims to make the credit more equitable.
• Called the Tax Relief for American Families and Workers Act of 2024, the deal was reached by the top lawmakers on the congressional tax writing committees: Senate Finance Committee Chair Ron Wyden (D-Ore.) and House Ways and Means Chair Jason Smith (R-Mo.).

State of play: Under the current law, parents can claim the credit on their taxes — up to $2,000 per child.

• But lower-income parents, who don't owe taxes, can't get that maximum amount as a cash refund— as you can with the Earned Income Tax Credit.
• Under current law a single parent with two children needs to make at least $28,000 a year to get the full credit, and a married couple needs more than $35,00.
• For example, a mom with two kids who earns $40,000 a year gets a $4,000 tax break, while a parent earning $14,000 with two kids gets $1,725.
• Stunning stat: There are 19 million children who, under the current law, are getting less than the $2,000 because their families' incomes are too low, according to an estimate from the Center on Budget and Policy Priorities.

How it works: The tax deal reached Tuesday targets those lower-income families, increasing the amount of the credit that's refundable to the full $2,000 per child over three years.

• It also eliminates a provision that effectively penalized lower-income families with more than one child.
• The expansion would cost an additional $33 billion; that's the same amount the deal allocates to reinstating business tax breaks that were part of the Trump tax cuts.

Between the lines: Even progressives who oppose corporate tax breaks were applauding the deal on Tuesday — because they were able to secure a break for low-income families, too.

• "As unwise as these corporate tax breaks are, there was a time when Congress might have enacted them without much consideration and without attaching provisions that also help low-income families," said Steve Wamhoff, the federal policy director of the Institute on Taxation and Economic Policy, in a statement.