Jan 18 An Update from the Hill: Tax Relief for American Families & Workers Act of 2024
On January 16, 2024, the Senate Finance Chair Ron Wyden (D) and House Ways & Means Chair Jason Smith (R) introduced the Tax Relief for American Families and Workers Act of 2024. This bipartisan tax proposal is far-reaching including, but not limited to:
- I.R.C. § 174 Treatment: The legislation is set to reinstate the domestic-based R&D expensing retroactively to 2022 and prospectively through 2025. It should be duly noted that foreign-based R&D must still be capitalized over 15 years as required under the TCJA ’17 for 2022 and forward.
- I.R.C. § 168(k) “Bonus” Depreciation Treatment: The legislation is set to extend 100% bonus depreciation for qualified property placed in service after December 31, 2022 through December 31, 2025. The legislation would retain 20% bonus depreciation for property placed in service after December 31, 2025 and before January 1, 2027 (after December 31, 2026 and before January 1, 2028, for longer production period property and certain aircraft), as well as for specified plants after December 31, 2025 and before January 1, 2027.
- I.R.C. § 163(j) Interest Deduction Treatment: The legislation is set to extend the application of interest deductions without regard to any deduction allowable for depreciation, amortization, or depletion (i.e., Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)) to tax years beginning after December 31, 2023 (and, if elected, for tax years beginning after December 31, 2021), and before January 1, 2026.
- I.R.C. § 24 (c)(1) Child Care Tax Credit Treatment: The legislation is set to provide enhancements to the Child Tax Credit for tax years 2023, 2024 and 2025, including modifications to the calculation of the refundable Child Tax Credit.
The draft legislation would also halt all Employment Retention Credit (ERC) filings after January 31, 2024. The proposed legislation also adds penalties to ERC promoters and extends the statute of limitations in certain instances.
There have been many discussions on the Hill as to how to expedite this tax legislation by January 29th to coincide with the beginning of the tax filing season. We will continue to monitor the development of this bill and provide updates on its progress.
