Business and Family Tax Relief Bills May Impact 2023 Fillings

In a significant milestone, HR 7024 garnered a resounding 357-70 vote in the House, propelling the Tax Relief for American Families and Workers Act of 2024 into the Senate’s hands. This bipartisan, bicameral bill is poised to revolutionize the financial terrain. Now awaiting Senate deliberation, it holds substantial implications for businesses and individuals alike in the upcoming tax season.

The Tax Relief for American Families and Workers Act of 2024 aims to boost economic growth and enhance the competitiveness of American businesses, while providing tax relief for families. For a detailed exploration of the groundbreaking legislative changes, you can delve into the complete bill [link here]. Alternatively, our seasoned professionals have distilled key highlights for your convenience:

Business Related:

• Business Interest (163j) Modification: A pivotal shift in the taxation framework involves the deferment of the depreciation and amortization addback for business interest (163j) until the 2026 tax years.

 

• Bonus Depreciation Extension: Businesses will be able to leverage a bonus depreciation of 100% until the 2026 tax years, providing businesses with extended opportunities for accelerated tax deductions.

 

• Section 179 Boost: A substantial elevation of Section 179 sees an increase to $1,290,000. This means businesses can deduct more for qualifying property.

 

• Research and Development Relief: If your business is into Research and Development, good news – they’re putting off some capitalization rules until the 2026 tax years. This means the rules related to expensing R&D costs will roll back to the pre-2022 rules for domestic R&D. Foreign R&D would still following the current capitalization rules.   For domestic R&D, the expensing changes would be retroactive to 2022 so could result in tax refunds for affected businesses back to 2022 in additional to tax savings for 2023.

 

• The Employee Retention Credit (ERC) Cut-Short: This legislation would end employers’ ability to claim the employee retention tax credit after January 31, 2024. The COVID-era provision was effective for tax years 2020 and 2021, but current law gives employers until April 15, 2025 to amend their payroll tax returns.

 

Individual Related:

• Child Tax Credit Enhancement: They’re planning to make the Child Tax Credit even better, with more money back. Currently, households earning $200,000 ($400,000 for couples) with children ages 16 and under are generally eligible for the full $2,000 amount, but only $1,600 of that amount is considered refundable. The lawmakers’ plan would include a phased increase to the refundable portion of the child tax credit for 2023, 2024 and 2025. Under the bill, the refundable portion of the child tax credit would increase to $1,800 for tax year 2023, $1,900 for 2024 and $2,000 for 2025.

 

Also, for individuals to consider there’s a new bill, HR 7160, titled SALT Marriage Penalty Elimination Act, making its way to a vote in the House. This bill suggests increasing the SALT deduction limit to $20,000 for couples earning less than $500,000. But if you make over $500,000, the deduction goes back down to $10,000.

 

Next Steps

As these pivotal bills progress through the legislative channels, we are committed to keeping you informed on any developments that arise.

We’re still waiting for more information, but if the Senate gives the nod to Tax Relief for American Families and Workers Act of 2024, get ready for these changes. If enacted, the bill promises to reshape the fiscal landscape in profound ways. Stay tuned for updates on this legislation and others.