Yesterday the House approved the Tax Relief for American Families and Workers Act of 2024 in a 357 to 70 vote. The Senate still needs to vote on the bill before the legislation is passed, and that vote is not yet scheduled.
A summary of the main highlights of what the bill would do, if enacted as introduced, follows:
For Businesses
- Allow businesses to deduct rather than amortize domestic research or experimental costs until 2026. Under current law, these expenditures must be amortized over a 5-year period.
- Allow businesses to calculate their section 163(j)[1] limitation on interest deductions without regard to any deduction allowable for depreciation, amortization, or depletion rather than earnings before interest and taxes for tax years 2024-2026.
- Retroactively extend the 100% bonus depreciation for qualified property placed in service after December 31, 2022 until January 1, 2026.
- Increase the maximum amount a business may expense of the cost of depreciable business assets under section 179 from $1.16 million in 2023 for qualifying property placed in service for the taxable year, to $1.29 million.
- Changes in threshold for reporting on Forms 1099-NEC and 1099-MISC for payments by a business for services performed by an independent contractor or subcontractor and for payments of remuneration for services from $600 to $1,000 and for payments of direct sales from $5,000 to $1,000.
For Families
- Extend the qualified disaster area rules enacted in 2020 for 60 days after the date of enactment of the bill; exempt from tax certain “qualified wildfire relief payments” for tax years beginning in 2020 through 2025; exempt certain “East Palestine train derailment payments” from tax.
- Enhance the low income housing tax credit and tax-exempt bond financing rules.
- Increase the maximum refundable portion of the child tax credit from $1,600 in 2023 to $1,800 in 2023, $1,900 in 2024, and $2,000 in 2025; modify the calculation of the maximum refundable credit amount by providing that taxpayers first multiply their earned income (in excess of $2,500) by 15 percent, and then multiply that amount by the number of qualifying children (so that a taxpayer with two children would be entitled to double the amount of refundable credit); adjust the $2,000 maximum per child tax credit for inflation in 2024 and 2025; and allow taxpayers in 2024 and 2025 to use earned income from the prior taxable year to calculate their credit. These provisions would be effective for tax years 2023-2025, after which the maximum per child credit would revert to $1,000.
This is a summary of the main highlights of the bill. We will summarize the changes, if any, when (and if) the bill is passed.
Any questions, contact us. Here is a link to the Technical Summary from finance.senate.gov if you would like to read about the Act in more detail.