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Tracking the Tax Relief for American Families and Workers Act of 2024: Will 100% Bonus Depreciation Come Back?

On Jan. 31, 2024, the House of Representatives passed the Tax Relief for American Families and Workers Act of 2024. The bill includes favorable tax changes for business owners and real estate investors.

The bill currently sits with the Senate which recently got back from recess on Feb. 27, 2024.

Many senators have shown an inclination to edit the current text of the bill. There is a strong chance this bill will not be stand-alone, but instead, will tied to the appropriations bill (government funding deadlines on March 1st and March 8th).

If true, the bill will go back to the House for a vote before it goes to the President’s desk.

The bill is popular but still has a long way to go before it is passed.

Because the proposed tax changes are retroactive to 2023, we recommend discussing filing an extension with your tax advisor to wait out the Senate vote and potential implementation of these tax changes.

We are currently tracking the bill and this page will be updated on a continuous basis.

Specific provisions in the bill:

  • Extension of 100% bonus depreciation. The bill delays the beginning of the phaseout of 100% bonus depreciation from 2023 to 2026. Without this retroactive treatment, bonus depreciation would be 80% in 2023 and 60% in 2024.
  • Deductions for R&D. The bill rolls back the requirement that began in 2022 for companies to write off domestic R&D costs over five years and foreign costs over 15 years. (IRC Sec. 174)
  • Business interest limitations. The bill returns the calculation for net interest expensing from earnings before interest and taxes (EBIT) to earnings before interest, taxes, depreciation, and amortization (EBITDA). This provision would take effect for taxable years beginning after Dec. 31, 2023. (IRC Sec. 163(j))
  • Increased expensing of business assets via IRC Sec. 179. The bill increases the maximum amount businesses can expense on depreciable business assets.
  • Child tax credit. The bill adjusts the child tax credit for inflation (rounded down to the nearest $100) in 2024 and 2025 and increases the partial refundability maximum for the child tax credit to $1,800 for 2023, $1,900 for 2024, and $2,000 for 2025. It bases the calculation for partial refundability on the number of children.
  • Taiwan double taxation relief. The bill provides expedited relief from double taxation between the United States and Taiwan.
  • Disaster relief. The bill contains disaster provisions that extend rules for tax treatment of disaster-related personal casualty losses, excludes compensation for wildfire losses from income, and funds East Palestine, Ohio, disaster relief.
  • Low-income housing. The bill boosts the low-income housing tax credit ceiling for calendar years 2023-2025 and lowers the bond-financing threshold to 30%.
  • 1099 thresholds increased. The bill increases the 1099-NEC and 1099-MISC reporting thresholds for work done by contractors, subcontractors, and others from $600 to $1,000.
  • Employee Retention Credit. ERC Claims submitted after January 31, 2024 are barred and the bill gives more enforcement power to the IRS in audits. The bill also increases penalties for ERC promoters.

Bill Timeline:

Feb 27th

The Senate is back from recess and scheduling their work. Senator Wyden was quoted saying his new target to have the bill done is April 15th. There might be an ability to put pressure on the ‘public nos’ in the coming weeks, but it’s something that is going to evolve over time.

There is discussion that it will be debated as these appropriation bills come up (starting late this week, early next week). But tax changes are nowhere near the Senate’s top priority at the moment.

Feb 13th

Senate breaks for two week recess, returning Feb 26th.

Feb 1st

Senate plans to vote on border bill and sideline tax bill (HR 7204), despite the bipartisan support coming from the House.

Jan 31st

The House votes and passes the Tax Relief Act for American Families and Workers tonight. The final numbers, 357-70, from the House, will matter because it will show the wiggle room the Senate will have to make their changes or need to push through.

Jan 29th

During the voting process, NY Republicans are putting their foot down to get SALT into this bill. Most think they will be forced to call their bluff.

Update: the NY Republicans fall into line.

Jan 23rd

The House posts HR 7204 with the intention to vote next week, Jan 29th.

Jan 19th

This current text passes Ways and Means, with a 40-3 vote, now heading into the real swampland, where it might get marked up in the process.

Jan 18th

Actual Text is released detailing the bill HR 7204

TLDR

  • Bonus: 2023-2025 100%
  • 163j Depr & Amort Addback: 2023-2025
  • R&D Capitalization: immediate expensing from 2022-2025
  • Increased Child Tax Credit Refundability
  • Massive ERC Crackdown

Bill Text released from Ways & Means Committee. It’s set for markup tomorrow. As outlined in the congressional summary, majority of provisions are retroactive to 2023 and go through 2025. That being said, the bill has received a lot of grandstanding from both sides of the aisle. The White House hasn’t thrown their support, the Speaker of the House has spoken negatively towards it, and a few democrats have come out saying they don’t ultimately support it either. However, the bill is relatively cheap (only a measly 226 million, pocket change to Congress), so with the right tweaks it could go through. Additionally, the struggle is to pass anything to keep the government funded and the target date for effect is January 29th… a little over a week away. Each day that we pass into February, the less likely 2023 retroactivity gets to stay.

January 16th

Framework for the bill is released for the Ways and Means Committee to discuss on its upcoming meeting. The title of the bill is also “Tax Relief for American Families and Workers Act”

January 10th

Additional details leak: ERC IS going to be a ‘pay for’ this deal, so if someone hasn’t filed a claim and if you helped/filed a fraudulent claim, watch out. Potential CTC Details also have been leaked. CTC will be increased with lower income families getting higher amounts AND CTC will be inflation indexed beginning in 2025. There were earlier reports that R&D might have been the only business provision, but it looks like all of the Big Three are back (priority to Congress: R&D Expensing, Bonus Depreciation, and DD&A Addback for 163j)the poor congress staffers were apparently working until 3 AM last night Wyden said. However, the House’s priority the appropriations bills, which, will be difficult to pass on its own.

Additional Details:

Other members of Congress are asking for SALT and Low Income Housing Credit get tossed in as well. With the enforcement that is going to be launched at ERC, almost anything is up for grabs currently, but watching how this funding bill over the next week will be interesting for the tax bill as well

January 9th

The leaked current picture is a $50-80 billion dollar deal. Senator Wyden said the Child Tax Credit will have to match however much the Big Three cost. Current estimates to extend through 2025 for the Big Three would be 47 billion… which if CTC has to match, then we’re over the current estimate. Plus there are budget hawks on the finance committee for the Republicans as well who will want to shrink any kind of deficit. The current priority is R&D expensing with Child Tax Credit, then

January 8th

Jason Smith (R-MO) & Ron Wyden (D-OR) begin negotiations on a tax package to pass (Smith is head of the House Ways and Means Committee & Wyden is head of the Senate Finance Committee). The provisions being negotiates are the Big Three Tax Extenders (R&D Expensing, Interest Expensing, & Bonus Depreciation) as well as an adjusted Child Tax Credit. Sources were quoted as saying the bill was “90% finished” Ron Wyden stated “We’re just going to pull out all the stops and do everything we can to make it possible to get this done for the filing season,” “There are real needs for families, which is what the child tax credit is all about.” The biggest issue is the remaining 10%. Which would be process. This bill will require a 2/3rds majority to pass and the House has not been playing nicely as of late.