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January 16, 2024 at 02:30 PM
Update, Jan. 31: The House passed the Tax Relief for American Families and Workers Act Wednesday evening. The bill now heads to the Senate.
New bipartisan legislation, the Tax Relief for American Families and Workers Act of 2024, includes 100% bonus depreciation as well as research and development expensing and also expands the Child Tax Credit.
The bill, agreed to by Senate Finance Committee Chairman Ron Wyden, D-Ore., and House Ways and Means Committee Chairman Jason Smith, R-Mo., also expands the small-business expensing cap, increasing the amount of investment that a small business can immediately write off to $1.29 million from the $1 million cap enacted in 2017.
The legislation, according to Erica York, senior economist and research manager at the Tax Foundation in Washington, “is more akin to a year-end tax extenders bill (though we have now started a new year!)”
Related: Bill to ‘Fast Track’ Social Security Cuts Up for Debate This Week
While the act overlaps with some of the proposals that were in the Ways and Means package introduced in June, “such as expired business deductions, it has many differences,” York explained to ThinkAdvisor in an email Tuesday.
The Wyden-Smith agreement “would restore three major business provisions (100% bonus depreciation, R&D expensing for domestic R&D only, and a looser limitation on business interest deductions) through 2025,” York said.
It would also “make new changes to the Child Tax Credit that would increase the amount that can be received as a refund and inflation adjust the maximum among other changes to the credit that would all last through 2025.”
The bill increases the maximum refundable amount per child to $1,800 in tax year 2023, $1,900 in tax year 2024 and $2,000 in tax year 2025. The $2,000 value of the child tax credit would be adjusted for inflation in tax years 2024 and 2025, rounded down to the nearest $100.
