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Democrats and Republicans don’t agree on much these days—but many of them see eye to eye on a bill that would give businesses some welcome tax relief.
On Tuesday, the House Ways and Means Committee and the Senate Finance Committee announced the Tax Relief for American Families and Workers Act of 2024, a proposed bipartisan tax package incorporating both individual and business tax provisions. It would temporarily reverse the “Big Three” tax code changes the Tax Cuts and Jobs Act of 2017 made, by:
- Allowing US companies to deduct research and development expenditures immediately, instead of amortizing them over 5 years.
- Enabling companies to take 100% bonus depreciation for qualified property (such as software, hardware, office furniture, and certain vehicles) through 2025. Currently companies are only allowed to take 100% bonus depreciation for the first year they put the qualified property into use, and then must phase the depreciation down by 20% each subsequent year.
- Allowing companies to use EBITDA, rather than EBIT, when calculating adjusted taxable income
The proposed bill contains other tax breaks for businesses, including:
- Increasing the amount of qualifying property businesses can expense from $1 million to $1.29 million.
- Ending “double taxation” for companies doing business in both the US and Taiwan.
- Many of these provisions, however, would only last until the end of 2025.
The tax package also includes a temporary increase in the child tax credit and the low-income housing credit, and disaster relief tax breaks, among other items. It would cost an estimated $78 billion, Reuters reported, which would be funded by ending the Employee Retention Tax Credit in January 2024 rather than in April 2025.
Proponents hope to get the bill passed before January 29, when filing season starts. But they face an uphill climb. Some lawmakers have already pushed back on the proposed bill. And it’s coming at an awkward time, when Congress is working to prevent a government shutdown.