This post has been updated with the following information on 8/6/2024: The Tax Relief for American Families and Workers Act was voted on by the Senate on Thursday, August 1, 2024 and did not pass. Therefore, the proposed changes will not be in effect for 2023.
This bill, which included provisions related to the Child Tax Credit, research and experimental costs, business interest deductions, bonus depreciation and Sec. 179 deductions, passed the House in late January 2024. It had been stalled in the Senate since that time.
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This legislation has made its way through the House and is now being considered by the Senate. It may be passed in the near future, with immediate significant effects, including:
- Increases the amount of the child tax credit that is refundable, and further increases for inflation in 2024 and 2025,
- Eliminates the required capitalization and amortization of Research and Experimental costs for research occurring domestically through 2025. Research and Experimental costs occurring outside the U.S. are still required to be capitalized and amortized over 15 years,
- Restores the addback of depreciation and amortization on the calculation of deductible business interest deduction for 2024 through 2026,
- If elected, the addback of depreciation and amortization on the calculation of deductible business interest deduction can be made for 2022 and 2023,
- 100% bonus depreciation would be extended through 2025.
- For 2024, increase in the amount eligible for Sec 179 from $1.22mm to $1.29mm.
- Eliminates the employee retention credit for any payroll return filed after January 31, 2024.
What does this mean to you?
We will continue to work on your tax returns under the current laws. If these potential law changes could affect your tax liability you may want to consider filing a tax return extension, or to file timely under the current laws and amend at a future date. In either event, we recommend paying the tax due by the current due date, as calculated under the current laws.
Final conclusion of these matters may not occur until after the due date of your return.
Should you have any questions, reach out to your dedicated CTBK tax team!
