The House, with broad support from both parties, overwhelmingly passed proposed legislation late Wednesday geared towards reviving expired business tax breaks coupled with a proposal to boost the child tax credit.
The bill, introduced in the House on January 17, 2024, and passing two weeks later, now moves to the Senate, where it faces additional hurdles. The Wall Street Journal observed that passage in the Senate will take 60 votes. Timing of Senate action is also uncertain; for example, current priorities also include immigration and spending issues. A two-week recess is scheduled to begin February 12, 2024. Options to passage exist – but it’s unclear at this time which, when, and how options might be exercised.
The Act does not include a provision to expand the state and local income tax deduction. To obtain support and address the concerns of certain lawmakers, House leadership committed to working on a separate bill proposed to double the cap on the SALT deduction for married couples filing a joint return, raising the limit to $20,000 from $10,000 (the Marriage Penalty Elimination Act). This bill faces an uncertain future.
Further delay, either in passing the Act in the Senate or being signed into law by President Biden, potentially risks implementation of the Act’s provisions for 2023. IRS computer software and forms likely will need to be updated; additionally, tax return preparation software used by accountants and taxpayers (particularly for the child tax credit portions of the bill) likely also needs to be updated. Due to continued uncertainty, it could make sense to proceed with compliance as the tax law exists today—while staying aware of the bill’s legislative status and any compliance impacts arising from actual passage of the bill.
Another important aspect of the current proposal, not considered by our federal government leaders and representatives, is the uncertainty this act has on state taxable income calculations. Not all states update their tax laws using the same effective dates used in the federal legislation, creating additional complexities with state tax compliance. This is an area that also warrants continued monitoring and consideration.
We understand the uncertainty arising from this late legislative action. Our goal is to keep you informed of the Act’s progress, of the federal and state uncertainties created by the proposed legislation, and work closely with you on resolving any issues that arise. If you have current questions, please do not hesitate to reach out to your Schneider Downs tax team.
NOTE: View an executive summary of the Tax Relief for American Families and Workers Act of 2024 (the Act).
About Schneider Downs Tax Services
Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.
To learn more, visit our dedicated Tax Services page.
Related Posts
No related posts.