In a resounding 357–70 vote, the House has given the green light to a comprehensive $78 billion tax bill that promises changes affecting individuals and businesses. The legislation, dubbed “The Tax Relief for American Families and Workers Act of 2024” (H.R. 7024), boasts a multifaceted approach that aims to address a myriad of financial concerns.
One of the critical components involves a recalibration of the employee retention credit (ERC). Under the current law, the bill barred additional ERC claims after January 31, 2024, hastening the filing deadline from April 15, 2025. This move is expected to incur $77.5 billion in added costs, offset by $77.1 billion in savings from the adjusted ERC filing deadline. The bill also introduces stringent enforcement measures, defining and penalizing “COVID-ERTC promoters,” individuals or entities aiding, assisting, or advising on ERC-related matters for a fee.
Entrepreneurs and small businesses should note that the bill reinstates crucial tax breaks from the Tax Cuts and Jobs Act (P.L. 115-97), which were set to expire. The renewal includes a temporary return to expensing research or experimental expenditures, providing a lifeline for innovative ventures.
In a notable boost for families, the legislation expands child tax credit eligibility (CTC) eligibility. For the 2023 tax year, the maximum refundable amount per child jumps to $1,800, marking an increase from the current $1,600. Further enhancements see the amount rise to $1,900 in 2024 and $2,000 in 2025, with inflation adjustments for these years. The bill also alters the CTC calculation method, allowing taxpayers to multiply the percentage by the number of children, a move aimed at simplifying the process.
Crucially, the bill partially restores the CTC expansion that proved instrumental in reducing child poverty during the pandemic, signaling a commitment to supporting families and children.
Entrepreneurs, self-employed individuals, and small businesses will find solace in the bill’s extension and enhancement of various tax breaks. The amendment to Section 174, delaying the deduction of domestic research and experimental costs, provides businesses with greater flexibility until tax years beginning after December 31, 2025. Similarly, the bill extends 100% bonus depreciation for qualified property placed in service, offering businesses continued financial relief until January 1, 2026.
The bill increases Section 179’s expensing limitation amounts for self-employed individuals and small businesses. This change allows for a maximum expense of $1.29 million, offering financial breathing room and encouraging investment.
Beyond these economic incentives, the legislation addresses various issues, from low-income housing to disaster relief for specific communities. Moreover, the bill tackles the thorny matter of double taxation between the United States and Taiwan, paving the way for a resolution if Taiwan reciprocates with a similar change.
As the Tax Relief for American Families and Workers Act of 2024 heads to the Senate with support from key figures, including Finance Committee Chair Ron Wyden and Majority Leader Chuck Schumer, the nation braces for a potential overhaul of tax policies that could have far-reaching implications for individuals and businesses alike.
Source ( Journal of Accountancy News).
