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House Approves Tax Relief for American Families and Workers Act of 2024 for Senate Consideration

House Approves Tax Relief for American Families and Workers Act of 2024 for Senate Consideration

On January 31, 2024, the House of Representatives voted 357 to 70 to approve H.R. 7024, the Tax Relief for American Families and Workers Act of 2024. The $79 billion bipartisan tax package now awaits consideration in the Senate.

H.R. 7024 features the restoration of several tax provisions through the end of 2025 on an elective, retroactive basis, including:

  • Section 174 expensing: H.R. 7024 would allow taxpayers to deduct research and experimental (R&E) costs that are U.S.-based and paid or incurred in tax years beginning after December 31, 2021, and before January 1, 2026.  R&E costs attributable to research conducted outside of the U.S would continue to be deducted over 15 years.
  • Section 163(j) interest deductions: The bill would extend the application of interest deductions to compute alternative taxable income without regard to any deduction forinterest, taxes, depreciation and amortization or depletion (EBITDA) for tax years beginning after December 31, 2023, and before January 1, 2026 (and, if elected, for tax years beginning after December 31, 2021).
  • Section 168(k) “bonus” depreciation: H.R. 7024 would extend 100% ‘bonus’ depreciation for qualified property placed in service and/or specified plants planted after December 31, 2022, and before January 1, 2026, under Section 168(k). The legislation would retain 20% bonus depreciation for property placed in service after December 31, 2025, and before January 1, 2027.

The Tax Relief for American Families and Workers Act of 2024 would also:

  • Enhance the child tax credit, including provisions to index the $2,000 tax credit starting in 2024 and the refundable maximum starting in 2025. The bill would also enhance the annual child tax credit refundable maximums through 2025, per the list below. All child tax credit provisions would sunset December 31, 2025.
    • $1,800 in 2023
    • $1,900 in 2024
    • $2,000 in 2025
  • Temporarily expand Section 179 small business expensing.
  • Provide information reporting relief on Forms 1099-NEC and 1099-MISC for payments made by a business for independent contractor or subcontractor-provided services.

The bill is slated to cost $79 billion over 10 years. This cost will be offset almost entirely by having accelerated the deadline for filing backdated employee retention tax credit (ERTC) claims to January 31, 2024. Under current law, taxpayers would have until April 15, 2024, to amend 2020 ERTC returns and April 15, 2025, to amend 2021 ERTC returns.

Brown Plus will continue to monitor the progress of H.R. 7024 and provide regular updates via the Brown Plus Blog. If you have any questions about the possible implications of H.R. 7024 on you or your business, please do not hesitate to contact your Brown Plus advisor.

Posted In: Tax | Insights

About the Author - Randy Fackler, CPA, CEPA, MST

Randy is a Tax Principal and the Tax Director at Brown Plus and is one of the key members of the Firm’s Tax Department. As Tax Director and Principal, Randy is responsible for managing tax consulting and compliance services for his clients, as well as overseeing the Brown Plus Tax Department.

Randy has over 30 years of experience in public accounting and working with clients in numerous industries including manufacturing, retail and distribution, healthcare, professional services and high-net-worth individuals. He assists clients with general business advisory services such as tax accounting methods, tax planning and consulting, cash flow needs analysis, merger and acquisition analysis, product profitability analysis, forecasting and more.

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