Lawmakers Announce Bipartisan Accord Reviving Business Tax Breaks and Expanding Child Tax Credit

The chair of the House Ways and Means Committee, Rep. Jason Smith, R-Mo. and the chair of the Senate Finance Committee, Ron Wyden, D-Ore., jointly announced Tuesday, January 16, 2024, an approximately $78 billion tax agreement that will restore or extend several important business tax provisions and expand the child tax credit for low-income families.

The legislation, known as “The Tax Relief for American Families and Workers Act of 2024”, includes a provision that would extend the full expensing of domestic research and experimental costs for taxpayers filing returns that begin on or before the end of 2025. While it would remain a requirement that foreign research and experimental expenses continue to be capitalized and deducted over a 15-year period, the ability to fully deduct domestic research and experimental expenses would be a welcome revision for corporate taxpayers across the country.

In addition to the return of the full expensing of domestic research and experimental costs, the agreement includes increased limitations on expensing of depreciable business assets, extends 100% bonus depreciation on all qualified property placed in service through the end of 2025, and extends the inclusion of depreciation and amortization in the computation of the limitation on business interest deductions for tax years that begin prior to 2026.

While uncertainty remains as to the likelihood of such a package being passed on a timely basis given lawmakers’ current focus towards keeping the government funded, this announcement represents a potentially positive development for corporate taxpayers after months of negotiation in a divided Congress. Smith + Howard is keeping abreast of all developments on this dynamic topic.

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