Bipartisan Tax Bill Moves in Congress
Author: Greg Valliere
January 17, 2024
IN A RARE SHOW OF UNITY, Republicans and Democrats are moving quickly to pass a modest tax bill that would increase the child tax credit and provide several tax breaks that would help businesses.
THE CHILD CREDIT would increase the maximum credit per child to $2,000 annually from $1,600 through 2025 while restoring business deductions for research and development costs, interest payments and capital investments.
THE EMERGING DEAL also has provisions on increasing the low-income housing tax credit and has carve-out to protect Taiwanese companies from double taxation following an effort by the U.S. to re-shore segments of the high-end semiconductor industry, much of which is based there.
THE PROPOSAL ALSO BOOSTS the amount in capital expenditures that small businesses can immediately write off to $1.29 million from $1 million now, along with increasing the reporting threshold for subcontractor work to $1,000 from $600.
DEMOCRATS ARE ON BOARD ON THE TAX BREAKS, since the bill could help as many as 15 million children who are close to the poverty line. The bill would increase the stock of low-income housing across the country.
TO PAY FOR the roughly $78 billion deal, tax writers plan to nix the employee retention tax credit, which they say has been aggressively marketed within the tax industry and has been accused of fraudulent business activity in the wake of the pandemic.
TIMING OF THE BILL’s FINAL ENACTMENT is unclear but lawmakers will push to attach this measure to a final budget deal, which is expected to pass later this winter.
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