Lawmakers will negotiate a raft of potential tax changes when Congress returns in January. We take a look at what could be included
By Joy Taylor – Kiplinger Reports
Year-end tax legislation is a no-go this December, with congressional lawmakers gone for the holidays. But there is movement behind the scenes and the hope of tax changes by mid-2024. The odds of any such package are about 50-50.
There’s lots for lawmakers to do when they come back in early January, including negotiating military funding for Ukraine and Israel, paired with upgraded security for the immigrant crisis at the U.S.-Mexico border. There is also the issue of funding the government so that we don’t have a shutdown in January or February.
If there is a tax package, let’s look at what could potentially be included. Republicans want to fully restore three popular business tax breaks:
- R&D: Before 2022, firms could fully expense R&D costs in the year incurred. The 2017 tax law changed this for R&D costs in tax years that started after 2021. Firms must amortize R&D expenses over five years, and 15 years for overseas research.
- Bonus depreciation: Prior to 2023, businesses could deduct the full cost of new and used qualifying business assets with lives of 20 years or less. For 2023, the 100% write-off fell to 80%. It drops to 60% in 2024, 40% in 2025 and so forth.
- Interest deductions on business debts of large companies: The 2017 tax law limited many big businesses’ net interest write-offs to 30% of adjusted taxable income, with disallowed interest carried forward. Starting with tax years that began in 2022, depletion and amortization write-offs are accounted for in adjusted taxable income.