Congress announces $80 Billion bipartisan tax deal

On January 16, 2024, Congressional Tax-writing committees announced a nearly $80 billion bipartisan deal to enhance tax breaks for businesses and low-income families through 2025, but prospects for passage are unclear amid bitter fiscal divisions, according to Reuters.

According to a summary of the legislation, the deal includes a proposed delay to the date when taxpayers must begin deducting their R&D costs over a 5-year period, meaning taxpayers may deduct currently domestic R&D costs that are paid in tax years 2022-2025. It also extends the application of EBITDA deductions to tax years 2024-2026 and extends the 100% bonus depreciation for qualified property acquired and placed into service after 2017 and before January 1, 2023.

All three tax issues were among the focus of our NFFS Government Affairs Committee (GAC) and other industry groups, including the National Association of Manufacturers (NAM). This is a very positive development if Congress can manage to come to a deal. Considering that Democrats were able to have the improved refundable child tax credit included in the legislation, there is a chance for it to pass. However, there remains a contingent in Congress that is concerned about Federal spending and may interject itself into the process, resulting in another round of modification to address its concerns. The NFFS GAC will continue to monitor this issue to see how the deal develops in the coming weeks.