On Wednesday (January 31, 2024), the U.S. House of Representatives passed HR 7024 – The Tax Relief for American Families and Workers Act of 2024. This $78 billion tax package passed in the House with an 83% approval rate and now makes its way to the Senate.

Highlights of HR 7024

  • Child Tax Credit expansion – The bill will allow more lower-income families to receive the credit by increasing the refundable portion, revising the income limitations, and adjusting for inflation for tax years 2023-2025.
  • Reinstatement of 100% expensing of domestic research and development (R&D) expenses – Current law requires domestic R&D expenses be capitalized and expensed over 5 years. 100% expensing will be retroactive to tax year 2022 and extend through 2025. Foreign R&D expenses will still be capitalized and expensed over 15 years.
  • Extension of 100% bonus depreciation – Under current law, bonus depreciation for tax year 2022 is limited to 80% and is set to phase down by 20% in each subsequent year. The bill will reinstate 100% bonus depreciation effective January 1, 2023, through December 31, 2025.
  • Inflation adjustments to increase the Section 179 expensing limit – The bill will increase the expensing limits beginning in tax year 2024 and be adjusted for inflation thereafter.
  • Business interest expense limitation adjustment – The bill will revert the limitation back to 30% of EBITDA (earnings before interest, taxes, depreciation, and amortization) for tax years 2024 and 2025.
  • Employee Retention Tax Credit (ERTC) termination – The bill will not allow any ERTC claims to be accepted after January 31, 2024. Claims submitted prior to January 31, 2024, will still be processed. The bill also includes a clause to impose penalties up to $200K for promoters filing fraudulent claims.