February 5, 2024

New bipartisan tax legislation, the Tax Relief for American Families and Workers Act of 2024 (the Act), has been passed by the House and is on its way to the Senate. The proposed Act contains several taxpayer friendly changes, many of which would apply retroactively. Key provisions include:

• Reinstating the immediate deduction for domestic Research and Experimental (R&E) Expenditures incurred before December 31, 2025. Domestic research expenditures incurred after this date would be amortized over a five-year period. The Act does not impact foreign research expenditures which would continue to be amortized over 15 years.
• Extending 100% bonus depreciation for qualifying property placed in service after December 31, 2022, and before January 1, 2026. Currently bonus depreciation is set at 80% for 2023 and 60% for 2024.
• Increasing Section 179 expensing limits for property placed in service after December 31, 2023 to $1.29 million and raising the cap for qualifying property up to $3.22 million.
• Modifying the calculation for businesses subject to the interest expense limitation, allowing more interest to be deducted by excluding depreciation and amortization from the calculation. This would be retroactive to years beginning after December 31, 2021, through December 31, 2025.
• Barring new claims for the Employee Retention Credit (ERC) filed after January 31, 2024, and extending the statute of limitations on assessment for ERC.

The timing of the Act’s passing remains unclear due to challenges such as the repeal of the SALT cap which was not included in the Act and the 2023 tax filing season which opened during the last week of January 2024.  Any changes to tax laws would require changes to tax forms that have already been issued. We will be watching the Act’s progress in the coming weeks.