House passes the Tax Relief for American Families and Workers Act of 2024
The Tax Relief for American Families and Workers Act of 2024, passed by the House of Representatives on January 31st, 2024, aims to provide tax relief and support to American families and workers.
This comprehensive legislation includes various provisions that address key areas such as the Child Tax Credit, business breaks, disaster tax relief, and affordable housing. Let’s delve into the details of this important act.
Enhanced Child Tax Credit
The bill includes provisions to enhance the Child Tax Credit, providing support to low-income families dealing with inflation.
While Democrats had hoped for a more robust version, this package promises to provide greater relief to families in need.
The Child Tax Credit will be indexed to inflation, and the refundable portion of the tax credit will be incrementally increased for the years 2023, 2024, and 2025. Taxpayers will have flexibility in using either current or prior-year income to calculate the credit during 2024 and 2025.
Business Breaks
The Tax Relief for American Families and Workers Act also includes several business breaks aimed at stimulating economic growth and job creation.
Businesses of all sizes will be able to immediately deduct the cost of their U.S.-based research and development (R&D) investments, instead of spreading it over five years. Full and immediate expensing for investments in machinery, equipment, and vehicles will be restored, and the amount of investment that small businesses can immediately write off will be increased to $1.29 million.
The bill also addresses the treatment of business interest expense, bonus depreciation, and research and experimental costs.
Disaster Tax Relief
Recognizing the impact of natural and man-made disasters, the legislation provides tax relief for recent hurricanes, flooding, wildfires, and the Ohio rail disaster.
These measures aim to alleviate the financial burden faced by individuals and businesses affected by such events.
Affordable Housing
The Tax Relief for American Families and Workers Act includes provisions to address the shortage of affordable housing. It restores a 12.5% allocation increase to the Low Income Housing Tax Credit (LIHTC) that expired in 2021 and reduces the private activity bond financing requirement to access the 4% LIHTC from 50% to 30%. These measures will help finance over 200,000 affordable homes, providing much-needed relief to individuals and families.
Next Steps
Having passed the House of Representatives, the bill now moves to the Senate for consideration.
While the House vote was bipartisan, the outcome in the Senate remains uncertain due to the narrow division. However, the strong support in the House and the potential benefits for American families and businesses may influence the Senate’s decision.
A promising step forward for American families and workers
The Tax Relief for American Families and Workers Act of 2024 represents a significant effort to provide tax relief and support to American families and workers. With provisions addressing the Child Tax Credit, business breaks, disaster tax relief, and affordable housing, this legislation aims to alleviate financial burdens, stimulate economic growth, and promote the well-being of individuals and communities.
As the bill progresses through the Senate, its potential impact on American taxpayers and the economy remains to be seen.