Federal Funding Talks continue
Once again, we are at the brink of another federal government shutdown as funding runs out for roughly half of federal agencies and departments at midnight Friday. Ñî¹óåú´«Ã½ had several meetings this week with Republican Members of Congress in the House who all believed that a shutdown would not materialize. As of this writing, the Senate is poised to consider a Continuing Resolution to fund the federal government into March to allow for more time to forge a fiscal year 2024 spending bill. Specifically, the short-term funding deal would extend the current deadlines from January 19 and February 2 to March 1 and March 8, respectively. The Senate is expected to pass the measure Thursday and the House will take it up on the consent calendar and pass it the same day.
Ñî¹óåú´«Ã½ Tax Priorities Make Positive Shift
We picked up some good news this week on the tax front. The chairs of the House and Senate tax writing committees unveiled an $80 billion tax package that includes, among other things, the Ñî¹óåú´«Ã½-supported extensions of key business tax incentives that had expired or are phasing out. Specifically, the package retroactively extends the research and development tax credit through 2025. That credit had expired in 2022. Likewise, the package retroactively restores the 100 percent bonus depreciation benefit on investments in machinery and equipment and extends full expensing through 2025. This credit began to phase down in 2023. The measure also increases limitations on depreciable business asset expensing under Section 179. Specifically, the language in the bill increases the maximum amount a taxpayer may expense to $1.29 million, up from the current $1 million, reduced by the amount by which the cost of qualifying property exceeds $3.22 million. The $1.29 million and $3.22 million amounts are adjusted for inflation for taxable years beginning after 2024. The proposal applies to property placed in service in taxable years beginning after December 31, 2023. And finally, the measure restores the more generous Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) standard for calculating interest expense deductibility.
In the non-business tax category, the package restores the upper limit on the Low-Income Housing Tax Credit (LIHTC). In calendar years 2018 through 2021, the 9 percent LIHTC ceiling was increased by 12.5 percent, allowing states to allocate more credits for affordable housing projects. This provision restores the 12.5 percent increase for calendar years 2023 through 2025 and is effective for taxable years beginning after December 31, 2022. The bill also makes more robust the Child Tax Credit. Under current law, the maximum refundable child tax credit is limited to $1,600 per child for 2023. This provision increases the maximum refundable amount per child to $1,800 in tax year 2023, $1,900 in tax year 2024 and $2,000 in tax year 2025, along with the inflation adjustment factor.
Ñî¹óåú´«Ã½ signed on to this week in support of the package.
The bill is scheduled to be marked up in the House Ways & Means Committee Friday and Members that we spoke to that sit on the Committee indicated that the goal is to pass the bill through the full House in the next couple of weeks.
