2024 Tax Shake-Up: Congress Sets Sights on Reform – The Tax Letter Unveils the Changes

December tax legislation is a no-go since House legislators are on vacation. Moving behind the scenes, tax adjustments are possible by mid-2024. Such packages have 50-50 chances.

2024 Tax Shake-Up: Congress Sets Sights on Reform – The Tax Letter Unveils the Changes (Photo: Google)

Navigating Military Funding, Border Security, and Tax Reform

Lawmakers returning in early January must negotiate military spending for Ukraine and Israel and border security. To avert a January or February shutdown, federal financing must be resolved. Republicans want to restore three popular company tax benefits.

This includes fully expensing R&D spending and reversing the 2017 tax law’s five-year amortization. GOP priorities include bonus depreciation and interest discounts on huge company loans.

Democratic priorities include extending the child tax credit to bring children out of poverty. Democrats want a bigger credit limit that is completely refundable with advance monthly payments, but GOP opposition and expenses are obstacles. Democrats may consider limited increases like boosting the working parent credit or assuring full refundability.

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Disaster Relief, Housing Incentives, and Legislative Adjustments

Relief for victims of federally declared disasters, additional home builder tax incentives, and technical changes to SECURE 2.0 legislation are bipartisan.

A 2024 tax pact would not extend 2017 tax law elements benefiting people, such as reduced tax rates and bigger standard deductions, which expire in 2025. Senator Ron Wyden’s Billionaire Income Tax proposal’s mark-to-market tax on ultra-rich assets is also excluded. This plan would tax yearly built-in gains for anyone with $100 million in income or $1 billion in assets, regardless of asset sale.

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