House Ways and Means Republicans have introduced a package of mostly small business tax bills which include a subsequent extension of expired business tax provisions, a bonus standard deduction, and cuts to green energy provisions.
The three related tax bills introduced on June 9 are largely viewed as a starting point for negotiations on a tax bill both Democrats and Republicans expect to come up at the end of the year. The package would extend and retroactively restore three expired business tax provisions from the Tax Cuts and Jobs Act (TCJA) (PL 115-97); create a two-year individual bonus standard deduction; increase the reporting threshold for forms 1099 and 1099-K; and repeal of some clean energy credits created by the Inflation Reduction Act (PL 117-169).
“These policies will provide relief for working families, strengthen small businesses, grow jobs, and protect American innovation and competitiveness,” Ways and Means Chairman Jason Smith, Republican of Missouri, said in a statement.
According to the Joint Committee on Taxation, the package contains around $237 billion of tax cuts which are financed by the repeal and modification of some of the green energy tax credits implemented by Inflation Reduction Act. The removal of the tax incentives for clean electricity production, clean-energy vehicles, and other green incentives, is estimated to raise $216 billion.
The first measure (HR 3938) of the American Families and Jobs Act, as the package is called, temporarily revives tax breaks including research spending, interest expenses, and equipment purchases. All three provisions expired last year as part of a planned phase out of tax cuts in the TCJA; a process that accelerates in 2025.
The second tranche (HR 3936) would allow taxpayers earning less than $400,000 annually to claim a larger standard deduction for the next two years. Married couples who do not itemize would see their deductions rise by $4,000, while single filers would benefit from an extra $2,000.
The third bill would return the Form 1099-K (HR 3937) reporting threshold to $20,000.
Representative Richard Neal, Democrat of Massachusetts, and the panel’s ranking member said Republicans were “laying the groundwork for even bigger cuts in 2025” when provisions of the 2017 tax law expire. The measure, Neal said, would usher in “retroactive corporate tax cuts, next-to-nothing for the most vulnerable children and families, and sneaking in favors for Big Oil.”
Senate Finance Committee Chairman Ron Wyden, Democrat of Oregon, said in a statement that Democrats agreed with many of the tax breaks, such as R&D expensing, but insisted that child care tax credits are included. “Other elements in this package will never get Democratic support,” he said.
Any bill that emerges from the House would likely face stiff opposition in the Democratic-controlled Senate. Chairman Smith has scheduled a markup of the tax package for June 13.
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