01/11/2024

Top Tax Writers on Verge of Bipartisan Tax Deal

The deal also would expand the Child Tax Credit

Leaders of the House Ways and Means Committee and Senate Finance Committee have reportedly agreed to a tax package that pairs restoration of three business tax breaks with an expanded Child Tax Credit through 2025.

House Ways and Means Committee Chair Jason Smith (R-MO) and Senate Finance Committee Chair Ron Wyden (D-OR) still have some policy issues to iron out, but the bipartisan agreement would include restoring GOP-supported business interest deductions; full deductions for research and development expenses; and an extension of bonus depreciation. In return, Democrats would get an expanded Child Tax Credit – extending access for lower-income families and adjusting the $2,000 maximum benefit for inflation.

The combined price tag for the tax changes is roughly $70 billion; lawmakers are considering rescinding funding for the Employee Retention Tax Credit (ERTC) as a partial pay-for. The ERTC was a lifeline to small businesses and nonprofit groups struggling to keep their employees on their payrolls during the COVID-19 pandemic. But in September, IRS Commissioner Danny Werfel ordered the agency to immediately stop processing new ERTC claims due to a “surge of questionable claims.”

Adding to the urgency of the tax deal is Wyden’s preference that Congress pass the tax package before tax filing season begins on Jan. 29 so that taxpayers can claim the Child Tax Credit. Smith and Wyden were hoping to release a joint statement announcing the deal as soon as today.

This article was provided to OSAP by ASAE's Power of Associations and Inroads.