KBKG Tax Alert: Update on the 174 Capitalization Fix, 2024 Tax Relief Act

The American Families and Workers Act of 2024 (“the Act”), aimed at reinstating the ability to deduct R&D expenditures, extending bonus depreciation, and expanding the Child Tax Credit has hit a significant roadblock in the Senate. Despite its bipartisan passage in the House earlier in the year, the bill faces staunch opposition from key senators, including Senator Mike Crapo, the top Republican on the Finance Committee.

The Act, crafted through negotiations between Democratic Senate Finance Committee Chairman Ron Wyden and Republican House Ways and Means Chairman Jason Smith, sailed through the House with bipartisan support in January, with a vote of 357 to 70. Despite hopes to swiftly advance the bill in the Senate, potentially by attaching it to a government funding measure, this prospect dimmed due to Crapo’s resistance and that of several other senators. Crapo voiced particular concern about the proposed adjustments to the Child Tax Credit, especially the inclusion of a refundable portion in 2024 and 2025, which could be accessed by households with no income. On Wednesday, he expressed apprehension about diminishing the incentive to work, stating:

After the Senate approved a $460 billion appropriations package on Friday, they can turn now their attention to a second package of remaining appropriations bills to have all federal agencies fully funded by a March 22 deadline. With the next few weeks being key to getting agreement to avoid a shutdown of certain federal agencies, it also provides additional time for Congress to negotiate on the pending tax legislation and potentially use the remaining appropriations bills as a vehicle for passing the stalled tax relief as well.

For more details about the bill, see KBKG’s prior tax alert when it passed the House.