Ways & Means Committee Approves Tax Legislation

On June 13, House Ways & Means Republicans approved the American Families and Jobs Act, consisting of three bills described as an “economic growth” package. The three bills were approved on party-line votes, with Republicans supporting and Democrats opposed. The three bills were announced on June 9 by the committee’s chairman, Rep. Jason Smith (R-MO).

Included in the package are:

• Certain tax breaks are scheduled to expire at the end of this year—among them are bonus depreciation, expanded business interest expense deduction, and more generous depreciation rules.
• Temporary reinstatement of the ability to deduct research and experimentation expenses.
• An expansion of opportunity zone tax benefits.
• An increase in the amount a small business could deduct for investment expenses, from $1 million to $2.5 million.
• Repeal of some of the green energy tax rules, including the electric vehicle tax credit changes enacted in last year’s Inflation Reduction Act.
• An increase in the standard deduction by $4,000 for married couples filing jointly and $2,000 for single filers, until 2025.
• An increase in the depreciation amount available for business-use cars, trucks, or vans.
• A hike to $5,000 (from $600) in the amount small businesses pay to contractors that they must report to the IRS.
• An increase in the level of third-party sales (e.g., sales via E-bay) from $600 to $2,000 that must be reported to the IRS.

The package includes three bills introduced by House Republicans: the Tax Cuts for Working Families Act, the Small Business Jobs Act, and the Build It in America Act. Other provisions widely supported by the committee’s Republicans (and by some Democrats, too) will wait for a broader tax bill (expected ahead of the expiration at the end of 2025 of the 2017 Tax Cuts and Jobs Act (TCJA) individual tax breaks). Those provisions include an extension of the section 199A 20 percent deduction for noncorporate business income, estate tax rules changes, and an extension of the TCJA individual, capital gains and estate tax rates, and potentially expansion of the child tax credit.

Prospects: The next step for this tax package is a vote on the House floor, something that has not yet been scheduled. But there is little to no chance that the Senate, controlled by Democrats, will consider the House tax bill. The widespread expectation is that this tax package will be the House GOP’s opening offer on a year-end tax bill. Most Washington insiders believe that Congress will act on a year-end tax bill due to the need to extend expiring tax rules.

NAIFA Staff Contact: Jayne Fitzgerald – Director – Government Relations, at jfitzgerald@naifa.org.