House Approves Major Tax Relief Bill With Strong Bipartisan Support
The U.S. House of Representatives has passed a new tax bill called the Tax Relief for American Families and Workers Act of 2024. This bill could bring important changes for businesses and families all across the country. The vote was not close—357 members voted yes, while only 70 voted no. Now, the bill will move to the Senate, where lawmakers will decide what happens next.
What’s Inside the Tax Relief Bill?
This new tax bill has several key provisions that could impact how much people and businesses pay in taxes. Here are the most important parts:
- Research and Experimental (R&E) Spending: Businesses often spend money on research and new ideas. The bill allows companies to immediately deduct these costs, instead of spreading them out over several years. This rule would apply to the years 2022, 2023, 2024, and 2025, giving businesses a big break on their taxes.
- Bonus Depreciation: If a business buys new equipment or property, the bill lets them deduct 100% of the cost in the year they buy it, instead of waiting. This rule would last for purchases made from the end of 2022 through the end of 2025. This helps businesses invest in new tools and technology right away.
- Business Interest Deduction: The bill changes how businesses can deduct interest they pay on loans. For tax years 2022 through 2025, businesses can use a more generous formula (called EBITDA) to figure out how much interest they can deduct, which could lower their tax bills.
- Child Tax Credit: The bill boosts the child tax credit, making more of it refundable, which means families could get more money back even if they don’t owe taxes. Starting in 2024, the maximum credit per child will also go up with inflation, so it keeps up with rising prices. These changes would apply to the years 2023, 2024, and 2025.
- Low-Income Housing Tax Credit (LIHTC): The bill increases the amount of money states can use to support affordable housing projects. It also makes it easier for these projects to qualify for certain tax credits. This is meant to help more families find affordable places to live.
- Disaster Tax Relief: People and businesses hit by certain federally declared disasters in 2020, 2021, and 2022 could get extra tax breaks to help them recover.
How the Bill Could Help Businesses
Many business owners are cheering the bill’s changes. The ability to deduct research costs and new equipment all at once could free up cash for companies to grow, hire more workers, and invest in new ideas. The business interest deduction change also makes it easier for companies to borrow money and pay less in taxes.
Here’s what some of these changes mean in real life:
- A small tech company could deduct all their spending on new inventions this year instead of spreading it out over five years.
- A farmer who buys a new tractor can write off the whole cost right away, instead of a little bit each year.
- A manufacturer can borrow money to upgrade its machines and deduct more of the interest it pays on the loan.
Bigger Child Tax Credit Means More Money for Families
The bill’s improvements to the child tax credit could help millions of families across America. By making more of the credit refundable, even families who do not owe a lot of taxes could get extra money back. The maximum amount per child is also set to go up with inflation, so it stays helpful as prices rise.
According to lawmakers, this change could especially help lower-income families who need the support the most. For many families, the extra money could mean help with groceries, rent, or school supplies.
More Support for Affordable Housing
Finding an affordable place to live is a big challenge for many Americans. The bill increases the amount of money each state can use to build or fix up affordable housing. It also lowers the requirements for some housing projects to qualify for key tax credits. Lawmakers hope this will encourage more developers to build affordable homes and apartments.
This is especially important in cities and towns where housing costs are rising and many families struggle to find a safe, affordable place to live.
Disaster Tax Relief for Those Hit Hard
People and businesses who have suffered from federally declared disasters in the years 2020, 2021, and 2022 could get special tax breaks. This could help families rebuild their homes or help businesses recover from storms, fires, or other disasters. The tax relief would make it easier for people to get back on their feet after tough times.
What Happens Next?
Now that the House has passed the bill, it moves to the U.S. Senate. The Senate will discuss the bill and may suggest changes. Some senators have already said they are concerned about certain parts of the bill, so it is possible that changes will be made before it becomes law.
If the Senate passes a different version of the bill, the two chambers will have to work out the differences. Only after both the House and Senate agree on the exact wording can the bill be sent to the President to be signed into law.
What This Could Mean for You
If the bill becomes law, it could bring big tax savings for both businesses and families. Here is a quick summary of who could benefit the most:
- Businesses who spend money on research, new equipment, or pay interest on loans
- Families with children who qualify for the child tax credit
- People and businesses rebuilding after disasters
- Communities in need of more affordable housing
Looking Ahead
The Tax Relief for American Families and Workers Act of 2024 is one of the biggest tax bills in recent years. It shows that lawmakers from both parties can still work together on important issues. If the bill becomes law, it could mean more money in the pockets of American families and businesses, and help for those who need it most.
Stay tuned for updates as the Senate takes up the bill and works toward a final decision on these major tax changes.