House Passes Bill Expanding Child Tax Credit and Business Breaks
The House passed a $78 billion business and child tax break bill that would provide a boon for U.S. companies with large capital and domestic research expenditures.
The measure, which was approved by a vote of 357 to 70, now heads to the Senate where lackluster Republican support threatens to sink it over a provision that would allow some people with no taxable income to collect the child tax credit and other concerns. But the lopsided House vote in favor signals to Senate holdouts that a majority of both parties is in favor of the deal.
The measure would revive a number of business tax breaks including the enhanced Child Tax Credit, the ability to fully deduct research and development expenses in the first year, 100% bonus depreciation, disaster tax relief, improvements in the Low Income Housing Tax Credit, interest expensing and a tax agreement with Taiwan.
The bill would allow businesses of all sizes to immediately deduct the cost of their U.S.-based R&D investments instead of over five years. It also would restore full and immediate expensing for investments in machines, equipment and vehicles. It would increase the amount of investment that a small business can immediately write off to $1.29 million, an increase above the $1 million cap enacted in 2017. It would adjust the reporting threshold for businesses that use subcontract labor from $600 to $1,000 and index for inflation, the first update to the threshold since the 1950s. It would also remove the current double taxation structure for businesses and workers with a footprint in both the United States and Taiwan. The bill would also provide disaster tax relief for recent hurricanes, flooding, wildfires, and the Ohio rail disaster.
To attract a group of New York Republicans from high-tax areas, House Speaker Mike Johnson has also promised a separate vote on a bill doubling the $10,000 state and local tax deduction cap for joint filers, according to three people familiar with the agreement. That SALT cap bill is unlikely to pass given widespread opposition from conservative Republicans and some progressive Democrats.
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