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TAX TAKE: Every Little Step: What's Next for the Tax Extenders Bill?

Tax Alert

On Friday, the House Committee on Ways and Means marked up and passed the $78 billion Tax Relief for American Families and Workers Act of 2024 (H.R. 7024) by a significant bipartisan vote of 40-3 (additional details on the mark-up available here). With the House on recess this week, a full House vote on the bill could come as early as the week of January 29, although House Republican leadership has not yet signaled when the bill could get floor consideration. This week, we turn to our top questions regarding the future of the tax package.

1. When will the tax bill get House floor consideration?  

Conventional thinking has been this tax bill could get attached to the larger fiscal year (FY) 2024 spending package that the House, Senate, and White House are currently trying to negotiate. However, Speaker Mike Johnson (R-LA) is walking a very fine line negotiating a bipartisan spending deal that has the support of conservative members of the Republican caucus and does not risk his speakership. Adding a tax bill that has critics on both the political left and right could be considered a bridge too far. That said, a 40-3 committee vote is a strong show of bipartisan support that could give the tax bill momentum in the coming weeks. 

2. How will the bill be addressed in the Senate?  

It is unclear if and when the bill would be marked up in the Senate Committee on Finance, particularly given that Ranking Member Mike Crapo (R-ID) was not involved in the development of the bill and has publicly expressed some reservations regarding it. Further, it is unlikely that the bill would be considered on a stand-alone basis on the Senate floor, where it would be subject to a time-consuming open amendment process.

3. When will the bill be enacted?  

As mentioned above, there may be some viable legislative vehicles in March that the tax bill could be attached to, including the two government spending bills – currently scheduled for March 1 and March 8 unless there is another continuing resolution – and a bill to extend Federal Aviation Administration (FAA) fees and excise taxes. After March, a post-election lame duck bill at the end of the year may be the next opportunity.

4. Will the bill change before its enactment? 

Given that further action on the tax bill will likely be delayed and that taxwriting committee ranking members and congressional leadership were not involved in its development, changes to the bill are inevitable. Many Democrats are seeking expansion of child tax credit (CTC) relief and proponents of state and local tax (SALT) deduction cap relief are seeking inclusion in the bill. Whether the current political and fiscal situation can tolerate the cost of an increased bill, and how such an increase is funded, is yet to be determined.

5. What happens to the proposed effective dates in the tax bill?  

The bill contains a variety of effective dates, including the extension of the "Big Three" Tax Cuts and Jobs Act (TCJA) extenders on a retroactive basis and through 2025 and effective dates regarding the numerous limitations on the employee retention credit that are used to fund the bill. Despite the probable delay in further consideration of the bill, these effective dates are likely to remain the same given that taxpayers (and the Internal Revenue Service (IRS)) are effectively on notice, although pressure may increase to re-examine those dates in the future.

6. What are the odds that the tax bill is enacted this year?  

The bipartisan agreement among the taxwriting committee chairmen and passage by the House Committee on Ways and Means are important developments, but they should be taken in context as the bill will likely need changes to pass the Senate, be made a priority by congressional leadership, and find a moving legislative vehicle to attach to. We remain hopeful, but collectively believe – at the moment – that passage in the near-term may be less than a 50/50 proposition. A lot can happen in the next couple of weeks. 

In the News

Marc commented in The Hill on the markup of H.R. 7024: "I just have a sense that we may see changes in the markup in Ways and Means, and once we get to the Senate, the Senate always gets its own stuff," Marc Gerson said in an interview. "And so what we have is a base bill … and I think it's going to change."

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