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TAX TAKE: It's Gonna Be a Funky New Year: Top Tax Policy Questions in 2024

Tax Alert

Welcome back to Tax Take! We hope you enjoyed a great holiday break. As the House of Representatives and Senate return to session this week, fiscal year (FY) 2024 spending is top of mind for lawmakers as they seek to avoid a looming government shutdown. The government spending bill that Congress passed in November expires January 19 and February 2, depending on the federal agency. Below we present five of the biggest questions that tax policy enthusiasts are asking:

1. What could be included in a potential bipartisan tax bill?  

The base package is estimated to be $50 billion to extend retroactively and through 2025 the "Big Three" Tax Cuts & Jobs Act (TCJA) extenders (repealing mandatory section 174 research and experimentation (R&E) amortization, restoring the section 163(j) usage of earnings before interest, taxes, depreciation, and amortization (EBITDA) rather than EBIT in the adjusted taxable income calculation, and restoring 100 percent bonus depreciation). This would be paired with an additional $50 billion in child tax credit relief. Those are the main provisions that leadership and taxwriters are negotiating that will determine whether a tax deal can come together. 

2. Will other tax relief be included?  

There is interest in potentially adding housing tax incentives and perhaps some discrete member priorities, although relief from the state and local tax (SALT) deduction limitation may be off the table.

3. Will it be paid for?  

Given the current deficit, members may be hard-pressed to pass a $100 billion tax relief package without revenue offsets. Getting bipartisan agreement on offsets will be challenging and members may pivot to only funding a fraction of the bill.

4. What legislative vehicles destined for the president's desk could carry a tax package?

As discussed earlier, the two government spending bills slated for late January and early February are the most logical legislative vehicles, assuming Congress can come to an agreement on funding the government for FY 2024.

5. What if there is no agreement on government funding?  

If there is a government shutdown or perhaps one or more additional continuing resolutions (CRs), a tax package will need to find another legislative vehicle. Legislation to extend airline excise taxes before they expire in early March may be the last viable legislative vehicle for a tax package this year, although there is always the potential for a post-election lame duck bill.

Upcoming Speaking Engagements and Events

Loren and fellow Miller & Chevalier attorneys Layla Asali and Lisandra Ortiz will speak at the 2024 DC Bar Tax Conference on January 10-11, 2024. Loren will be moderating "International Taxation: Current Developments" on January 10.

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