House and Senate Begin August Recess
With the House already having hit the eject button last week and left town, the Senate followed suit Thursday afternoon after the vote on the tax bill’s procedural motion discussed below. Congress will be in recess all of August and will return September 9 for what is expected to be a shortened work period in DC before they go back to the campaign trail through the election in November.
Senate Vote Leaves Key Tax Benefits in Limbo
Yesterday, the full Senate voted on a Motion to Proceed to consider H.R. 7024—the Tax Relief for American Families and Workers Act. Recall, this legislation passed the House January 31 on an overwhelmingly bipartisan vote of 357-70. The legislation restores retroactively the 100 percent bonus depreciation tax credit, which took a 20 percent haircut in 2023 and another 20 percent reduction in 2024. The bill would restore the write off to 100 percent in 2023 and extend that benefit through 2025. The legislation also retroactively extends through 2025 the research and development tax credit which expired in 2022 and includes more favorable interest deductibility provisions. Finally, it bumps up the deduction limits under Sec. 179, which allows businesses to write off business expenses for depreciable assets like equipment, vehicles and software. These business tax credits are paired with a more robust Child Tax Credit, which was successful in attracting support from Democrats and a number of Republicans who are working on rebranding the Republican party to one focused less on corporate America and more on working families.
This legislation was a centerpiece of ABMA’s advocacy during our Washington, D.C. fly-in earlier this year. While we were encouraged by the bipartisan vote in the House and optimistic for speedy consideration in the upper chamber, that outcome did not materialize. Senate Finance Committee Ranking Member Mike Crapo (R-ID) pushed for the bill to go through regular order in the Senate with a committee markup and consideration of amendments. The majority’s concern with that approach is that the House-passed bill represented a delicate balance of competing interests and any changes to the legislation were seen as potentially upsetting that balance and killing the effort.
Yesterday’s unfortunate vote tally was not unexpected as Senate Republicans remain opposed to the legislation. Senate Majority Leader Chuck Schumer (D-NY) put the procedural motion up for a vote to get lawmakers’ position on record in advance of the upcoming election in November.
As we have noted, next year is a consequential one in the tax space. In addition to all of the benefits in H.R. 7024 that need to be acted upon, the Sec. 199A deduction (20 percent for S-Corporations/pass through entities) expires at the end of 2025. ABMA attended a breakfast fundraising event last week for House Ways & Means Committee Chairman Jason Smith (R-MO). During the discussion, Chairman Smith noted that $4.6 trillion (with a T) in tax benefits expire at the end of next year. Along with our workforce and transportation/supply chain priorities, ABMA will be busy working to restore and preserve these important tax benefits that are critical to the competitiveness of Main Street businesses in the LBM sector.
