Tax Cuts Jobs Act | Sunsetting Provisions | OH IN KY

The Tax Cuts and Jobs Act: Sunsetting or Not?

Published on by Rob Riesenbeck in Tax Services

The Tax Cuts and Jobs Act: Sunsetting or Not?

The Tax Cuts and Jobs Act (TCJA) of 2017 put major tax provisions in play – and as our team of top tax pros outlined in our most recent Signature Tax Event, many of those provisions are set to expire at the end of 2025 – putting a nasty wakeup call on the horizon for many taxpayers in 2026.

As tax filing season quickly approaches, Congressional lawmakers are attempting to pass a tax law to benefit both individuals and businesses and offset many of the sunsetting provisions. If passed, The Tax Relief for American Families and Workers Act of 2024 (“the Act”) would extend several sunsetting provisions and provide key relief for taxpayers. Let’s dive into some of the key provisions of this potential legislation.

Continued support for the research and development expenses

Currently, under IRC Section 174, businesses with domestic research and development (R&D) expenses must deduct the costs over a five-year period if the costs were incurred after December 31, 2021. The period for expensing jumps to fifteen years for foreign R&D expenses. The Act would allow domestic R&D expenses to be immediately deducted for costs incurred between 2021 and 2026.

A ‘bonus’ 100% bonus depreciation

One of the most popular aspects of the TCJA was the bonus depreciation piece. Businesses were able to enjoy a deduction for 100% of the cost of applicable assets placed in service. Under current law, bonus depreciation is beginning to phase out by 20% each year starting with the 2023 tax year. If passed, the Act would extend the 100% bonus depreciation expense retroactively from 2023 through 2025. Certain assets would be eligible for 100% bonus depreciation through 2027.

Extending interest expense deductibility

The Act would extend factors such as depreciation, amortization, and depletion to be considered in calculating Adjusted Taxable Income (ATI) for IRC Section 163(j) interest expense deductibility. This would be a welcomed change for businesses with substantial interest expenses.

Additional relief

The Act also provides enhancements to Section 179 depreciation expense, child tax credits, disaster tax relief, and affordable housing expansion.

We’re here to help

The potential Tax Relief for American Families and Workers Act of 2024 is a lot to unpack. For professional guidance on the Act and other tax planning, the Barnes Dennig tax team is here to help. You may also be interested in top tax planning tips for 2024, insights into EV tax credits and select sustainable home improvement tax credits, and key estate planning insights that could change your financial future for the better. Contact us today for a free consultation. As always, we’re here to help.



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