Congress Approves New Tax Legislation

A significant tax package made progress in Congress as a key House panel overwhelmingly approved the $78 billion bill. This bill proposes benefits for companies, such as allowing immediate expensing of research and development costs and granting flexibility for businesses through interest deductions. Additionally, it includes tax credits for affordable housing construction and disaster relief for wildfires and train derailments from last year. The package also aims to eliminate double taxation for business and workers with ties to the U.S. and Taiwan. These measures, previously part of the 2017 Trump tax cuts, lapsed over the past years, prompting lobbying efforts from major business groups for their reinstatement. The bill resulted from a rare bipartisan agreement between Republican House Ways and Means Chair Jason Smith and Democratic Senate Finance Chair Ron Wyden. To garner more Democratic support, the bill expands the child tax credit and received endorsement from the White House, which emphasized its potential impact in alleviating child poverty and supporting affordable housing construction. Despite concerns from some influential Democrats, the bill advanced in the House Ways and Means Committee. The proposed measures would be funded by ending a pandemic-era tax credit for businesses with Covid-19 impacted employees. Plans to bring the bill to the House floor for a vote were uncertain at the time, but proponents aim for its timely approval to apply to 2023 federal tax filings.