BREAKING NEWS: The Tax Relief for American Families and Workers Act of 2024

February 1, 2024

The Tax Relief for American Families and Workers Act of 2024 (“The Act”) was passed by the House of Representatives yesterday, January 31, 2024. This bipartisan legislation is the result of months of across-the-aisle cooperation, and its passage is welcome news to families and business owners.  

Three potential provisions are of particular interest to Capstan clients:  

Mandatory Amortization of Sec. 174 Expenses Delayed 

  • The Tax Cuts and Jobs Act contained a provision mandating that – beginning in Tax Year (TY) 2022 – Section 174 expenses may no longer be immediately deducted. Instead, they must be amortized over 5 years or 15 years in the case of foreign R&E.  
  • THE CHANGE: The Act would delay the implementation of the aforementioned provision until TY 2026, meaning that Sec. 174 expenses may be deducted or amortized in TY 2022, TY 2023, TY 2024, and TY 2025.  

Extension of 100% Bonus Depreciation 

  • Qualified property placed-in-service after 9/27/2017 and before 1/1/2023 are eligible for 100% bonus depreciation.  
  • The bonus rate decreases by 20% in each subsequent year – 80% in TY 2023, 60% in TY 2024, etc.  
  • THE CHANGE: The Act will extend 100% bonus depreciation for qualified property placed-in-service after 12/31/2022 and before 1/1/2026. Properties placed-in-service in TY 2023 will benefit from a retroactive 100% bonus rate, and properties placed-in-service in TY 2024 and TY 2025 will enjoy that rate as well. Property placed-in-service in TY 2026 will be treated with a bonus rate of 20%.  

Increase in Sec. 179 Expensing Limits 

  • In TY 2023, the Sec. 179 expensing limit was $1.16M, and the phase-out threshold was $2.89M.  
  • THE CHANGE: Property placed-in-service in TY 2024 will have an expensing limit of $1.29M, and a phase-out threshold of $3.22M. These numbers will be adjusted for inflation in TY 2024 and beyond. 

This legislation is overwhelmingly positive for American business owners and American families, but additional Senate and Presidential approval is still required. We’ll be watching the legislation’s progression closely, and a more detailed analysis of the Act and its implications will follow.  

 

This bipartisan legislation is the result of months of across-the-aisle cooperation, and its passage is welcome news to families and business owners. 

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