Tax Relief Bill Restoring Domestic Section 174 R&D Expensing Faces Resistance in the Senate

March 20, 2024

At a glance

The main takeaway: The tax bill that could return full deductibility of U.S. research expenses, extend 100% bonus depreciation, and extend continued business interest deductions faces resistance in the Senate, despite overwhelming bipartisan support in the House of Representatives.
Next steps: Aprio will continue to monitor the progress of this legislation. Potentially impacted taxpayers should schedule a consultation with their Aprio advisor.

The full story:

The bipartisan tax relief bill (H.R. 7024 – The Tax Relief for American Families and Workers Act of 2024) that the House of Representatives passed on January 31, 2024 is currently stalled in the Senate. The $79 billion tax package, the product of the Democratic Senate Finance Committee Chairman Ron Wyden and Republican House Ways and Means Chairman Jason Smith, aims to provide relief to both businesses and families. Despite an overwhelming signal of bipartisan support from the House of Representatives with a vote of 357 to 70 earlier this year, the bill faces opposition from several Senators including Senator Mike Crapo, the ranking Republican on the Senate Finance Committee.

The bill includes several high-profile tax law changes, among them a temporary return to full deductions of U.S. research expenses under Section 174, the end of the ERC, an expansion of the Child Tax Credit (CTC), and more.

One of the main points of contention is the provision that would incrementally increase the amount of CTC available as a refund and adjust the topline credit amount to temporarily increase with the rate of inflation. While the House bill would extend these changes for four more years, Crapo and other Republicans argue that this would create a disincentive to work and potentially increase fraud.

This and other disagreements have stalled the progress of the bill in the Senate, despite the efforts of Wyden and Smith to reach a compromise. The Senate is scheduled for a two-week recess starting March 25th and is slated to return to the Capitol April 8th.

Aprio will continue closely monitoring the progression of this legislation to best advise our clients. Schedule a consultation with your Aprio tax advisor to discuss the potential impact these changes, if passed, could have on your business and tax burden.