Legislative update: Ways and Means Chairman Smith releases three tax bills
The “Tax Cuts for Working Families Act,” the “Small Business Jobs Act,” and the “Build It in America Act”
Tax Cuts for Working Families Act, Small Business Jobs Act, and Build It in America Act
House Ways and Means Committee Chairman Jason Smith (R-MO) today released three tax bills to be considered by the committee next week:
Build It in America Act
The “Build It in America Act” includes extensions of a number of popular expired business tax items. Most notably, the legislation addresses the section 174 treatment of research and experimentation expenditures by retroactively restoring the deduction to January 1, 2022 and extends the deductibility forward until December 31, 2025. The legislation addresses the following expired items:
- Research and experimentation costs (section 174): Deductible from January 1, 2022 to December 31, 2025.
- Limitation of deductibility of interest (section 163(j)): Limit based upon 30% of EBITDA from January 1, 2022, to December 31, 2025
- 100% bonus depreciation (section 168(k)): Eligible costs subject to 100% deduction from January 1, 2023, to December 31, 2025
The legislation also includes provisions that would suspend the Superfund financing rate, would impact how foreign taxes paid are treated for purposes of the foreign tax credit, and would impose a new tax on certain “disqualified persons” who acquire U.S. agricultural interests.
Notably, the bill would offset the costs of the legislation by repealing a number of energy credits previously enacted in the “Inflation Reduction Act of 2022.”
- Read the JCT description
- Read the JCT estimated revenue effects
- Read the JCT description of the chairman’s amendment in the nature of a substitute
- Read the Ways and Means Committee Report [PDF 1.2 MB]
Small Business Jobs Act
The “Small Business Jobs Act” includes a number of provisions targeted at small businesses. These include:
- An increase in the reporting threshold for payments made to certain payees (the current threshold is $600 and the legislation would increase that amount to $5,000)
- A new phased-in (and higher) exclusion for gains from qualified small business stock from 50% up to as high as 100%
- An enhanced benefit under the opportunity zone rules for capital gains derived from certain rural zones
- New information reporting rules for certain opportunity zone investments
Read the JCT description
Read the JCT estimated revenue effects
Read the JCT description of the chairman’s amendment in the nature of a substitute
Tax Cuts for Working Families Act
The “Tax Cuts for Working Families Act” would generally enhance the standard deduction, and would rename the standard deduction as “the guaranteed deduction.”
Read the JCT description
Read the JCT description of the chairman’s amendment in the nature of a substitute
What’s next?
These bills have been scheduled for a markup in the Ways and Means Committee next week. If approved in Ways and Means, the bills could then be considered by the full House of Representatives. To become law, the bills would then need to be approved by the Democratically controlled Senate and signed into law by President Biden.
The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 3712, 1801 K Street NW, Washington, DC 20006.