January 29, 2024
Congress must act quickly on the Tax Relief for American Families and Workers Act of 2024 (H.R. 7024), which would provide much-needed support and certainty to America’s small businesses.
Fill me in: This long-sought bipartisan, bicameral deal would restore and temporarily extend three critical business tax incentives: (1) the deduction for domestic R&D expenses; (2) the EBITDA standard for determining the limitation on business interest; and (3) 100% bonus depreciation. Small businesses have been most acutely impacted by the lapse of these key policies, which this bill would finally address. H.R. 7024 would reinvigorate domestic small business investment by reducing the associated tax costs while increasing tax certainty and simplicity—the importance of which to small businesses cannot be overstated.
The legislation cleared a major hurdle on January 19, 2024, when the Committee on Ways and Means marked-up the bill and voted 40 to 3 to report it favorably to the full House for a vote. Now, Congress must move swiftly to pass this legislation and send it to the President’s desk to be signed into law.
The impact on small businesses: The prolonged uncertainty surrounding the extension of these critical, pro-growth tax provisions has curtailed small businesses’ ability to plan, invest, and grow. Failure to swiftly enact this legislation now would only compound these negative impacts to small businesses.
Some small- and medium-sized businesses have already begun laying off employees to compensate for the additional tax costs under current law. Failure to restore the deduction for domestic R&D expenses alone is expected to result in an additional tax increase of 32% (or $59,000 on average) for small businesses. Increased tax liabilities can profoundly impact small businesses’ ability to make capital investments, modernize, and grow their workforces. According to a recent Small Business and Entrepreneurship Council survey, a sobering 19% of small business owners reported that they may need to close their small businesses if R&D expensing is not soon restored.
Bottom Line: Congress must finish the job and pass this important bipartisan, bicameral legislation to support U.S. small businesses. With tax filing season starting today, it is imperative that Congress act now to avoid further negative impacts to American businesses. Swiftly enacting H.R. 7024 would not only reinvigorate domestic capital investment and innovation but also strengthen and expand the American workforce. We urge Congress to prioritize this bipartisan legislation to help protect, strengthen, and grow our U.S. small businesses.