Congress may enact changes in tax policy this year, but only in a few areas, and the chances of any such package passing by midyear remains at 50-50, according to Kiplinger Consumer News Service.

Congress still must pass bills to keep the government operating, provide military aid to Ukraine and Israel, and fund border security. Aside from all of that, Republicans want to restore three tax breaks:

● Full expensing of research-and-development (R&D) costs, which changed as a result of the Tax Cuts and Jobs Act (TCJA) of 2017. Now, firms must amortize R&D expenses over five years, and 15 years for overseas research, rather than in the year incurred;

● Deduction of the full cost of new and used qualifying business assets with lives of 20 years or less; the deduction dropped to 80 percent in 2023, and will drop to 60 percent in 2024, to 40 percent in 2025, etc.; and

● Interest deductions on business debts of large companies, which were limited to 30 percent of adjusted taxable income by the TCJA. Starting with tax years that began in 2022, depletion and amortization write-offs are accounted for in adjusted taxable income. Republicans are seeking to overturn this limit and extend the more generous rule that was in effect previously, according to the Institute on Taxation and Economic Policy.

Congressional Democrats seek an extension of the child tax credit, for which there may be bipartisan support. Bipartisan support also exists for tax relief for victims of federally declared disasters in 2021, 2022 and 2023, expanded tax credits for builders of low-income and middle-income housing, and some technical corrections to the SECURE 2.0 legislation of 2022. 

Two items will not be part of any 2024 tax deal, according to Kiplinger’s: the extension of provisions in the 2017 tax law affecting individuals, such as the lower tax rates, higher standard deductions, and the 20 percent write-off for qualified business income of owners of pass-throughs, all of which end after 2025; and a mark-to-market tax regime on the assets of the ultra-rich, such as the Billionaires Income Tax proposal by Sen. Ron Wyden (D-Ore.).

To get the latest guidance on how to navigate resolution of your clients’ tax issues, and to meet key IRS players as you face a new filing season, attend the Foundation for Accounting Education's NYSSCPA Meet The IRS Webcast on Jan. 25.