{"id":2907,"date":"2023-06-29T09:12:02","date_gmt":"2023-06-29T09:12:02","guid":{"rendered":"https:\/\/mysourcefunding.com\/tax-preparation\/key-tax-changes-proposed-in-the-new-american-families-and-jobs-act\/"},"modified":"2023-06-29T09:12:02","modified_gmt":"2023-06-29T09:12:02","slug":"key-tax-changes-proposed-in-the-new-american-families-and-jobs-act","status":"publish","type":"post","link":"https:\/\/mysourcefunding.com\/?p=2907","title":{"rendered":"Key Tax Changes Proposed In The New American Families And Jobs Act"},"content":{"rendered":"
\n

The Internal Revenue Service (IRS) governs some of the most complex laws in the world. Beyond the complexity, the pace of change in the tax code is hard to keep up with year after year. This month, the latest round of proposed tax changes have implications for individuals and business owners. House Republicans released drafts of three separate bills creating an individual and business tax package that is collectively called the new American Families and Jobs Act. These bills will serve as the starting point for this year\u2019s congressional tax negotiations and include the Tax Cuts for Working Families Act (H.R. 3936), the Small Business Jobs Act (H.R. 3937), and the Build It in America Act (H.R. 3938).<\/p>\n

Implications of the proposed tax changes<\/strong><\/h2>\n

While the proposed bills are complex, there are key implications that can have a direct impact on most taxpayers. Here\u2019s a high-level review of the key provisions for each bill.<\/p>\n

Tax Cuts for Working Families<\/h3>\n

This bill aims to change the name of the standard deduction to the guaranteed deduction. It proposes a new Guaranteed Deduction Bonus for the next two years and is designed to provide annual tax savings and more money in the household budgets of middle-class families. It allows an additional bonus amount of $2,000 ($4,000 for married couples filing jointly) in taxable years beginning in 2024 and 2025 but reduces the bonus amount for taxpayers whose modified adjusted gross income exceeds $200,000 ($400,000 for joint filers). This applies on top of the current standard deduction and is projected to be impactful to 9 out of 10 American households who currently take the standard deduction.<\/p>\n

<\/fbs-ad><\/p>\n

Small Business Jobs Act<\/h3>\n

This bill centers on supporting the growth of small, privately-held businesses and offers four key provisions.<\/p>\n

    \n
  1. Provides relief to American workers and small businesses by increasing the reporting threshold for subcontract labor from $600 to $5,000. It updates an IRS reporting rule that has not been inflation-adjusted in almost 70 years and reverses the tax code change from 2021 that lowered the threshold for these transactions from $20,000 to $600.<\/li>\n
  2. Expands tax incentives to investors in startups organized as S Corporations.<\/li>\n
  3. Encourages investment in new equipment and production capacity by increasing immediate expensing for small businesses from $1 million to $2.5 million. With this provision, small businesses like farms and machine shops can make more fully tax-deductible purchases of new equipment.<\/li>\n
  4. Designs a new Rural Opportunity Zone (OZ) program that will allow rural communities to benefit from the same recovery and development OZs have delivered to urban areas.<\/li>\n<\/ol>\n

    Build It in America Act<\/h3>\n

    This bill aims to secure US-based supply chains while growing the economy. It is a robust bill with 11 significant tax law changes. It includes four key provisions relevant to small businesses and individual taxpayers.<\/p>\n

      \n
    1. Extending the ability for companies to immediately deduct research and development (R&D) costs. Beginning in 2022, companies could no longer immediately deduct R&D costs and have been required to gradually spread those expenses over time, for a minimum of 5 years and as high as 15 years. This provision makes this expense deductible in the year the expense is incurred.<\/li>\n
    2. Extending interest deductibility. Starting in 2022, employers face a more restrictive limit. With today\u2019s higher interest rates, the 2022 change increases costs for mid-sized companies and industries that are required to finance their operations with debt. This provision will allow business owners to deduct more of their interest expense each year.<\/li>\n
    3. Promoting American jobs and manufacturing by extending 100 percent expensing. Starting in 2023, job creators are able to immediately deduct only 80 percent of the cost of equipment, machinery, and vehicles, with the rest of the deduction claimed over the life of each asset. This provision will ensure that businesses are incentivized to maintain their operations in the United States.<\/li>\n
    4. Lowering fuel costs by eliminating the superfund tax on petroleum. Repealing this tax included provides lower gas prices for consumers.<\/li>\n<\/ol>\n

      Next steps for the proposed tax changes<\/strong><\/p>\n

      The House Ways and Means Committee held a review meeting and passed all three bills through the committee this month. This is a key first step in the overall passing of each bill. The bill now moves forward for review, debate, and a vote with the House of Representatives.<\/p>\n

      The proposed tax package is expected to clear the Republican-controlled House. However, the Democrat-controlled Senate has already deemed the trio of bills as dead on arrival in their current state. Senate Finance Chair, Ron Wyden, publicly expressed his disapproval of the proposed bills in a statement where he remarked flatly, \u201cIt\u2019s not going to happen.\u201d However, he notes opportunities for Democratic support with modifications. \u201cPairing tax cuts for businesses and families has been the bipartisan practice for several years in recent memory,\u201d Wyden said. \u201cI\u2019m hopeful there\u2019s enough common ground for the two sides to reach an agreement this year, and I\u2019m going to work with my colleagues in the Senate on our own priorities.\u201d<\/p>\n

      The bills are expected to be included in the next legislative session for the House. Historically, major tax changes endure heated debate and numerous amendments. Most lawmakers expect this current act to be debated throughout the year and for the final changes to be effective beginning in the 2024 tax year.<\/p>\n<\/div>\n

      Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

      The Internal Revenue Service (IRS) governs some of the most complex laws in the world. Beyond the complexity, the pace of change in the tax code is hard to keep up with year after year. This month, the latest round of proposed tax changes have implications for individuals and business owners. House Republicans released drafts […]<\/p>\n","protected":false},"author":1,"featured_media":2908,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[79],"tags":[],"class_list":{"0":"post-2907","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-tax-preparation"},"yoast_head":"\nKey Tax Changes Proposed In The New American Families And Jobs Act | Brandiary<\/title>\n<meta name=\"description\" content=\"The Internal Revenue Service (IRS) governs some of the most complex laws in the world. 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