Last week, the Senate Finance Committee Chairman Ron Wyden and the House Ways and Means Committee Chair Jason Smith, approved a $78B proposal that would give a bit of a tax break to businesses and families. The bill now heads to the House Floor.
The Tax Relief Act for American Families and Workers Act of 2024 proposes several ways farmers could benefit, including:
Section 179 Limits
The proposal bumps up the amount farmers can deduct in equipment purchases. Previously, that number was $1.16M (with deductions reducing for every dollar over $2.89M in purchases).
Now, the deduction will increase to $1.29M in equipment purchases—and the cap would go to $3.22M.
Extension of 100% depreciation through 2025
Currently, bonus depreciation is set at 80% for 2023 taxes and fell to 60% for 2024. The plan would return bonus depreciation to 100% for property through 2025.
1099 forms: Independent contractors are currently required to fill out 1099s for payments higher than $600. The plan increases that to $1K.
The bill also increases the maximum refundable amount per child to $1,800 in tax year 2023, $1,900 in tax year 2024 and $2,000 in tax year 2025. The $2,000 value of the child tax credit would be adjusted for inflation in tax years 2024 and 2025, rounded down to the nearest $100. To read the section-by-section summary of the proposal, click here.
Committee Chairman Jason Smith, R-MO notes that, the bill also expands 100% expensing, “which allows employers to fully deduct the cost of equipment and machines that increase productivity and worker wages. When this policy was originally implemented, investment in American businesses grew 20%,” Smith said.
Wyden said he and Smith want to pass the package quickly so that families and businesses can take advantage of the breaks as they file tax returns this year. The filing season for 2023 income is due to start on January 29, 2024.
