What Might be in Year-end Tax Package?

• November 16, 2022
• Paul Neiffer

After almost every election cycle, there is some type of year-end tax package and this year is likely to be no different. Sometimes it is simply passing some expiring tax extenders. Other times, there is more tax meat on the bone.

Here are the items being discussed in Congress right now:

• An expansion of the child tax credit. In 2021, this credit was $3,000/$3,600 depending on the age of the child up from the old $2,000 credit. Part of the credit was also paid monthly starting in July, 2021. The Democrats would like to increase the credit and make it refundable. They likely know they don’t have enough votes for a full increase but a partial increase may pass.
• Extend 100% bonus depreciation through 2025. It is currently scheduled to drop to 80% in 2023, then 60% in 2024…. Many lawmakers want to extend 100% through 2025 and then have it expire in 2026.
• Reinstate full research expensing. The Tax Cuts and Jobs Act of 2017 requires research expenses to be capitalized and then amortized over 5 years beginning this year (2022). There is bipartisan support for allowing full expensing.
• Pass Secure 2.0. The Secure Act increased the required beginning date for pension and IRA distributions to age 72. Secure Act would increase this to age 75 sometime next decade and add many other changes to allow more people to participate in profit sharing plans, etc. This proposal appears to have a very good chance of passing.
• Some lawmakers think there is also a chance of making many provisions of the Tax Cuts and Jobs Act permanent. This could likely only happen if the Democrats get a full child tax credit, etc.

There is no chance that all of these will happen this year and there is also the chance that none of them will happen. We will keep you posted.

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