Background on The Tax Relief for American Families and Workers Act of 2024

Supports Working Families with an Enhanced Child Tax Credit

• Expand access to child tax credit: phased increase to the refundable portion of the child tax credit for 2023, 2024, and 2025.
• Eliminate penalty for larger families: ensure the child tax credit phase-in is applied fairly to families with multiple children.
• One-year income lookback: create flexibility for taxpayers to use either current- or prior-year income to calculate the child tax credit in 2024 or 2025, similar to bipartisan action taken six times in the past 15 years.
• Inflation relief: adjust the tax credit for inflation starting in 2024.

Expands Innovation and Competitiveness with Pro-Growth Economic Policies

• Research & Development (R&D) expensing so businesses of all sizes can immediately deduct the cost of their U.S.-based R&D investments instead of over five years – encouraging American innovation and improving our competitive position versus China and the rest of the world.
• Interest deductibility: continued flexibility for businesses forced to borrow at higher interest rates to meet their payroll obligations and expand their operations.
• 100 percent expensing: restore full and immediate expensing for investments in machines, equipment, and vehicles.
• Taiwan double tax relief: strengthen America’s competitive position with China by removing the current double taxation that exists for businesses and workers with a footprint in both the United States and Taiwan.

Builds Up Main Street and Rebuilds Communities Struck by Disasters

• Expand small business expensing cap: increase the amount of investment that a small business can immediately write off to $1.29 million, an increase above the $1 million cap enacted in 2017.
• Cut red tape for small business: adjust the reporting threshold for businesses that use subcontract labor from $600 to $1,000 and index for inflation – the first update to the threshold since the 1950s.
• Help families get back on their feet with disaster tax relief covering recent hurricanes, flooding, wildfires, and the Ohio rail disaster.

Increases supply of low-income housing by enhancing the Low-Income Housing Tax Credit, a public-private partnership with a proven track record, with increased state allocations and a reduced tax-exempt bond financing requirement.

Eliminates Fraud and Waste by Ending the Employee Retention Tax Credit Program

Saving over $70 billion in taxpayer dollars by accelerating the deadline for filing backdated claims to January 31, 2024 under the COVID-era employee retention tax credit – a program hit by major cost overruns and fraud.