Tax Relief for American Families and Workers Act of 2024

Tax Changes for Individuals

Calculation of Refundable Credit on a Per-Child Basis. —Effective for tax years 2023, 2024, and 2025, this provision modifies the calculation of the maximum refundable credit amount by providing that taxpayers first multiply their earned income (in excess of $2,500) by 15 percent, and then multiply that amount by the number of qualifying children.

Modification in Overall Limit on Refundable Child Tax Credit. —This provision 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, along with the inflation adjustment described below.

Adjustment of Child Tax Credit for Inflation. —This provision would adjust the $2,000 value of the child tax credit for inflation in tax years 2024 and 2025, rounded down to the nearest $100.

Rule for Determination of Earned Income. —For tax years 2024 and 2025, taxpayers may, at their election, use their earned income from the prior taxable year in calculating their maximum child tax credit if the taxpayer’s earned income in the current taxable year was less than the

taxpayer’s earned income in the prior taxable year.

Tax Changes for Businesses

Increase in Threshold for Information Reporting on Forms 1099-NEC and 1099-MISC. —The reporting threshold for payments by a business for services performed by an independent contractor or subcontractor and for certain other payments is increased to $1,000 and adjusts it for inflation after 2024. The new threshold is based on payments during the calendar year. This section applies to payments made after December 31, 2023.

Deduction for Research and Experimental Expenditures. —This provision delays the date when taxpayers must begin deducting their domestic research or experimental costs over a five-year period until taxable years beginning after December 31, 2025. Therefore, taxpayers may deduct currently domestic research or experimental costs that are paid or incurred in tax years beginning after December 31, 2021, and before January 1, 2026.

Extension of Allowance for Depreciation, Amortization, or Depletion in Determining the Limitation on Business Interest. —This provision extends the application of EBITDA (earnings before interest, taxes, depreciation, and amortization) to taxable years beginning after December 31, 2023 (and, if elected, for taxable years beginning after December 31, 2021), and before January

1, 2026. Therefore, for taxable years beginning after December 31, 2021, and before January 1, 2024, ATI (adjusted taxable income) is computed with regard to deductions allowable for depreciation, amortization, or depletion (i.e., earnings before interest and taxes (EBIT)). However, ATI may be computed as EBITDA, if elected, for such taxable years. For taxable years beginning after December 31, 2023, and before January 1, 2026, ATI is computed as EBITDA. For taxable years beginning after December 31, 2025, ATI is computed as EBIT.

Extension of 100 Percent Bonus Depreciation. This provision extends 100-percent bonus depreciation for qualified property placed in service after December 31, 2022, and before January 1, 2026 (January 1, 2027, for longer production period property and certain aircraft) and for specified plants planted or grafted after December 31, 2022, and before January 1, 2026. The provision retains 20-percent bonus depreciation for property placed in service after December 31, 2025, and before January 1, 2027 (after December 31, 2026, and before January 1, 2028, for longer production period property and certain aircraft), as well as for specified plants planted or grafted after December 31, 2025, and before January 1, 2027.

Increase in Limitations on Expensing of Depreciable Business Assets. —In general, qualifying property is defined as depreciable tangible personal property, off-the shelf computer software, and qualified real property that is purchased for use in the active conduct of a trade or business.

This provision increases the maximum amount a taxpayer may expense the cost of qualifying property to $1.29 million, reduced by the amount by which the cost of qualifying property exceeds $3.22 million. The $1.29 million and $3.22 million amounts are adjusted for inflation for taxable years beginning after 2024. The proposal applies to property placed in service in taxable years beginning after December 31, 2023.