Several Provisions of Proposed $78B Tax Package Should Interest Home Builders

On Jan. 16, House Ways and Means Committee chairman Jason Smith (R-MO) and Senate Finance Committee chairman Ron Wyden (D-OR) announced a bipartisan, bicameral tax framework agreement on business and individual tax relief called the Tax Relief for American Families and Workers Act of 2024. The bill aims to help working families and would expand the federal child tax credit. It would also enact some business-related provisions, of which the National Association of Home Builders identifies several as being of particular interest. In addition to expanding Section 179 expensing and increasing the threshold for information reporting on forms 1099-NEC and 1099-MISC, the package would ...

• Strengthen the Low-Income Housing Tax Credit (LIHTC). In calendar years 2018 through 2021, the 9% LIHTC ceiling was increased by 12.5%, allowing states to allocate more credits for affordable housing projects. The legislation restores the 12.5% increase for calendar years 2023 through 2025 and is effective for taxable years beginning after Dec. 31, 2022. The measure also lowers the 50% bond test threshold to 30% for 4% LIHTC bond projects, which will allow for more production and lower costs.
• Extend the 100% Bonus Depreciation. Businesses were permitted to claim 100% bonus depreciation in 2022 for qualifying assets placed in service in 2022. The rate decreased to 80% in 2023, and was set to drop to 60% in 2024, 40% in 2025, 20% in 2026, and zero in 2027. The legislation would allow businesses to claim 100% bonus depreciation for investments in machines, equipment and vehicles for tax years 2023, 2024 and 2025, providing a retroactive tax benefit for 2023.

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