Democrats on the House Ways and Means Committee advanced a significant portion of President Joe Biden’s $1.9 trillion stimulus package on Friday, including the tax title.
The action marks a key step in the budget reconciliation process, which will allow the package to pass the Senate with a simple, 51-vote majority. Democrats have not ruled out a bipartisan bill but are pressing forward using reconciliation absent a compromise.
Major tax changes for businesses advanced by the Ways and Means Committee include:
- Extending the sick pay and paid family leave credits provided by the Families First Coronavirus Relief Act through Sept. 30
- Repealing the election to allocate interest on a worldwide basis, which goes into effect for tax years beginning after Dec. 31, 2020
- Extending the employee retention credit through 2021, but restructuring it as a payroll tax credit against Medicare tax after June 30
- Exempting Economic Injury Disaster Loan and Restaurant Revitalization grants from tax
The bill also provides $1,400 stimulus checks for each filing taxpayer and dependent with slightly modified phaseouts and makes enhancements to the Child Tax Credit, Earned Income Tax Credit and the Child and Dependent Care Tax Credit for 2021.
It notably excludes a repeal of the $10,000 cap on the state and local tax deduction and a rollback of changes to net operating loss carrybacks enacted by the CARES Act, which several Democrats have been pushing for. However, further tax changes are possible as the package is being considered on the House floor and in the Senate.
Dustin Stamper is a managing director in Grant Thornton’s Washington National Tax Office and leads the tax legislative affairs practice for the firm.
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