Congress has returned from its August recesses to a plethora of outstanding tax and spending issues that many taxpayers hope lawmakers resolve as quickly as possible.
The most immediate issue on Capitol Hill is government funding, which is currently scheduled to expire on Oct. 1. While lawmakers will likely enact a continuing resolution (CR) to keep the government funded through mid-December, there are potential complications, as Sen. Joe Manchin, D-W.Va., has been pushing lawmakers to include an overhaul of the nation's permitting process for energy infrastructure in any CR. Conversely, Sen. Bernie Sanders, I-Vt., has come out in opposition to Manchin’s proposed inclusions.
Lawmakers next will turn their attention towards the midterm elections taking place on Nov. 8. Recent polling suggests a tightening race to control the House after the midterms, though Republicans still appear likely to take control of the chamber. Control of the Senate remains a toss-up.
Congress is expected to return after the election for a lame-duck session to finish any lingering priorities. Top tax priorities could include:
- Retroactively restoring full expensing of research and experimentation (R&E) costs under Section 174
- Extending 100% bonus depreciation, which is scheduled to revert to 80% for property placed in service in 2023
- Passing a package of retirement incentives (See our prior story for more on the various retirement bills currently under consideration)
- Extending other expired “extender” tax provisions, such as credits for railroad maintenance and deductions for racehorses and racetracks
- Providing relief from the new calculation for the limit on interest deductions under Section 163(j)
While several of the tax priorities enjoy bipartisan support, there are no guarantees in the legislative process. In addition, many energy extenders were already addressed in the reconciliation package, which could potentially sap momentum for a separate extenders package in the lame-duck session.
Taxpayers should remain attuned to developments on Capitol Hill, as significant tax legislation could be enacted before year-end.
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