Business groups and congressional supporters continued to make a final push for a tax extenders deal as the opportunities for legislation dwindle.
Key lawmakers said that negotiations are ongoing over a potential agreement to trade child tax credit enhancements for restoring research expensing under Section 174, reinstating 100% bonus depreciation and providing relief for the Section 163(j) limit on interest deductions. Nearly 150 House Republicans sought to add momentum to the effort by writing a letter to House Speaker Mike Johnson, R-La., urging action on the business provisions before the end of the year. Business groups have also stepped up their lobbying with a blitz of advertising.
Despite the push, major hurdles remain, and the opportunities for a deal are narrowing. An agreement struck to fund the government through January and February of 2024 robs negotiators of the usual legislative vehicle carry a tax package. Congress is close to finishing its business for the year, with only reauthorization for the Federal Aviation Administration and a few other spending priorities likely to move. Congress is also considering moving on Taiwan tax relief. It would be challenging to add a tax package to any of these vehicles, though it is a possibility.
Broad governmental funding deadlines in January and February could still be vehicles for a tax deal, but the effort gets more difficult the farther Congress gets into 2024. Election year politics and the start of the filing season will complicate any effort next year. The cost of a potential package also remains a problem, and lawmakers have so far been unable to find a mutually acceptable compromise on individual and business relief despite two years of trying.
Taxpayers should keep an eye out over the next two months to see if Congress can pull together a last-minute deal, but it may also be appropriate to begin assessing planning options to address Section 163(j) and Section 174 moving forward. Calendar-year taxpayers generally had to implement the changes for the 2022 return but may not have had the capacity to assess proactive planning that could soften the impact.
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