TCJA Extensions and Tax Changes Making Their Way Through Congress

Last Wednesday, the House Ways and Means Committee voted to approve a new bill addressing various tax provisions and extensions — with no modifications. This bill includes substantial changes affecting businesses, individuals, estates, and energy-related tax credits. The bill could potentially increase the US deficit by up to $4 trillion over the next 10 years, so due to the high cost, it seems unlikely to be approved by the senate. However, we do expect some of these items will eventually be pushed through. Here’s a breakdown of what is currently included in the bill:
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For Businesses

• SALT Workaround Closed: The bill ends the workaround created by PTET (Pass-Through Entity Taxes), complicating state tax reporting for pass-through entities.
• Bonus Depreciation: Returns to 100% for eligible property acquired and placed in service between January 19, 2025 and December 31, 2029.
• Section 179 Expensing: Increases the expensing limit to $2.5 million with a $4 million overall cap.
• Factory Deductions: Allows a 100% deduction for certain types of factories, expansions, or similar structures.
• R&D Cost Amortization Suspension: Domestic R&D amortization rules suspended for expenses paid or incurred from 2025 through 2029.

Note: Foreign R&D treatment remains unclear.

• 1099 Threshold Increase: Raises the reporting threshold from $600 to $2,000.
• Childcare Credit Enhancements (IRC §45F):
  • Small businesses (< $31 million in gross receipts) can use third-party intermediaries for childcare services.
  • Increases the base credit to 40% (up from 25%); small businesses may qualify for a 50% credit.

For Individuals

• Tax-Free Tips:
  • Tips are not taxed (set to expire in 2028).
  • Not available to professionals in a 199A business (e.g., CPAs).
  • Applies only to industries where tips were customary as of 12/31/2024.
  • Ineligible for individuals with earned income over $80,000.
• Tax-Free Overtime:
  • Overtime pay excluded from taxable income (also expires in 2028).
  • Income limit of $80,000 applies.
• Senior Bonus Deduction: New deduction available (details pending).
• Partial Charitable Deduction for Non-Itemizers: Provides some charitable deduction without itemizing.
• §199A Deduction Expansion:
  • Deduction increases from 20% to 23%.
  • Income-based phase-out is softened: QBI deduction reduces by 75¢ per $1 over the threshold.
• Increased Standard Deduction: Made permanent.
• Child Tax Credit:
  • Increased to $2,500.
  • Indexed annually for inflation.
  • Permanently extended.
• Personal Exemptions: Permanently set at $0.
• Itemized Deductions:
  • SALT cap may increase to $30,000 for some.
  • Vehicle Interest Deduction:
    • Up to $10,000 in interest on qualified vehicles.
    • Includes cars, motorcycles, ATVs, RVs — but not bicycles.
    • Final assembly must occur in the U.S.
    • Phases out at $100,000 AGI (single) / $200,000 (MFJ).
    • Expires in 2028.

Estate & Gift Tax

• Estate Tax Exemption:
  • Made permanent at $15 million, indexed for inflation.

Other Provisions

• MAGA Accounts:
  • New bank accounts for children under 8 years old.
  • Taxable entities can contribute up to $5,000/year.
  • Withdrawals allowed at age 18.
  • Qualified use = long-term capital gains tax.
  • Non-qualified use = ordinary income tax.
  • Hybrid structure similar to UTMA + IRA.
  • $1,000 government contribution for children born 1/1/24 – 12/31/2028.

(Nathan's son missed the deadline by a week!)


Clean Energy Tax Credits – Being Repealed or Phased Out
Most energy-related credits are set to expire by the end of 2025:

• Previously-Owned Clean Vehicle Credit
• Clean Vehicle Credit
• Qualified Commercial Clean Vehicle Credit
• Alternative Fuel Vehicle Refueling Property Credit
• Energy Efficient Home Improvement Credit
• Residential Clean Energy Credit
• New Energy Efficient Home Credit

For More Information
For further analysis and a full breakdown of the bill, refer to the Tax Advisor article: “Ways and Means Approves Proposed TCJA Extensions and Tax Changes.”