The fate of a year-end tax package remains uncertain, although with each passing day it looks more likely that its best chance will be during the first quarter of 2024 as part of the two-step appropriations process established by the Further Continuing Appropriations and Other Extension Act, 2024. This week we'll focus on what will be included, and what likely won't be, when the tax package comes up for consideration.

As currently envisioned, the $100 billion in tax relief will be divided roughly equally between:  

• Business tax relief in the form of extension (retroactive and through 2025) of the "Big Three" Tax Cuts and Jobs Act (TCJA) provisions (section 174 research and experimentation (R&E) amortization, the section 163(j) interest expense deduction earnings before interest, taxes, depreciation, and amortization (EBITDA) calculation, and 100 percent bonus depreciation)
• Child tax credit (CTC) relief extension and expansion in a manner that can attract bipartisan support, such as inclusion of a work requirement

Given this split, any other tax relief (including relief from the state and local tax (SALT) deduction limitation and low-income housing incentives) will likely not be included. With the looming 2024 elections, it may be that any serious consideration of these additional items will have to wait until 2025, when the anticipated larger tax reform effort gets underway to address the expiration of the individual and estate tax cuts enacted in 2017 as part of the TCJA.

Another wild card is whether lawmakers will insist that the anticipated cost of the $100 billion package be offset. Any effort to offset the cost of the bill would need to be bipartisan, thereby taking a corporate tax rate hike or other major tax increases off the table. Whether the tax writing committees can develop $100 billion of "non-controversial" revenue raisers – presumably narrowly targeted to address abusive tax regimes, information reporting, and other items – is yet to be seen.

In any event, we remain cautiously optimistic that the major items business taxpayers have been keen to see addressed over the last two years will be, even if that means that the timeline for a traditional year-end tax bill is somewhat extended. While a simple retroactive and short-term going-forward extension of the above-mentioned provisions is most palatable, real concerns with rising debt (and the attendant interest rates) mean that it would be foolish to ignore the possibility of the inclusion of provisions that raise revenue to offset the cost of the package. #TaxTake

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