Last night, the House of Representatives passed a bipartisan, bicameral tax bill structured by House Ways and Means Committee Chair Jason Smith (R-MO) and Senate Finance Committee Chair Ron Ryden (D-OR) by a vote of 357-70. The bill is a compromise that gives Democrats an expansion of COVID-era child tax credits and tax breaks for business for Republicans. Importantly, the bill includes a restoration of the 100 percent business tax deductions for domestic research and development spending. This deduction was originally created in the 2017 Tax Cuts and Jobs Act (TCJA) but was sunset last year. This bill would extend these deductions to the end of 2025 when the rest of TCJA expires.
The bill faced some opposition from Freedom Caucus members over the potential for child tax credits go to illegal immigrants, and New York and California Republicans were upset that it did not include SALT deductions. Some progressives also opposed extending TCJA at all, but the bill was able to pass all the same. It will now be referred to the Senate Finance Committee where Ranking Member Mike Crapo (R-ID) will attempt to shape the bill to his priorities. Though he is not fully on board with the bill as it stands, Crapo has called it “a thoughtful starting point.” All indications are that the Senate will move quickly with the bill and hope to have a vote on it coming weeks.
The White House supports passage of the bill, calling it a “welcome step forward” and saying, “We believe Congress should pass it.”