Major Tax Changes Ahead and What Every Business Owner Needs to Know

Discover What the New $78 Billion Tax Deal Means for You

In an ambitious move, Congress is considering a bipartisan tax deal worth $78 billion. This legislation primarily aims to enhance child tax credits and reinstate key business deductions. Understanding these changes is crucial for every business owner.

Part 1: A Boost for Working Families

  • Refundable Credit Calculation: The child tax credit will now be calculated differently, multiplying earned income above $2,500 by 15% for each qualifying child. This change applies from 2023 to 2025.
  • Increased Credit Limits: The maximum refundable credit per child rises to $1,800 in 2023, $1,900 in 2024, and $2,000 in 2025.
  • Inflation Adjustments: Starting in 2024, the child tax credit will be adjusted for inflation.

Part 2: Spurring American Innovation and Growth

  • Research Expenditures: Deduction of domestic research costs is delayed until after December 31, 2025.
  • Business Interest Deduction: Adjustments in EBITDA calculations for tax years 2024 to 2026.
  • Bonus Depreciation: The 100% depreciation for qualified property is extended until 2026.

Part 3: Strengthening Global Ties

  • Reduced Withholding Taxes: For qualified Taiwanese residents, new lower rates on interest, royalties, and dividends.
  • Permanent Establishment Rules: Altered criteria for U.S. income tax applicability.
  • Income from Employment: Exemptions for certain wages earned by qualified Taiwanese residents in the U.S.

Part 4: Relief for Disaster-Impacted Communities

  • Casualty Losses: Changes in deduction requirements for disaster-related losses.
  • Wildfire and East Palestine Disaster Relief: Specific exclusions for relief payments received.

Part 5: Encouraging Affordable Housing Development

  • Increased State Housing Credits: A 12.5% increase in the Low-Income Housing Tax Credit for 2023-2025.
  • Relaxed Bond-Financing Thresholds: Reduced requirements for LIHTC eligibility.

Remember, this legislation is still in the proposal stage. We will keep you updated with the latest information. For any immediate questions, please reach out to us.

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