On June 9, 2023, House Ways & Means Committee Chairman Jason Smith (R-MO) presented a new tax package consisting of three proposed tax bills. The Republican-backed package would repeal several electric vehicle tax credits in the Inflation Reduction Act, provide families an additional $4,000 standard deduction for two years, and repeal a law requiring users to report aggregate payments over $600 on payment platforms like Venmo and PayPal.
The proposed bills that make up the package are the Build It in America Act, the Small Business Jobs Act, and the Tax Cuts for Working Families Act.
Build It in America Act
This Act proposes retroactively extending expired tax breaks for research and development costs. Companies lost the ability to deduct those costs under Internal Revenue Code Section 174 for tax years starting after December 31, 2021 – under this legislation, companies would not be required to amortize those costs until 2026. This extension aims to provide businesses with additional flexibility and incentives for conducting research and development activities. Research and development tax breaks are supported on a bicameral, bipartisan basis.
The Build It in America Act also repeals the superfund tax on crude oil and petroleum products, and repeals tax credits related to clean electricity production and investment, previously owned clean vehicles, and qualified commercial clean vehicles.
Small Business Jobs Act
This Act increases the 1099 reporting threshold for services by contractors or subcontractors from $600 to $5,000. It also expands tax incentives for investors in startups and establishes information reporting requirements for both qualifying opportunity zone programs and proposed rural opportunity zone programs.
Tax Cuts for Working Families Act
This provides individual taxpayers a new $4,000 standard deduction for the 2024 and 2025 tax years. However, the bonus is reduced for taxpayers with higher incomes. The bill also proposes changing the name of the standard deduction to the "guaranteed deduction."
