An increase in income tax rate means you'll pay a higher percentage of your income to the government. This directly reduces your disposable income, the money you have left after taxes for spending or saving. This can make it harder to afford basic necessities, save for retirement, or invest in your future.
Tax Package Update: Bill Awaits Further Action in Congress: The House is expected to vote on the Tax Relief for American Families and Workers Act of 2024 (H.R. 7024) under suspension of the rules on Wednesday evening. Bringing a bill under suspension allows the bill to bypass the House Rules Committee, but the process precludes amendments and requires a two-thirds vote to pass.
The bill is moving forward without changes—late Tuesday a group of blue-state Republicans used procedural maneuvers to reopen negotiations with Speaker Mike Johnson (R-LA) demanding that he amend the bill to include relief from the $10,000 state-and-local tax (SALT) deduction cap. The House may consider SALT relief as a standalone bill, paired with changes to the Child Tax Credit (CTC) to assuage concerns from the House Freedom Caucus.
Yellen Provides Window into Biden’s Second-Term Tax Agenda: Speaking at a keynote address on Jan. 25, Treasury Secretary Janet Yellen discussed some of President Biden’s tax policy priorities should he be reelected to a second term in November. Yellen said that Biden would seek to keep the Tax Cuts and Jobs Act’s provision on individual tax rate cuts for taxpayers earning less than $400,000 but raise taxes on corporations and wealthy individuals, saying that “the President is clearly focused on tax fairness.” Yellen also noted that Biden would seek to retain IRS enforcement-funding allocations from the Inflation Reduction Act, saying that enforcement initiatives are contributing to long-term economic growth.
IRS to Begin Rollout of Direct File Pilot: The 2023 tax-filing season opened on Jan. 29, and certain eligible federal and state workers apparently will be the first to try the Direct File pilot program, an Internal Revenue Service (IRS)-managed program that will allow select taxpayers to file federal tax returns through government-run and operated tax preparation software. The pilot program is voluntary; filers invited to use it have the choice to use it instead filing their taxes using other free or paid tax preparation options. The IRS expects to open the program to other eligible taxpayers in mid-March, but has not provided any further specifics.
Former IRS Consultant Sentenced in 2021 Tax Return Data Leak: On Jan. 29, Charles Littlejohn, a former Internal Revenue Service (IRS) contractor, was sentenced to five years in prison for leaking tax return information about wealthy filers, including former President Donald Trump, to ProPublica and The New York Times in 2021. Littlejohn allegedly stole the returns while working as a government contractor for the agency and released the data to the two news outlets. Judge Ana Reyes’ decision to impose the maximum sentence was praised across the political spectrum, with Justice Department Acting Assistant Attorney General Nicole Argentieri saying that the sentence “sends a strong message that those who violate laws intended to protect sensitive tax information will face significant punishment.” House Ways and Means Committee Chair Jason Smith (R-MO) said that the sentence “sends a strong message that the U.S. judicial system takes these crimes seriously.”
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