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 Bill Update – Package Remains in Limbo: Almost two months after the Tax Relief for American Families and Workers Act (H.R. 7024) passed the House with an overwhelming 357-70 vote, committee leaders are still considering the process for advancing the bill with or without amendments. Senate Finance Committee Ranking Member Mike Crapo (R-ID) has laid out some of issues in the bill but suggested others may still be identified, while noting there is no proposed timeline for wrapping up negotiations. Chairman Ron Wyden (D-OR) has maintained that Republicans’ demands are an “amorphous smorgasbord” of proposals and is reportedly waiting for a clear list of Republicans’ priorities. With the current stalemate within Finance Committee leadership, eyes will be on Senate Majority Leader Chuck Schumer (D-NY), who has reportedly expressed interest in moving the bill forward with or without amendments and may choose to bring the package, as it currently stands, before the Senate to force a conclusion to the ongoing amendment debate.
Government Funding Update – First Appropriations Package Will Fund Certain Departments and Agencies Through Sept. 30: On March 9, President Biden signed a $459 billion six-bill package funding major areas of the government (Military Construction-VA, Agriculture-FDA, Commerce-Justice-Science, Transportation-HUD, Interior-Environment and Energy-Water) for the remainder of fiscal year (FY) 2024. The bill received bipartisan approval in both chambers of Congress, with the House passing the bill under suspension of the rules in a 339-85 vote on March 6, and the Senate following with a 75-22 vote on March 8.
Ways and Means Pillar One Hearing Exposes Policy Rift: On March 7, the House Ways and Means Subcommittee on Tax held a hearing titled “OECD Pillar 1: Ensuring the Biden Administration Puts Americans First.” The hearing explored the recent proliferation of digital services taxes (DSTs) pending in a number of countries, which will disproportionately increase tax burdens on U.S. multinational businesses and may lead to global tax instability if not mitigated, as the Organisation for Economic Co-operation and Development (OECD) Pillar One proposal aims to do. Committee members on both sides of the aisle agreed on the detrimental effects DSTs would have on U.S. multinationals, but were divided on whether the correct course of action is to continue negotiations with the OECD on Pillar One or to walk away from discussions altogether.
Treasury Department Finalizes Direct Pay for IRA Tax Credits: On March 5, the Treasury Department finalized regulations that would expand the accessibility of energy tax credits to tax-exempt entities previously unable to utilize them. Using Direct Pay (also known as Elective Payment), state, local and tribal governments along with nonprofit organizations can elect to receive direct payment of 12 energy tax credits in lieu of a nonrefundable credit, which taxable entities would otherwise claim against their federal tax liability. The Treasury Department and the Internal Revenue Service (IRS) also issued proposed regulations to provide clarity and flexibility for qualifying entities that co-own clean energy projects to provide additional flexibility in using the elective payment option. The proposed rules would allow energy investments to be made “through a noncorporate entity, rather than requiring direct co-ownership of the property or facility by the applicable entity” and ensure that “multi-year power purchase agreements would not violate the requirements to elect out of partnership tax treatment.” The comment period on the proposed regulations will be open for 60 days.
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