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—Senate Likely to Punt Consideration to Following Week: The Senate returned to Capitol Hill on Monday, and while consideration of the Tax Relief for American Families and Workers Act (H.R. 7024) was included on Senate Majority Leader Chuck Schumer’s (D-NY) April 5 Dear Colleague letter, the Senate’s agenda this week is already at capacity. Priorities for Senate consideration include the impeachment trial of Homeland Security Secretary Alejandro Mayorkas, which the Senate majority will likely table after House managers deliver the articles of impeachment, as well as the reauthorization of the Foreign Intelligence Surveillance Act. Senate Republicans are seeking modifications to the tax bill, with industry and family groups continuing outreach campaigns over the recess urging action on the package. Schumer will likely move to proceed to the tax package during this work period, although the timing is uncertain, which will add further pressure for Senate Republicans to make a decision on the bill.
House-Passed FSGG Appropriations Bill Houses IRS Rescission: On March 22, the House passed a “minibus” spending bill containing the last six remaining fiscal year 2024 appropriations bills: State-Foreign Operations, Defense, Homeland Security, Labor-HHS, Legislative Branch and Financial Services-General Government (FSGG). The FSGG bill would provide $12.3 billion for the Internal Revenue Service (IRS) for its annual operations, maintaining the FY23 funding level for the agency, but $1.8 billion less than what the president requested in in his annual budget proposal. The amounts allocated for Taxpayer Services ($2.8 billion), Enforcement ($5.4 billion) and Operations Support ($4.1 billion) remain unchanged from FY23 levels. Notably, the bill does not include any funds for IRS Business Systems Modernization and contains language designed to protect small businesses and households with incomes below $400,000 from increased audits. The FSGG bill also includes the previously agreed-to $20.2 billion rescission from IRS funds allocated in the Inflation Reduction Act (Pub. L. 117-169).
OECD Misses Deadline for Amount A Convention Text: The Organisation for Economic Co-Operation and Development (OECD) missed its March 31 deadline to reach an agreement on the final convention text for Amount A, a critical facet of the Pillar One global tax agreement. Amount A would affect companies with revenues above 20 billion euros (approximately $21 billion) and profit margins in excess of 10%, with some exceptions.
IRS Closes ERTC Voluntary Disclosure Program, Leaves Open the Possibility of Resumption: March 22 marked the deadline for entities to submit applications for the Internal Revenue Service’s (IRS) program to voluntarily disclose erroneous disbursements of the Employee Retention Tax Credit (ERTC). The program yielded promising results—with a March 15 announcement noting that the agency had collected $225 million from over 500 taxpayers, and projections that the agency still had several hundred more applications left to process. As a result, an IRS official noted during a reporter call on March 22, the IRS could potentially reopen the program.
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