From Social Security Reform to Disaster Relief, Here’s What Passed and What’s Next
December was a pivotal month for tax legislation. While Congress narrowly avoided a government shutdown, several impactful tax-related bills were passed before closing out the 118th legislative session. Here’s a closer look at the highlights and the measures introduced that could shape future discussions.
Bills That Passed: Key Legislative Wins
1. Social Security Reforms
The Senate passed the Social Security Fairness Act, removing provisions that reduced benefits for public service workers also receiving state or local government pensions. By eliminating the windfall elimination provision and government pension offset, this reform ensures fair treatment for beneficiaries starting in 2024.
2. Child Support Enhancements
The Supporting America’s Children and Families Act allows third-party contractors for child support enforcement to access taxpayer information. It also empowers Tribal agencies to collect overdue child support from federal tax overpayments. This bill modernizes the child support system and boosts enforcement capabilities.
3. Health Care Paperwork Simplification
Two bills addressed the Affordable Care Act’s tax form requirements:
- The Paperwork Burden Reduction Act allows electronic furnishing of Forms 1095-B and 1095-C upon request.
- The Employer Reporting Improvement Act lets employers substitute a date of birth for a taxpayer identification number (TIN) when unavailable. Additionally, the IRS must now give employers 90 days (up from 30) to respond to proposed penalties.
4. Disaster Relief Tax Breaks
The bipartisan Federal Disaster Tax Relief Act reinstates deductions for personal casualty losses tied to disasters like hurricanes and wildfires. It also excludes certain disaster relief payments from gross income.
5. Support for Veterans
The VSO Equal Tax Treatment (VETT) Act permits veteran service organizations (VSOs) serving non-wartime veterans to accept tax-deductible donations. This change ensures fair treatment across all veteran-serving organizations.
Bills Introduced: Future Topics to Watch
While the 119th Congress will need to reintroduce unfinished bills, several proposals could shape upcoming discussions:
1. Energy Credits
The ELITE Vehicles Act aims to repeal tax credits for new and used electric vehicles and end incentives for charging stations. It also seeks to close a “leasing loophole” exploited for additional credits.
2. Housing Incentives
The Rural Historic Tax Credit Improvement Act increases credits for historic renovations in rural areas. Affordable housing projects could receive up to 40% in credits.
The Tax Relief for Renters Act proposes a personal deduction of up to $4,000 for one month’s rent annually, benefiting renters in specific income categories.
3. Boosting Manufacturing
The SEMI Investment Act offers tax incentives to strengthen the domestic semiconductor supply chain. This initiative supports U.S. competitiveness in critical manufacturing sectors.
4. Social Security Adjustments
The RETIREES FIRST Act raises the income thresholds for Social Security tax liability, exempting most middle-class retirees. Single filers earning under $34,000 and married filers earning under $68,000 would avoid Social Security taxes.
5. Support for Survivors
The Tax Fairness for Survivors Act excludes sexual assault and harassment settlements from taxable income, ensuring survivors keep the compensation they deserve.
6. Disaster Employment Credits
The HIRE CREDIT Act provides incentives to businesses hiring displaced disaster victims, offering up to 40% of $6,000 in wages as a tax credit. This measure aims to rebuild local economies and support affected communities.
What It Means for Taxpayers
These bills and proposals reflect Congress’s focus on fairness, relief, and efficiency. Taxpayers should pay close attention to legislative changes that could affect benefits, credits, or liabilities. As the 119th Congress begins, reintroduced measures may carry significant implications for individuals and businesses alike.
As a professional – Revolutionize your tax workflow with our complete suite of tools: onboarding links, initial interviews, compliance planning, calendars, messaging, task management, and TaxMan for advanced tax research. Please sign up. Our resource directory also offers valuable links to assist in managing various financial and legal aspects of a business or individual.
