A Summary of New Legislation, Advancements, and Proposals Shaping U.S. Tax Policy
November and early December have seen significant tax-related activity in Congress. Despite the lame-duck session, lawmakers advanced multiple bills, including disaster relief measures and efforts to enhance benefits for veterans and public service workers. Here’s what taxpayers and professionals need to know.
Bills Awaiting Presidential Approval
- Federal Disaster Tax Relief Act (H.R. 5863):
On December 4, the Senate passed this bipartisan bill. It reinstates deductions for disaster-related personal casualty losses and excludes specific wildfire and train derailment relief payments from gross income. This change provides substantial relief to affected individuals. - VSO Equal Tax Treatment (VETT) Act (H.R. 1432):
Also passed on December 4, this act allows tax-deductible contributions to veterans’ service organizations (VSOs) serving non-“wartime veterans.” This addresses prior limitations on serving diverse veteran groups while retaining tax benefits for donors.
House-Passed Bills Under Review
- Stop Terror-Financing and Tax Penalties on American Hostages Act (H.R. 9495):
This controversial bill empowers the Treasury to revoke tax-exempt statuses of organizations linked to terrorism. It also offers tax deadline extensions for American hostages held abroad. - Social Security Fairness Act (H.R. 82):
Passed with bipartisan support, this bill eliminates Social Security benefit reductions for public service workers affected by the Windfall Elimination Provision and Government Pension Offset.
Unsuccessful House Proposals
- Equal Treatment of Public Servants Act (H.R. 5342):
This bill aimed to modernize Social Security benefit calculations. However, it failed to pass, leaving current provisions unchanged.
Recent Bill Introductions
With Congress approaching recess, newly introduced bills hint at tax reform priorities for 2025.
IRS Reform
The Tax Administration Simplification Act (S. 5316) proposes electronic filing improvements, changes to estimated tax payment schedules, and simplified S-Corp elections for businesses.
Technology and Manufacturing
The Carbon Dioxide Removal Investment Act (S. 5369) and Second Generation Biofuel Producer Credit Extension Act (H.R. 10104) emphasize sustainable energy and manufacturing growth through new tax credits.
Employment Incentives
The ABLE Employment Flexibility Act (H.R. 10302) allows employers to contribute tax-free to employees’ ABLE accounts, promoting financial inclusion for workers with disabilities. Similarly, the Improve and Enhance the Work Opportunity Tax Credit (S. 5370) increases tax incentives for hiring diverse workforce segments.
Housing Relief
Proposals like the Tax Relief for Renters Act (H.R. 10277) introduce tax deductions for rent payments, providing financial aid amid housing affordability concerns.
Disaster Preparedness
Bills such as the Hurricane Milton and Helene Tax Relief Act (H.R. 10203) and Helene Recovery Support Act (H.R. 10088) focus on supporting disaster-stricken communities through revised tax credits and deductions.
Tax Reform in Focus
These developments underscore Congress’s ongoing effort to modernize tax policies, address emerging challenges, and provide relief where needed. Tax professionals should closely monitor these changes to guide their clients effectively.
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