Breaking news: House and Senate negotiators have agreed on a roughly $78 billion framework for a package of tax benefits aimed at businesses and low-income families, according to a source familiar with the negotiations.
The two sides expect to roll it out this morning.
The question now is whether Senate Finance Chair Ron Wyden (D-Ore.) and House Ways and Means Chair Jason Smith (R-Mo.) can build enough support to get their deal through both chambers. It’s iffy. More on that below.
First, the details. Here’s what’s expected to be in the proposal, according to the source.
→ Businesses: The agreement would bring back full, upfront deductions for domestic research and development costs along with bigger deductions for businesses’ interest expenses and purchases of machinery and equipment — all through 2025. It’s also expected to increase immediate deductions that smaller businesses can take for buying equipment and machinery, and raise the threshold to $1,000 for sending tax forms for payments to certain non-employees.
→ Child tax credit: The deal would gradually raise the maximum child tax credit to $2,000 for families who owe less than that in taxes. It would also allow low-income families with multiple children to phase in eligibility for more benefits faster, and let families use the previous year’s income to qualify for benefits in 2024 and 2025. In a broader change, the child tax credit’s maximum benefit would be tied to inflation, with a potential increase from $2,000 to $2,100 likely in 2025.
→ Housing: The low-income housing tax credit — which incentivizes developers to build affordable rental units — gets a boost in the deal, restoring a higher credit allocation to states and lowering the bond-financing threshold.
→ Disaster aid: In a win for lawmakers from areas ravaged by storms and wildfires, we expect a disaster tax relief bill to be included in the framework. This could help sweeten the pot for some wary members on both sides.
→ Taiwan: The deal is expected to include a widely-backed bill to extend tax treaty-like benefits to Taiwan.
→ The big loser: Wyden and Smith would cut back the pandemic-era employee retention tax credit by shortening the time period for when new claims could be filed. That’s expected to provide enough deficit savings to cover the package’s price tag.
Up next — building support: Smith is expected to have more conversations this week with Republicans beyond his panel about the package.
We’re also keeping an eye on the business lobby, which is likely to ramp up pressure on the House to pass the proposal as we reported Sunday.
The announcement expected this morning is, notably, not a Four Corners agreement. Sen. Mike Crapo (Idaho), the top Republican on Finance, and Rep. Richie Neal (Mass.), the top Democrat on Ways and Means, haven’t signed off on the deal.
But some rank-and-file members in both parties want to get it done. Sens. Bill Cassidy (R-La.) and Maggie Hassan (D-N.H.) are teaming up to boost the deal, as we scooped Sunday.
How the Senate GOP and House Democrats respond to the deal will be critical. We’ll be covering it closely.
— Laura Weiss