Pending 2024 Tax Legislation: A Comprehensive Guide for Small Business Owners and Taxpayers

February 20, 2024 - 9 minutes read

Tax Relief for American Families and Workers Act of 2024

Economic policy can fascinate or confound even the most seasoned professionals. But for small business owners and taxpayers, understanding the ins and outs of the evolving tax landscape is crucial. As of the latest tax season, we’ve found ourselves amidst a maelstrom of potential tax reforms with wide-ranging effects – from enhancing child tax credit to fortifying small business sectors. The Tax Relief for American Families and Workers Act of 2024 is a monumental step in this direction, designed to bolster a recovering economy. This comprehensive guide is your playbook to comprehend the intricate provisions of the 2024 act, simplifying technical jargon into tangible impacts on your financial standing.

From the doorsteps of small businesses to the living rooms of taxpayers, every corner of America will witness the ripple effects of these tax changes. Through this exploration, we’ll uncover the good, the bad, and the promising to help you chart a course through the fiscal year.

Unpacking the Good: Tailored Benefits for Growth and Resilience

The 2024 Tax Relief Act isn’t just a policy; it’s a dynamic instrument attuned to multiplying wealth-building opportunities for specific segments.

Enhanced Child Tax Credit

The backbone of family tax-cut policy gets a healthy bolstering. With the expanded Child Tax Credit, the gates to financial assistance swing wider for hardworking families. What could this mean for your household? More support over the next few years as the refundable portion of the credit grows incrementally. A lighter economic burden could be on the horizon if you’re a parent or guardian grappling with rising costs.

  • Increased Refundable Portion: The refundable portion of the child tax credit will gradually increase over the years 2023-2025, offering more financial tax assistance to families.
  • Fairness for Larger Families: Adjustments will be made to ensure fairness for families with multiple children.
  • Flexible Income Lookback: Taxpayers can choose to use either current or prior-year income to calculate the child tax credit in 2024 and 2025, providing flexibility in determining eligibility.
  • Inflation Adjustment: Starting in 2024, the child tax credit will be adjusted for inflation to keep up with the rising cost of living.

For enterprises, the horizon brightens with a host of incentives that pave the way for innovation and expansion. The immediate deduction of research and experimentation costs and the extension of bonus depreciation are like fiscal fireworks for businesses aiming at the stars. Additionally, the increased limit for small business expensing could offer a welcome respite, encouraging more growth investments.

Support for Small Businesses

The backbone of the American economy, small businesses, receives significant consideration. Streamlined expensing norms and reduced reporting thresholds for subcontract labor echo a clear intent: ease the path to profitability. The extended disaster tax relief measures offer a buffer against unforeseen adversities, reaffirming the government’s commitment to entrepreneurial ventures.

These measures resonate with the act’s overarching theme of economic recuperation and resilience. For small businesses, they translate into surplus opportunities and reduced financial strain.

  • Research and Experimental Expenses: The act allows businesses to immediately deduct research and experimentation expenditures, encouraging innovation. Beginning in 2022 most R & D tax expenses are required to be deducted over 60 months. The proposal rolls back this 2022 to allow fully expensing those expenses even in 2022.
  • Bonus Depreciation:100% bonus depreciation is extended through 2025, allowing businesses to fully expense qualified property.
  • Interest Deductibility: Businesses can deduct interest expenses, supporting their ability to meet payroll obligations and expand operations.

Weighing in on the Potentially Disruptive: Adjusting for Change

With every policy overhaul comes an adjustment period, and the 2024 Tax Relief Act is no different. Looming in the shadows of robust provisions are potential disruptions that taxpayers and businesses must ready themselves for.

Employee Retention Tax Credit (ERTC)

The tightening of the ERTC claim window and the fortification of penalties against fraudulent activity signify the Congress’ dual intent – to support businesses genuinely affected by the pandemic while clamping down on misuse. The transition could pose administrative challenges for businesses accustomed to previous relaxed terms. However, the heightened measures bode well for the credibility of future tax credits.

  • Accelerates the termination: of the period for making new claims for the ERTC.
  • New penalties: establishes measure to increase penalties aimed at fraudulent promoters.

Adjustments to 1099-MISC and 1099-NEC Filing Thresholds

The hike in thresholds for filing these forms can save businesses time and effort. Yet, it’s a double-edged sword. On one hand, it eases reporting obligations for lower-value transactions. On the other, it could lead to inadvertent oversight, potentially compounding tax issues.

The need of the hour is not just to comply with these new norms promptly but to also sharpen internal mechanisms to keep pace with heightened compliance standards.

  • Reducing Administrative Burdens: The reporting threshold for businesses using subcontract labor is adjusted, reducing administrative burdens and streamlining operations.

The Silver Lining: Strategic Tax Planning in a Dynamic Environment

Navigating the tax landscape is akin to plotting a course through ever-shifting currents. In this dynamic climate, strategic tax planning isn’t just a necessity – it’s a survival imperative and a strategic advantage. The 2024 tax changes prompt a critical review of your financial situation, from adjusting investment strategies to fortifying your business operations.

Strategic Tax Planning for Individuals and Small Business Owners

These changes present a unique opportunity for astute planning. As an individual, consider leveraging the benefits of the enhanced Child Tax Credit and the flexible lookback provision to optimize your returns. Small businesses should capitalize on the extended deductions, aligning them with investments that hold value over the long term.

Consulting Professionals and Staying Informed

Amidst these shifts, the wisdom of consulting tax professionals cannot be understated. Their insights can prove invaluable in uncovering bespoke tax-saving strategies. Staying informed, through proactive monitoring of updates and expert analysis, is your compass to the new tax landscape.

The IRS Dirty Dozen

For over 20 years, the IRS has released a series of notices identifying tax scams and avoidance schemes, which the agency calls the “Dirty Dozen.”

The Dirty Dozen list is quite useful and is something you should review each year:


Be sure to check out last week’s Tax Tuesday blog, where we explained the Qualified Small Business Stock and how to know if you qualify for the Taxable Gain Exclusion.

Also, if you have any questions related to your business, schedule a call with us! We would love to hear about your company:

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