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The Tax Relief for American Families and Workers Act of 2024

Table of Contents

Part 1: Tax Relief for Working Families ................................................................................................... 2

Part 2: American Innovation and Growth .................................................................................................. 2

Part 3: Increasing Global Competitiveness ................................................................................................ 3

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Part 1: Tax Relief for Working Families

maximum refundable credit amount by providing that taxpayers first multiply their earned

income (in excess of $2,500) by 15 percent, and then multiply that amount by the number of

qualifying children. This policy would be effective for tax years 2023, 2024, and 2025.

Modification in Overall Limit on Refundable Child Tax Credit. —Under current law, the

maximum refundable child tax credit is limited to $1,600 per child for 2023, even if the earned

income limitation described above is in excess of this amount. This provision increases the

maximum refundable amount per child to $1,800 in tax year 2023, $1,900 in tax year 2024, and

$2,000 in tax year 2025, along with the inflation adjustment described below.

taxpayer’s earned income in the prior taxable year.

Part 2: American Innovation and Growth

Deduction for Research and Experimental Expenditures. —Current law provides that

research or experimental costs paid or incurred in tax years beginning after December 31, 2021,

are required to be deducted over a five-year period. Research or experimental costs that are

attributable to research that is conducted outside of the United States are required to be deducted

over a 15-year period.

Limitation on Business Interest. —For tax years beginning before January 1, 2022, the

computation of adjusted taxable income (ATI) for purposes of the limitation on the deduction for

business interest is determined without regard to any deduction allowable for depreciation,

amortization, or depletion (i.e., earnings before interest, taxes, depreciation, and amortization

(EBITDA)).

The provision extends the application of EBITDA to taxable years beginning after December 31,

2023 (and, if elected, for taxable years beginning after December 31, 2021), and before January

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1, 2026. Therefore, for taxable years beginning after December 31, 2021, and before January 1,

2024, ATI is computed with regard to deductions allowable for depreciation, amortization, or

depletion (i.e., earnings before interest and taxes (EBIT)). However, ATI may be computed as

EBITDA, if elected, for such taxable years. For taxable years beginning after December 31,

after September 27, 2017, and before January 1, 2023, are eligible for 100-percent bonus

depreciation. The 100-percent allowance is phased down by 20 percent per calendar year for

qualified property acquired after September 27, 2017, and placed in service after December 31,

2022 (after December 31, 2023, for longer production period property and certain aircraft), as

well as for specified plants planted or grafted after December 31, 2022.

The provision extends 100-percent bonus depreciation for qualified property placed in service

after December 31, 2022, and before January 1, 2026 (January 1, 2027, for longer production

period property and certain aircraft) and for specified plants planted or grafted after December

31, 2022, and before January 1, 2026. The provision retains 20-percent bonus depreciation for

Revenue Code (“IRC”) section 179, a taxpayer may elect to expense the cost of qualifying

property, rather than to recover such costs through tax depreciation deductions, subject to

limitation. Under current law, the maximum amount a taxpayer may expense is $1 million of the

cost of qualifying property placed in service for the taxable year. The $1 million amount is

reduced by the amount by which the cost of such property placed in service during the taxable

year exceeds $2.5 million. The $1 million and $2.5 million amounts are adjusted for inflation for

taxable years beginning after 2018, and were $1.16 million and $2.89 million in 2023,

respectively. In general, qualifying property is defined as depreciable tangible personal property,

off-the shelf computer software, and qualified real property that is purchased for use in the active

conduct of a trade or business.

Part 3: Increasing Global Competitiveness

Subtitle A – United States-Taiwan Expedited Double-Tax Relief Act

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This subtitle provides targeted and expedited relief from double taxation on U.S.-Taiwan cross

border investment through changes to the U.S. tax code.

Short Title. —This section provides the short title for subtitle A (the “United States-Taiwan

1. Reduction of withholding taxes;

2. Application of permanent establishment (“PE”) rules;

3. Treatment of income from employment; and

4. Determination of qualified residents of Taiwan, including rules for dual residents.

Since the application of these provisions requires full reciprocal benefits, the new tax code

section does not come into effect until Taiwan provides the same set of benefits to U.S. persons

with income subject to tax in Taiwan, similar to the reciprocal operation of a tax treaty.

Instead of the 30 percent withholding tax presently imposed on U.S. source income received by

nonresident aliens and foreign corporations, interest and royalties would be subject to a 10

percent withholding tax rate. Generally, dividends would be subject to a 15 percent withholding

tax rate. Dividends would be subject to a lower 10 percent rate if paid to a recipient that owns at

least ten percent of the shares of stock in the corporation, subject to limitations.

Lower withholding tax rates would not apply to certain amounts, such as those subject to the

Foreign Investment in Real Property Tax Act (“FIRPTA”), received from or paid by an inverted

company, and others.

Taiwan’s taxable income effectively connected to the United States PE.

Treatment of income from employment

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No U.S. tax would be imposed on certain wages of qualified residents of Taiwan in connection

with personal services performed in the U.S. Such wages cannot be paid by a U.S. person or

borne by a U.S. PE of a foreign person. This treatment does not apply to certain types of wages,

such as directors’ fees, pensions, and other wages that are generally taxable under the U.S.

similar criterion, and is not a U.S. person. Additional rules are provided to determine whether

certain dual resident individuals are treated as qualified residents of Taiwan. For corporations, a

qualified resident of Taiwan must also meet one of the limitation on benefits tests to be a

beneficiary of the provision.

Application and regulatory authority

The tax benefits provided to qualified residents of Taiwan only apply once the U.S. has

determined that Taiwan has granted reciprocal benefits to U.S. persons. Specific regulatory

authority is provided for a number of policies, and any regulations or other guidance should be

Taiwan tax agreement that includes provisions generally conforming with those customarily

contained in U.S. tax treaties.

Short Title. —This section provides the short title for subtitle B (the “United States-Taiwan Tax

Agreement Authorization Act”).

Definitions. —This section provides definitions for terms used in subtitle B, including the terms

“Agreement,” “appropriate congressional committees,” “approval legislation,” and

“implementing legislation.”

authority and a provision conditioning the entry into force of the tax agreement upon (i)

enactment of approval and implementing legislation and (ii) confirmation by the Treasury

Secretary that Taiwan has approved and taken appropriate steps required to implement the tax

agreement.

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Consultations with Congress. —This section stipulates that the President provide written

notification to the appropriate congressional committees at least 15 days before commencement

of negotiations on a U.S.-Taiwan tax agreement. In addition, the section includes rules providing

not enter into force unless (i) the President, at least 60 days before the tax agreement is entered

into, publishes the text of the contemplated tax agreement on a publicly available website of the

Treasury Department, and (ii) approval and implementing legislation with respect to the tax

agreement is enacted into law. Further, this section provides that the President may provide for

the tax agreement to enter into force upon (i) enactment of approval and implementing

legislation, and (ii) confirmation by the Treasury Secretary that Taiwan has approved and taken

appropriate steps required to implement the tax agreement.

Submission to Congress of Agreement and Implementation Policy. —This section stipulates

that not later than 270 days after the President enters into the tax agreement, (i) the President or

Consideration of Approval Legislation and Implementing Legislation. —This section

provides language that should be included in approval legislation and indicates the congressional

committees to whom the approval and implementing legislation would be referred. Approval

legislation would be referred to the Senate Foreign Relations Committee and House Ways &

Means Committee, and implementing legislation would be referred to the Senate Finance

Committee and House Ways & Means Committee.

Relationship of Agreement to Internal Revenue Code of 1986. —This section states that no

provision of a tax agreement or approval legislation which is inconsistent with any provision of

the IRC shall have effect. Further, this section provides that nothing in subtitle B should be

provided in subtitle B may be utilized for a future U.S.-Taiwan tax agreement(s) that

supplements or supersedes a previous tax agreement(s). The section also provides that the

provisions of subtitle B, including the congressional consultation requirements in section 204,

should be applied separately with respect to each tax agreement.

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United States Treatment of Double Taxation Matters With Respect to Taiwan. —This

section provides congressional findings and a statement of policy regarding double taxation

matters with respect to Taiwan.

related personal casualty losses, including eliminating the requirement that casualty losses must

exceed 10 percent of adjusted gross income (AGI) to qualify for the deduction, requiring losses

to exceed $500 per casualty in order to be deductible, and allowing taxpayers to claim the

casualty loss deduction “above the line,” i.e., without itemizing their deductions.

This section extends the rules for the treatment of certain disaster-related personal casualty losses

as passed in the Taxpayer Certainty and Disaster Tax Relief Act of 2020, including any area with

respect to which a major disaster was declared by the President during the period beginning on

January 1, 2020, and ending 60 days after the date of enactment of the proposal if the incident

period of the disaster (as specified by the Federal Emergency Management Agency as the period

individual as a qualified wildfire relief payment. It defines “qualified wildfire relief payment” as

any amount received by or on behalf of an individual for expenses, damages, or losses incurred

as a result of a qualified wildfire disaster, but only to the extent any expense, damage, or loss is

not compensated for by insurance or otherwise. This section also includes provisions to deny

double benefits.

This section applies only to qualified wildfire relief payments received by an individual during

taxable years beginning after December 31, 2019, and before January 1, 2026.

East Palestine Disaster Relief Payments. —In general, gross income is defined as income from

individual as compensation for loss, damages, expenses, loss in real property value, closing costs

with respect to real property, or inconvenience resulting from the East Palestine train derailment

paid by a Federal, State, or local government agency, Norfolk Southern Railway, or any

subsidiary, insurer, or agent of Norfolk Southern Railway or any related person.

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“East Palestine train derailment” is defined as the derailment of a train in East Palestine, Ohio,

on February 3, 2023. This section applies to amounts received on or after February 3, 2023.

Part 5: More Affordable Housing

Tax-Exempt Bond Financing Requirement. —Under current law, to receive LIHTC a building

must either receive a credit allocation from the state housing finance authority or be bond-

financed. To be bond-financed, 50 percent or more of the aggregate basis of the building and

land must be financed with bonds that are subject to a state’s private activity bond volume cap.

This provision lowers the bond-financing threshold to 30 percent for projects financed by bonds

with an issue date before 2026. This section provides a transition rule for buildings that already

have bonds issued by requiring that a building must have 5 percent or more of its aggregate basis

financed by bonds with an issue date in 2024 or 2025.

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Under current law, a paid tax return preparer may be subject to a $500 penalty for each failure to

comply with due diligence requirements relating to the filing status and amount of certain credits

with respect to a taxpayer’s return or claim for refund. This section requires a COVID-ERTC

promoter to comply with similar due diligence requirements with respect to a taxpayer’s

Under current law, certain material advisors are required to disclose information to the IRS with

respect to designated types of transactions (known as “listed transactions”) and to make lists of

advice recipients with respect to such transactions available to the IRS upon request. Under this

section, a COVID-ERTC promoter is similarly required to file return disclosures and provide

lists of clients to the IRS upon request.

This section defines a COVID-ERTC promoter as any person who provides aid, assistance, or

advice with respect to an affidavit, refund, claim, or other document relating to an ERTC, if the

person charges fees based on the amount of the credit or meets a gross-receipts test. The gross

receipts test is met if (1) aggregate gross receipts from ERTC-related aid, assistance, or advice

Under current law, the statute of limitations period on assessment for the COVID-related ERTC

is generally five years from the date of the claim. This section extends the period to six years.

As a correlative matter, it extends the period for taxpayers to claim valid deductions for wages

attributable to invalid ERTC claims that are corrected after the normal period of limitations.

Under current law, taxpayers can claim COVID-related ERTC until April 15, 2025. This section

bars additional claims after January 31, 2024.

This section is effective for aid, assistance, or advice provided after March 12, 2020. The due