An increase in income tax rate means you'll pay a higher percentage of your income to the government. This directly reduces your disposable income, the money you have left after taxes for spending or saving. This can make it harder to afford basic necessities, save for retirement, or invest in your future.
CBO Explains TCJA Extension Estimates, Rebuts Lawmakers’ Concerns: On Dec. 4, the Congressional Budget Office (CBO) published a blog post explaining the agency’s methodology for modeling economic effects of the changes in incentives stemming from the expiration of tax provisions, such as the agency’s June estimate of the effects of extending all of the expiring Tax Cuts and Jobs Act (TCJA, Pub. L. 115-97) provisions. That report estimated that a straight extension of all TCJA tax provisions would add $4.6 trillion to the federal deficit, a figure that has been criticized by some lawmakers for not taking into account a potential increase in economic growth that would flow from those TCJA provisions. The lawmakers point out that CBO’s original 2017 estimate of expected receipts, when compared to actual receipts in the ensuring years, totaled $1.5 trillion more revenue than CBO’s original estimates.
Senate Approves Disaster Tax Relief Bill: On Dec. 4, the Senate approved by voice vote the Federal Disaster Tax Relief Act of 2023 (H.R. 5863), which would provide a range of relief for individuals affected by previous wildfires, recent hurricanes and the East Palestine, Ohio, train derailment. Qualified wildfire relief payments, which includes compensation for losses, expenses and damages incurred as a result of a qualified wildfire disaster received in tax years 2020–2025 would also qualify for the income exclusion. This bill was brought to the House floor via a discharge petition led by its author, Rep. Greg Steube (R-FL). The bill also was a component of the Tax Relief for American Families and Workers Act (H.R. 7024), which passed the House on a strong bipartisan vote but did not advance through the Senate.
Trump to Nominate Michael Faulkender as Deputy Treasury Secretary: On Dec. 4, President-elect Donald Trump announced his intention to nominate Michael Faulkender as deputy secretary of the treasury. He would serve with Scott Bessent, who Trump intends to nominate to be treasury secretary, if both are confirmed. Trump wrote in a post on Truth Social that Faulkender “is a distinguished economist and policy practitioner who will drive our America First agenda.” The deputy treasury secretary acts as a second-in-command for the department and would oversee work across the department and its bureaus.
Treasury Department, IRS Finalize Rules on Section 48 Investment Tax Credit: On Dec. 4, the Treasury Department and Internal Revenue Service (IRS) issued final rules on the Section 48 Investment Tax Credit (ITC) for energy-related projects, which was extended and expanded as part of the Inflation Reduction Act (Pub. L. 117-169). The final rules modify and clarify proposed rules released in November 2023 with respect to qualifying energy property, including ownership requirements for geothermal heat pumps, definitions relating to qualified biogas property and thermal energy property, and rules governing hydrogen energy storage property, including a loosening of the “end use” requirement. The rules also clarify the use of the prevailing wage and apprenticeship bonus credit in coordination with the section 48 ITC.
Trump Hints at Bolstering U.S. Steel Through Tax Incentives and Tariffs: On Dec. 2, President-elect Donald Trump announced on Truth Social that he would seek to block the acquisition of the United States Steel Corporation (U.S. Steel) by Nippon Steel Corporation, a Japanese steelmaker. His decision would follow similar efforts by the Biden administration, which indicated in September that it would await a report from the interagency Committee on Foreign Investment in the United States considering potential national security concerns of the acquisition before making a decision. Both Nippon Steel and U.S. Steel support the acquisition. Trump noted in his post that he would instead seek to use “tax incentives and tariffs” to bolster U.S. Steel and the industry as a whole but did not offer additional details.
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