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.
Disaster Relief Tax Bill Passes House: On May 15, Rep. Greg Steube (R-FL) succeeded with a discharge petition for his bill, the Disaster Tax Relief Act (H.R. 5863), advancing the bill to a vote by the House. The bill broadens the definition of a qualified disaster area for the purposes of personal casualty losses and also provides an exclusion from gross income for amounts received as qualified wildfire relief payments. The bill would also provide tax relief for losses related to the February 2023 train derailment in East Palestine, Ohio.
Ways and Means Committee Advances Exempt Organizations, Unlawful Disclosure Bills to House Floor: On May 15, the House Ways and Means Committee marked up four bills intended to increase transparency and reporting standards for tax-exempt organizations and one bill increasing the penalty for the unlawful disclosure of tax return information. The committee reported all five bills favorably with bipartisan support.
Treasury Department, IRS Issue Additional Guidance for Domestic Content Bonus Credit: On May 16, the Treasury Department and Internal Revenue Service (IRS) issued Notice 2024-41 (“Notice”), providing additional guidance on the domestic-content bonus for the section 45, 48, 45Y, and 48E tax credits. The domestic content bonus credit, created as part of the Inflation Reduction Act (Pub. L. 117-169), provides taxpayers with an up to 10% bonus credit if all steel and iron used in the energy project is domestically produced and not less than the “adjusted percentage”—currently 40%—of the total costs of the project’s manufactured products are mined, produced or manufactured in the United States. Under previous guidance, taxpayers could only take into account the direct costs (excluding labor cost) of each of the project’s manufactured products, information that is challenging to obtain from third-party vendors in many cases.
Biden Administration to Announce Policies to Bolster Domestic Solar Manufacturing: The Biden administration released domestic-content bonus guidance (discussed above) and expanded tariffs in an effort to increase demand for domestically produced solar panels and protect U.S. manufacturers from cheaper foreign panel imports entering U.S. markets. With the announcement of the new policies, Senior Adviser to the President for International Climate Policy John Podesta said that the actions are intended to “support U.S. clean energy industries to both make sure we’re doing our part to reduce emissions and to make sure our competition with China is actually fair.”
Treasury Department, IRS Announces Amount of Unallocated Capacity Limitation Carryover Amounts: On May 17, the Department of the Treasury and Internal Revenue Service (IRS) issued Announcement 2024-25, which details the total amount of unallocated environmental justice solar and wind capacity limitation (Capacity Limitation) for the Section 48(e) Low-Income Communities Bonus Credit Program. The total amount of unallocated capacity limitation from 2023 was assessed to be 324.785 megawatts, which will be added to the 2024 available Capacity Limitation of 1.8 gigawatts to result in just over 2.1 gigawatts to be allocated for the 2024 program year.
Democratic Lawmakers Write Letter Urging Extension of Direct File Pilot Program: Led by Sens. Elizabeth Warren (D-MA) and Tom Carper (D-DE) and Reps. Katie Porter (D-CA) and Brad Sherman (D-CA), over 130 Democratic lawmakers sent a letter to Treasury Secretary Janet Yellen and Internal Revenue Service (IRS) Commissioner Daniel Werfel on May 15, congratulating the agencies for a perceived “resoundingly successful launch” of the Direct File pilot program, which allowed eligible taxpayers in 12 states to file their individual federal tax returns directly with the government. The lawmakers reported that taxpayers using Direct File claimed over $90 million in refunds, saved an estimated $5.6 million in filing fees, and overwhelmingly rated their tax-filing experience as positive. They also called for the IRS and Treasury Department to make the Direct File permanent, and to expand its scope to reach more taxpayers, despite well-established concerns that the IRS may not have the statutory authority to administer a direct tax-filing platform. Improvements to the program that the lawmakers are petitioning the IRS for include additional sources of income, integration with additional states, greater accommodation of tax credits applicable to low- and middle-income families, and the pre-population of tax information onto the platform.
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