Congress suddenly has a lot on its plate:
The Russian invasion of Ukraine. Senate confirmation of President Biden’s pick for the Supreme Court. Keeping the federal government open and funded. Gearing up for the Nov. midterm elections. And more.
Taxes and tax policy will take a back seat.
But that doesn’t mean nothing will get done. We’ll delve into tax items on Congress’s to-do list that might see action this year…and what won’t.
Take the Democrats’ Build Back Better plan. Biden and Capitol Hill Democrats are still in limbo when it comes to BBB and the proposed tax hikes and tax breaks that are included in the package. It has been torpedoed by infighting among Democrats, with Sen. Joe Manchin (WV) as the main naysayer and Sen. Kyrsten Sinema (AZ) also raising her objections.
Party leaders want to salvage some of BBB. Don’t hold your breath.Chances are slim that a pared-down BBB could be raised from the ashes.
Temporarily suspending the federal gasoline tax is also a long shot. Some vulnerable Senate Dems want to halt the 18.4¢-per-gallon federal gas tax or the rest of 2022 in an effort to mitigate the cost of spiking gas prices at the pump. But other Democrats oppose it. Odds are better of gas tax holidays at the state level.
Retirement legislation could advance this year. In late 2019, lawmakers passed the SECURE Act to help participants in workplace retirement plans and IRA owners. Now there are multiple proposals that would go even further to encourage more individuals to save for retirement, give relief to people withdrawing funds during retirement and urge employers to offer retirement plans.
In this vein, keep an eye on a popular bipartisan House bill that passed in the House Ways & Means Com. unanimously last year, which is rare these days. The Securing a Strong Retirement Act of 2021, commonly known as SECURE 2.0, is sponsored by Rep. Richard Neal (D-MA) and Rep. Kevin Brady (R-TX), two of the lawmakers who spearheaded passage of the original 2019 SECURE Act.
Among its many proposals: Indexing to inflation each year the $100,000 cap for qualified charitable distributions from traditional IRAs. Letting people ages 62 to 64 stash more money in 401(k)s. Raising the age for taking required minimum distributions incrementally to 75. Requiring employers to offer automatic enrollment in their 401(k)s with employee opt-out. Also, incentivizing small firms to adopt retirement plans.
There’s also bipartisan support to delay a narrowing of the R&D tax break. Before 2022, firms could choose to fully expense their research and development costs in the year they incurred them. The 2017 tax law changed this rule for amounts paid or incurred in taxable years beginning after Dec. 31, 2021. Starting this year, companies must amortize their R&D costs over five years…15 years for research conducted outside the U.S. Businesses have been lobbying lawmakers hard for relief.