Optimism is rising that Congress will approve a bipartisan tax deal that includes an expansion of the child tax credit along with business breaks, including for research and development. A vote in the House of Representatives is possible as soon as next week.
According to Benjamin Salisbury of Height Capital Markets, there is a 55%-65% probability that Congress will enact a tax bill that includes the extension of the R&D tax credit. This credit is a priority for industries such as pharma, tech, aerospace, and defense.
If the House passes the deal, combined with lobbying from the business community, it would put significant pressure on the Senate to pass the legislation, as stated by Beacon Policy Advisors. However, there is some skepticism among senators, including Mike Crapo of Idaho, the top Republican on the Senate Finance Committee. Nevertheless, Crapo and some of his GOP colleagues may come around on the bill if given a chance to amend it.
The tax deal, formally known as the Tax Relief for American Families and Workers Act of 2024, would also boost the low-income housing tax credit, which incentivizes developers to build new affordable housing units. This effort could lead to the creation of 200,000 new affordable rental units and is deemed a modest yet important endeavor.
Salisbury cautions that there may be challenges in the House, including opposition from conservatives regarding progressive priorities and the absence of the State and Local Tax deduction (SALT) from the deal. Furthermore, changes demanded by senators could require a second vote in the House.