Year-End Tax Bill May Depend on Election Outcome

Business and charitable interests continue to press lawmakers on the need for a year-end tax bill following the November midterm elections.

There are some “must-pass” priorities that Congress must address no matter the outcome of the elections, such as agreement on FY2023 government spending, but a year-end tax bill could potentially include tax relief for research and development expenses and the expanded child tax credit, as well as a revival of the universal charitable deduction.

Election results, namely whether Republicans are able to gain control of the House and/or Senate, will likely influence lawmakers’ appetite for negotiation on additional tax relief. The research and development tax credit is an area for potential bipartisan agreement, but Democrats probably need to retain the House and pick up a seat or two in the Senate to reinstate the popular expanded child tax credit enacted as part of the American Rescue Plan Act last year.

The universal charitable deduction of $600 for married couples filing jointly and $300 for individual taxpayers expired at the end of 2021, but there is interest in reinstating the deduction for all of tax year 2022. Independent Sector released survey data last month indicating that 85 percent of voters want to bring back the expired charitable deduction of up to $300 for single taxpayers who take the standard deduction. The universal charitable deduction would likely be part of a package of short-term tax extenders that Congress would consider this fall.