What the Stalled TRAWFA Bill Means for Your Business Taxes in 2025

At the beginning of 2024, the Tax Relief for American Workers and Families Act (TRAWFA) had a great deal of momentum, having easily passed a vote in the House of Representatives and working its way into the Senate.

As a surprise to many, the bill stalled by the time it reached the Senate for a vote. This left many taxpayers wondering what this might mean for their future tax planning.

With a better understanding of what TRAWFA entailed and why it had such a hard time passing in the Senate, taxpayers may be able to plan accordingly—even as the future continues to look uncertain for tax cut provisions.

What Is the Tax Relief for American Workers and Families Act?

Specifically, the Tax Relief for American Workers and Families Act (TRAWFA) was a bill that was drafted by a bipartisan team in the House and Senate. This bill had several goals, but one of them was to extend several of the provisions from the Tax Cuts and Jobs Act (TCJA) that were set to expire, such as a 100% bonus depreciation that allowed businesses to use EBITDA rather than EBIT to determine their appropriate business interest deduction limitation.

Meanwhile, TRAWFA would have also delayed the implementation of capitalization/amortization for domestic research and development/experimental costs for businesses until after the 2025 tax year.

Why Didn't TRAWFA Pass?

Although the TRAWFA was drafted by a bipartisan team and passed with an overwhelming majority in the House of Representatives, it never even made it to the floor for a debate and vote in the Senate. How could this happen?

There are many factors that could have come into play here. One of the most influential factors is likely that 2024 was an election year. Historically, it is difficult to get any bills passed during an election year due to overall uncertainty. Neither the Democratic nor Republican parties want to give the other side any kind of chance to claim the bill passing as their own “victory,” so the bill has essentially been tabled until at least 2025.

Of course, this is not to say that TRAWFA will never make it to a vote in the Senate. There's a decent chance that it will come to a vote sometime in 2025, although it's probably a safer bet to assume that the vote will not happen until after the mid-term elections in 2026. Only time will tell what the outcome of this vote will be, as plenty could change between now and then. Still, it's important for taxpayers who may be affected by the expiration of certain provisions in the Tax Cuts and Jobs Act to prepare for either scenario.

What Does This Mean for Future Tax Planning?

For now, taxpayers will essentially need to choose between two options when it comes to preparing to file their returns.

• One option is to continue with filing under the assumption that the provisions will not be extended.
• The other is to file for an extension in the hopes that TCJA provisions may be retroactively extended down the road.

Of course, the potential drawback of filing under the assumption that provisions will not be extended is that if they are, taxpayers will then need to file an amended return. This process can be somewhat drawn-out and time-consuming, so it could create additional headaches for taxpayers.

On the other hand, filing for an extension when there is no guarantee that any action will be taken anytime soon could also lead to more hassles down the road—so both options have their potential pros and cons.

It May Be Time to Consult with a Professional

Ultimately, the path that is right for taxpayers will depend on several factors beyond what has already been covered here. Because there are so many different considerations that must be considered when preparing tax returns, taxpayers are strongly encouraged to consult with a tax professional before moving forward.

In doing so, they can determine their best course of action for handling the uncertainty around TRAWFA and the expiration of TCJA provisions. From there, they can also get the professional guidance that they need to move forward with confidence as they prepare to file their tax returns.

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