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On March 9, President Biden released his administration’s fiscal year 2024 budget. The President’s annual budget request traditionally kicks off the annual budget process.
While Congress has the final say on spending and taxation needed to pay for the spending, the budget signals the administration’s spending priorities and includes details on the revenue needed to pay for those priorities along with the sources generating that revenue.
OMB Circular A-11 - Preparation, Submission, and Execution of the Budget notes that the federal budget primarily focuses on the upcoming fiscal year for which Congress needs to make appropriations. However, it also includes data for the most recently completed year, the current year and nine years following the budget year (outyears) to reflect the effect of budget decisions over the longer term. In addition to proposed appropriations for the budget year, the budget may include proposed changes to appropriations for the current year and legislative proposals that would affect the current year, the budget year and the outyears.
With that brief background, the current budget proposes numerous changes in federal tax law (which likely would have impact on many states’ tax law for those states basing their tax law on federal tax law), including the following:
The above list identifies just some of the numerous tax items included in the budget proposal. Buried in the line-item details of Table S-6 Mandatory and Receipt Proposals are numerous other proposals including:
The budget also seeks an additional $28.6 billion and a two-year extension to the $80 billion the IRS received over 10 years as part of the Inflation Reduction Act to modernize its technology and expand enforcement.
It’s important to remember that the above items are only proposals; many of these items have been floated in the past and did not make it into final legislation. As many others have already observed, it’s likely no secret that many of President Biden’s proposals are already dead upon arrival in the current divided Congress. However, the proposed budget effectively represents an opening salvo in the budget battle between the administration and Democratic legislators with Republicans on funding and spending for the next fiscal year beginning October 1, 2023, and directionally for the next decade. For their part, Republicans are preparing their version of what the budget might look like. For example, the Republican Study Committee (a Republican caucus) has recently released its vision of a 2023 budget.
It’s much too early to act on these proposals, but it’s important to remain informed about the progress on the budget and the possible implications on your tax situation. If you have any questions, please don’t hesitate to reach out to your Schneider Downs tax consultant.
Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.
To learn more, visit our dedicated Tax Services page.
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