The House, by a vote of 339 to 65, and the Senate, by a vote of 92 to 3, on September 23, 2004, enacted the Working Families Tax Relief Act of 2004. The primary focus of the legislation is to extend two sets of expiring provisions: four tax cuts from the 2001 and 2003 tax acts that were scheduled to expire on December 31, 2004 and a package of regularly expiring tax provisions that, for the most part, had expired on December 31, 2003. A couple of new provisions are also included in the legislation — focusing on a new uniform definition of a child under several Code provisions and an expansion of the definition of earned income to include combat pay for purposes of the refundable child tax credit and earned income credit.
Extensions of the child tax credit increase, the elimination of the marriage penalty in the standard deduction and the 15% tax bracket, and the increase in the size of the 10% tax bracket would result in these provisions continuing through 2010, when all of the provisions of the 2001 tax act expire. The 15% refundability percentage for the child tax credit is accelerated one year to 2004. The other expiring provision from the 2001 and 2003 tax acts, the AMT exemption amount increase, would only be extended for one year through 2005.
The following is a list of the other package of expiring provisions, that would generally be extended through December 31, 2005.
1. Research Credit
2. Parity in the application of certain limits to mental health benefits
3. Work Opportunity Tax Credit
4. Welfare-to-Work Tax Credit
5. Qualified Zone Academy Bonds
6. Cover over of excise tax on distilled spirits to Puerto Rico and Virgin Islands
7. Charitable contributions of computer technology and equipment used for educational
purposes and of scientific property used for research
8. Certain expenses of elementary and secondary school teachers
9. Expensing of environmental remediation costs
10. New York Liberty Zone Bond provisions (bond issuing authority through 2009)
11. Tax incentives for investment in the District of Columbia
12. Combined employment tax reporting
13. Nonrefundable personal credits allowed against the AMT
14. Extension of the credit for electricity produced from certain renewable resources
15. Suspension of the 100-percent-of-net-income limitation of percentage depletion
for oil and gas from marginal wells
16. Indian Employment Tax Credit
17. Accelerated depreciation for business property on Indian reservations
18. Disclosure of return information relating to student loans
19. Credit for Qualified Electric Vehicles
20. Deduction for Qualified Clean-Fuel Vehicle Property
21. Disclosures relating to terrorist activities
22. Availability of Archer Medical Savings Accounts
23. Extension of joint review of strategic plans and budget for the IRS
A set of technical correction provisions is also included in the legislation. Projected ten-year cost of the legislation is $146 billion; no revenue offsets were included. The President has indicated that he will sign the legislation.