2024 Corporate Tax Landscape in the U.S.: Key Changes to Know

Understanding Key Corporate Tax Changes for 2024

With tax laws constantly evolving, businesses must stay ahead of regulatory changes to remain compliant and optimize their financial strategies. The 2024 corporate tax landscape in the U.S. brings significant changes, including adjustments to corporate tax rates, the implementation of a corporate minimum tax, and updates on deductions and international tax considerations.

In this article, we explore the key corporate tax updates for 2024 and what they mean for U.S. businesses.

1. Implementation of the 15% Corporate Minimum Tax

A major shift in corporate taxation comes with the 15% Corporate Alternative Minimum Tax (CAMT). This tax applies to large corporations with annual adjusted financial statement income exceeding $1 billion over a three-year period.

Key Details:

Introduced under the Inflation Reduction Act to curb corporate tax avoidance.
Affects approximately 150 of the largest U.S. companies that previously paid little to no federal income tax.
Estimated to generate $250 billion in revenue over the next decade.

Impact on Businesses:

Corporations subject to this minimum tax must conduct careful tax planning to assess how their financial reporting aligns with the new tax framework. Companies in industries with significant deductions or deferred tax assets should re-evaluate their strategies.

2. Corporate Tax Rate Proposals: Potential Reductions

The corporate tax rate remains at 21%, following the 2017 Tax Cuts and Jobs Act (TCJA). However, potential political shifts could bring proposals to lower the corporate tax rate to 15% to enhance business competitiveness.

Considerations for Businesses:

If rates decrease: Companies may adjust their deferred tax liabilities and optimize tax planning strategies.
If rates remain at 21%: Businesses should continue leveraging deductions and credits to minimize tax liability.

While no official changes have been implemented, businesses should remain prepared for potential rate adjustments in future legislative sessions.

3. Expiration of Key Provisions in the Tax Cuts and Jobs Act (TCJA)

Several provisions from the TCJA are set to expire in 2025, but companies need to plan for the transition in 2024.

Major Changes to Consider:

Bonus Depreciation Phase-Out: The 100% bonus depreciation benefit for capital investments has started phasing down to 80% in 2024 and will continue decreasing.
Interest Deduction Limitations: The limitation on net business interest expense deductions (30% of adjusted taxable income) could become stricter.
R&D Expense Deductions: The requirement to amortize R&D expenses over five years, instead of immediate expensing, remains in effect.

What This Means for Businesses:

Businesses should evaluate their investment strategies and consider accelerating purchases before the bonus depreciation benefit declines further.

4. Carried Interest and Potential Taxation Changes

The carried interest tax loophole, which allows private equity and hedge fund managers to pay lower capital gains tax rates instead of higher ordinary income tax rates, has been under scrutiny.

Current Status:

While past efforts to eliminate the loophole have failed, discussions in Congress indicate that changes could still be proposed.
If reformed, carried interest income could be taxed at ordinary income rates (up to 37%) instead of capital gains rates (20%).

How This Affects Businesses:

Investment firms and fund managers should monitor potential legislative changes and prepare for higher tax liabilities on carried interest earnings.

5. Global Minimum Tax and International Considerations

The OECD’s Global Minimum Tax (GMT), which establishes a 15% minimum tax for multinational corporations, is gaining traction globally. The U.S. has not yet fully aligned with the OECD’s framework, but international businesses should anticipate potential adoption.

Key Considerations:

If implemented in the U.S.: Large multinational corporations may need to adjust their tax structures.
Current status: U.S. policymakers are debating how to integrate GMT provisions without disrupting domestic tax policy.

Businesses with international operations should stay updated on potential policy shifts affecting cross-border tax strategies.

6. New IRS Compliance Initiatives Targeting Corporations

The IRS has ramped up corporate tax enforcement efforts, particularly targeting large businesses with complex tax structures.

Key IRS Focus Areas:

Transfer Pricing Reviews: Companies engaging in international transactions may see increased scrutiny over pricing structures.
Cryptocurrency Reporting Compliance: Businesses involved in digital asset transactions must adhere to new IRS reporting requirements.
R&D Credit Audits: The IRS is closely reviewing R&D tax credit claims to ensure proper substantiation.

How to Stay Compliant:

Corporations should conduct internal tax audits and maintain detailed documentation to minimize audit risks.

What Businesses Should Do Next

Navigating the 2024 corporate tax landscape in the U.S. requires a proactive approach. Businesses should work closely with tax professionals to:
✅ Assess eligibility for the corporate minimum tax.
✅ Optimize tax planning strategies for potential corporate rate changes.
✅ Prepare for TCJA expirations impacting deductions and depreciation.
✅ Monitor global tax policy developments for multinational compliance.

Explore the 2024 corporate tax landscape in the U.S. and how businesses can adapt to regulatory updates and IRS enforcement.

How TMP Can Help

At TMP, we provide expert tax advisory services tailored to businesses navigating the U.S. corporate tax landscape. Whether you need strategic planning for corporate tax changes, IRS compliance support, or international tax guidance, our experienced CPAs are here to help.