House Republicans Introduce ‘Tax Reform 2.0’ bills

Filed in Capitol Hill, Tax Reform Toolkit by on September 11, 2018 0 Comments

moneyHouse Republicans yesterday unveiled their long-anticipated package of tax changes intended to build on the enactment of last year’s Tax Cuts and Jobs Act (TCJA).

Known as Tax Reform 2.0, it is actually a package of three bills. The House Ways and Means Committee is expected to take up the bills quickly, possibly later this week.

The Protecting Family and Small Business Tax Cuts of 2018 (H.R. 6760) would make permanent the provisions of the TCJA that are scheduled to expire on December 31, 2025. This includes making permanent:

  • the new Section 199A 20% deduction for pass-through businesses
  • the increased AMT exemption amount
  • the new $750,000 cap on the mortgage interest deduction
  • the $10,000 limit on the deduction of state and local taxes (SALT)
  • the lower marginal tax rates of 10%, 12%, 22%, 24%, 32%, 35%, and 37%
  • the increased standard deduction ($12,000 singles, $24,000 couples)
  • the repeal of the overall limitation on itemized deduction (Pease limitation)

The Family Savings Act of 2018 (H.R. 6757) focuses on promoting individual and retirement savings.  Notable changes included in this bill would give small businesses a more cost-effective means to offer employees retirement savings plans through the creation of Open Multiple Employer Plans, which is a change NAHB has supported.

Also, families that have Section 529 savings plans for higher education would be permitted to tap into those funds to cover costs associated with apprenticeships.

And the bill includes a new savings program known as Universal Savings Accounts (USAs), which would allow individuals to save up to $2,500 a year on a pre-tax basis. Distributions from a USA could be taken for any purpose, giving individuals a simple, tax-free savings vehicle, which could benefit younger home buyers saving for a downpayment.

The American Innovation Act of 2018 (H.R. 6756) would provide start-up businesses with new tax benefits. The bill would expand the Section 195 deduction for certain start-up costs and provide an exception to current rules that limit the use of net operating losses and certain tax credits when there is an ownership change and when a start-up business engages in additional rounds of financing.

At this point, the House leadership remains committed to a vote by the full House on all three bills this month. The Senate, however, has indicated that it will not considered these bills prior to the elections.

Of the three bills, the retirement savings changes have the best prospects for future enactment, as there has been strong bipartisan support in this area.

For more information, contact J.P. Delmore at 800-368-5242 x8412.

 

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