With mid-term elections on the mind, House Ways and Means Committee Chairman Kevin Brady (R-TX) pushed through three bills. The intent is to make permanent previous tax reforms, including reducing the marginal tax rates for businesses and individuals and the depreciation allowances for businesses.
Initial estimates are that the combined trio of bills will cost approximately $657.4 billion over ten years.
The details of each act follow:
- Protecting Family and Small Business Tax Cuts Act of 2018 makes permanent the individual tax changes from the 2017 Tax Cuts and Jobs Act, which are currently set to expire in 2025:
- The new individual tax brackets;
- Expanded standard deduction and child tax credit;
- Increased estate and gift tax exemptions;
- The $10,000 aggregate cap on the state and local tax (SALT);
- Property tax deductions (which has opposition from some Republican members from high tax states); and
- The new Section 199A deduction for qualified business income from pass-through entities (the IRS issued proposed regulations earlier this summer).
- Family Savings Act of 2018 incorporates some provisions drawn from the Senate's Retirement Enhancement Savings Act of 2018 (RESA), that we have reported on:
- It does not include a proposed provision which would eliminate the stretch IRA and force non-spouse beneficiaries to take funds out of an inherited IRA within five years.
- It does include the following:
- Changes to the rules for multiple employer plans (MEPs);
- Expands the types of groups that can come together and sponsor a MEP;
- Creates a new universal savings account similar to a Roth IRA
- Individuals may contribute up to $2,500 per year, to grow tax deferred
- Unlike a traditional IRA, the savings in such an account could be removed without restrictions and with tax on withdrawn earnings
- Elimination of the maximum age for IRA contributions; and
- Elimination of the required minimum distribution (RMD) requirement for retirement accounts with less than $50k as well as Section 529 (college savings) plans.
- c ; and then
- Amortize additional costs beyond the limit over 180 months.
What can we expect? Chairman Brady has indicated he wants to move these three bills to the House Floor following the mid-term elections. However, action on these bills by the Senate is not expected this year.
SPAN