Many taxpayers and tax advisors are still digesting last year’s comprehensive tax reform bill, but Congress is set to begin its next round of tax legislation. Dubbed “Tax Reform 2.0,” the proposal was unveiled on September 10, 2018 by House Ways and Means Committee Chairman Kevin Brady. This proposed legislation is much smaller than last year’s bill and will be part of the committee’s mark-up meeting this week.
The Ways and Means Committee split Tax Reform 2.0 into three parts as follows:
- H.R 6760, the Protecting Family and Small Business Tax Cuts Act of 2018 (click here for the legislative text of the bill; and click here for the description of the bill). This part of Tax Reform 2.0 will make permanent many of the individual tax changes made in the Tax Cuts and Jobs Act last year that are set to expire in 2026. Among the items included for permanency are: the lower individual tax rate changes; higher standard deduction; doubling of the child tax credit; Cap on State and Local Taxes (SALT) at $10,000; repeal of the dependent exemption; the new 20% deduction for pass-through businesses for qualified business income; expanded AMT relief; and increase in estate tax exemption.
- H.R. 6757, the Family Savings Act of 2018 (click here for the legislative text of the bill; and click here for the description of the bill). This proposal would expand retirement savings for individuals and businesses with several provisions. It would also introduce new Universal Savings Accounts for families.
- H.R 6756, the American Innovation Act of 2018 (click here for the legislative text of the bill; and click here for the description of the bill). This bill would expand the deduction for start-up costs for new businesses, and also loosen restrictions on deducting losses generated in the early years of a new business.
Next Steps and Outlook: The Committee plans to vote this week on these proposals and the full House will likely vote near the end of September. Prospects in the Senate are uncertain at this time. The coming mid-term elections will make for some political drama in Washington this fall.
In last year’s bill, supporters indicated that passing tax reform would allow taxpayers to file their tax returns on a postcard, so perhaps Tax Reform 2.0 will be the stamp to put on the postcard. We’ll keep you posted – Stay Tuned. Please let your Sikich tax advisor know if you have any questions.