House Committee Passes Tax Cut Legislation
Last week, Republicans in the U.S. House of Representatives introduced their second major tax package in as many years. The chamber’s Ways and Means Committee, which oversees tax policy, acted quickly, passed the package on a party-line vote by the end of the week. The bill includes three separate pieces of legislation:
- R. 6760, the Protecting Family and Small Business Tax Cuts Act. The piece of legislation would make permanent the individual and small business tax cuts that were passed in 2017 and will expire at the end of 2025. It also would make several other features of that bill permanent, including: $10,000 cap on state and local tax deduction; lower mortgage interest deduction; expanded standard deduction; and the expanded child tax credit. It also would extend the newly-expanded medical expense deduction until 2020.
- R. 6757, the Family Savings Act of 2018. This bill would expand access to new and existing retirement savings vehicles; help local businesses provide retirement plans to their workers and helps workers participate in retirement plans; and create small universal savings accounts in which individuals would be able to contribute up to $2,500 into accounts on an annual basis, with any withdrawals being tax free.
- R. 6756, American Innovation Act of 2018. This legislation focuses on spurring innovation by allowing businesses to deduct the lesser of their start-up expenses or $20,000 for firms with less than $120,000 in expenses. For firms with more than $120,000 in expenses, those costs that could not be deducted immediately could be amortized over 180 months.
While the full House of Representatives is expected to vote on, and pass, the tax package by the end of September, there is no similar legislation in the Senate and that chamber likely won’t consider additional tax legislation by the end of the 115thCongress this December. If the House passes the legislation, but the Senate does not act, lawmakers will have to reintroduce the package when the 116thCongress begins in January 2019.