Are we entering “the second phase” of tax reform?
On September 13th, the House Ways and Means Committee passed three separate bills that will be the cornerstone of what is being referred to as Tax Reform 2.0. A full House vote on the bills is expected to take place at the end of September or in October. If the bills pass the full House, it’s not expected that the legislation will be taken up in the Senate before the midterm November elections. However, experts believe the provisions on retirement savings could eventually find bipartisan support. A major sticking point is the estimated price tag of the legislation: $627 billion over the next decade, according to a recent analysis by the Joint Committee on Taxation.
The three-bill package focuses on making certain provisions of the Tax Cuts and Jobs Act (TCJA) permanent, promoting retirement savings, and encouraging innovation. Let’s go through each of the three bills so you can gain a better understanding of what this might mean for you and your business.
Protecting Family and Small Business Tax Cuts Act
Many provisions of the TCJA affecting individuals are set to expire after 2025. The proposed Protecting Family and Small Business Tax Cuts Act of 2018 seeks to make permanent nearly all of the provisions that would expire, including:
Family Savings Act
The second bill, the Family Savings Act of 2018, provides for changes to retirement and education accounts and creates a new tax-deferred savings account. Specifically, this proposed law would:
American Innovation Act
The third bill, called the American Innovation Act of 2018, provides two new provisions to encourage small business formation. If certain qualifications are met, this bill would:
No matter what happens from here, it’s important to be informed of any potential tax law changes. We can answer your questions about how current tax law and any proposed legislation may affect your individual or business tax planning. Contact a member of your DGC Engagement Team or Stephen E. Minson, CPA, MST at 781-937-5120 / firstname.lastname@example.org, Erica Nadeau, CPA, MST at 781-937-5311 / email@example.com, or Matthew Iannetti, CPA at 781-937-5370 / firstname.lastname@example.org.