House Releases Tax Reform Legislation, Moves Forward with Small Business, Estate Tax Relief
The House Ways and Means Committee has shared highlights and text on historic tax reform legislation, the Tax Cuts and Jobs Act of 2017. While highlights from the bill are outlined below, AHC is currently reviewing the fine print of the 429-page legislation, received from the tax committee shortly after 12:00 PM ET. Today’s release initiates a long over-due effort to streamline the nation’s 70,000 page tax code. In a move that is consistent with advocacy from the equine industry and its allies, the House bill will repeal the estate tax after six years, and reduce rates for small business, or so-called “pass through” entities. Please see the below highlights, focusing on issues that have the most significant impact on the equine industry:
Business Provisions
Small Business: The bill sets a maximum tax rate of 25 percent on small business, or “pass through” entities. Under current law, small businesses can pay federal taxes at rates as high as 39.6 percent.
Corporate Tax Rate: The bill lowers the corporate rate to 20 percent, down from the current 35 percent corporate tax rate.
Expensing: The plan will “allow business to immediately write off the full cost of new equipment.”
Business Interest: The plan also states that small business will be able to deduct interest on loans that allow job creators to “hire workers and increase paychecks.”
Estate Tax: The House bill will repeal the estate tax after six years, and double the current exemption on estates valued at $5.49 million. This is a positive development for family-owned farms and businesses.
Charitable Giving: The plan “continues the deduction for charitable contributions.”
Mortgage Interest: The bill preserves the deduction for existing mortgage interest, and establishes a $500,000 cap on interest from new home purchases
Streamlined Tax Brackets: The plan consolidates the number of individual brackets from seven to four. Under the House bill, the IRS will create brackets at rates of 12 percent, 25 percent, 35 percent and preserve the 39.6 percent on higher income earners.
Retirement Savings: The plan “retains retirement plan options” including 401(k)s and Individual Retirement Accounts.
Alternative Minimum Tax (AMT) – The plan eliminates the unpopular AMT, which doubles the amount of time taxpayers must spend to calculate their tax liability within any given year.
In a compromise that has bogged down negotiations, the House plan will retain the deduction for state and local property taxes at amounts up to $10,000.
Path Forward
According to congressional sources, the Ways and Means Committee will mark up the legislation for four days, beginning the week of Monday, November 6. The bill will go to the House floor for a vote before Thanksgiving, which falls on Thursday, November 23. According to Senate Majority Whip John Cornyn (R-TX), the Senate will take up tax reform legislation after Thanksgiving.
To learn more about up-to-date activity related to tax reform, AHC is conducting a webinaron the issue featuring congressional and industry perspectives on Monday, November 13 at 3:00 PM ET. To view a copy of a two-page summary of the bill’s highlights, please click here: Tax Policy Highlights. To review a copy of the bill, please click here: now available online.
For more information, please contact Bryan Brendle, Director of Legislative Affairs, at bbrendle@horsecouncil.org.
sitio en español
site en français
