On July 4, President Trump signed into law H.R.1, the $3.3 trillion budget reconciliation spending and tax cuts bill. The Senate passed the measure on July 1, by a 50-50 vote with the tie broken by Vice President JD Vance. The Senate made a raft of changes to the version the House passed on May 22. The House approved the Senate-passed measure, without changes, on July 3, by a 218 to 214 vote. Enactment came after multiple all-night, high-drama, tension-filled days as Congress raced to meet their target July 4 date for signing the measure into law.
1 min read
Section 199A Deduction for Noncorporate Business Income Now Permanent
H.R.1, which is now the law of the land, permanently extends the 20 percent deduction for qualifying noncorporate business income (QBI).
The end result came after a rollercoaster of a journey through the legislative process. The House version increased the deduction to 23 percent and added restrictions on eligibility for the deduction. The Senate version dropped the deduction back to 20 percent and ultimately dropped new restrictions on eligibility for the deduction.
Topics: Legislation & Regulations Small Business Tax Reform
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New Law Makes Permanent Enhanced Business Loan Interest, Depreciation Rules
The new law makes permanent enhanced business loan interest and depreciation rules. The Senate version, which was enacted into law, changed the House version of the bill that enhanced interest deductibility and depreciation rules for only five years.
Topics: Legislation & Regulations Tax Reform
Tax Package Increases Estate Tax Exemption
H.R.1, the budget reconciliation bill enacted into law on July 3, includes a provision that permanently increases the estate tax exemption to $15 million ($30 million for married couples). The base year for indexing the $15 million exemption amount was changed to 2025.
Topics: Legislation & Regulations Estate Planning Tax Reform
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Income-Limited Tax Break for Some Seniors Approved
Now law is a new five-year $6,000 deduction for some seniors. The Senate version of H.R.1, which has been enacted into law, creates a $6,000 special deduction from income, but not Social Security, for taxpayers over age 65 with incomes of $75,000 ($150,000/married) or less. The deduction phases down (but not below zero), at the rate of six percent of the amount by which a single taxpayer’s income exceeds $75,000 ($150,000/married filing jointly). The deduction is good for 2025 through 2028.
Topics: Legislation & Regulations Tax Reform
1 min read
Reconciliation Bill Restricts Itemized Deduction Values for Wealthy
A “tax-the-rich” provision in the new law reduces the value of itemized deductions for 37 percent taxpayers. The provision would replace current law’s Pease limitation on the value of itemized deductions.
Topics: Legislation & Regulations Tax Reform Charity
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New Law Exempts Some Overtime Pay from Income Tax
The new law provides that individuals earning up to $150,000/year ($300,000/married) will not pay income tax on up to $12,500 ($25,000 married) in overtime (OT) pay. This tax break takes effect this year (2025) and expires at the end of 2028.
Topics: Legislation & Regulations Tax Reform
3 min read
House Approves Reconciliation Bill
On May 23, by a narrow 215 to 214 vote after an all-night debate, the House of Representatives passed the $6+ trillion reconciliation bill, H.R.1. The Congressional Budget Office (CBO) projects that the measure as passed by the House would, over 10 years, add $2.42 trillion to the federal deficit. H.R.1 contains a $3.8 trillion tax package. CBO also projected that Trump tariffs would reduce the deficit by $2.5 trillion over 10 years.
Topics: Legislation & Regulations Congress Tax Reform
2 min read
Senate Contemplates Changes to House-Passed Reconciliation Bill
The Senate is now working on its version of reconciliation (tax) legislation, expecting to make multiple changes to H.R.1, the bill the House passed just before Memorial Day. Here are some of the issues that Republican Senators are considering.
Topics: Legislation & Regulations Congress Tax Reform
3 min read
H.R.1 Expands and Makes Permanent Section 199A
The House-passed reconciliation bill, H.R.1 contains a provision increasing the Section 199A deduction for qualifying non-corporate business income from 20 percent to 23 percent There is no expiration date on the provision, which also contains modifications to eligibility for use of the deduction.
Topics: Legislation & Regulations Tax Reform
1 min read
Tax Package Increases Estate Tax Exemption
H.R.1, the budget reconciliation bill approved by the House on May 23, includes a provision that permanently increases the estate tax exemption to $15 million ($30 million for married couples). The $15 million exemption amount is indexed for inflation with a base year of 2025.
Topics: Legislation & Regulations Estate Planning Tax Reform
1 min read
Reconciliation Bill Restricts Itemized Deduction Values for Wealthy
A “tax-the-rich” provision in the House-passed reconciliation bill would reduce the value of itemized deductions for 37 percent taxpayers. The provision would replace current law’s Pease limitation on the value of itemized deductions.
Topics: Legislation & Regulations Tax Reform
1 min read
House Bill Offers New Tax Break for Some Seniors, Enhanced Standard Deduction
The House-passed tax bill provides a temporary additional deduction of $4,000 for those over age 65 who have less than $75,000 ($150,000 for married couples) in taxable income. It also temporarily expands the standard deduction by $2,000 (married)/$1,000 (single taxpayers).
Topics: Legislation & Regulations Tax Reform
1 min read
House-Passed Reconciliation Bill Includes Bonus Depreciation for Five Years
The House-passed budget reconciliation bill includes a temporary bonus depreciation provision that allows a 100 percent deduction (rather than several years of partial deductions to reflect amortization of the cost of the property) for qualified property acquired and placed in service by a business.
Topics: Legislation & Regulations Tax Reform
1 min read
Enhanced Deduction for Business Loan Interest Included in H.R.1
H.R.1 modifies the rules for calculating the amount of interest paid on business loans. The result is for many businesses an increase in the amount of business loan interest that is deductible from taxable income.
Topics: Legislation & Regulations Tax Reform
1 min read
Trump Calls for Tax Cuts in Address to Joint Session of Congress
President Trump’s March 4 address to a joint session of Congress included a call for tax cuts along with most of his other campaign promises and priorities. The speech (technically not a State of the Union speech due to its occurrence at the beginning of his term) was well-received by President Trump’s GOP base, but characterized as divisive by those who do not support him.
Topics: Tax Reform
2 min read
Retirement Savings, Death Benefits on Most Recent JCT Tax Expenditure List
The Joint Committee on Tax’s (JCT’s) most recent “tax expenditure list” includes trillions in foregone federal revenue as a result of the tax rules governing retirement savings, life insurance death benefits and cash values, and employer provided health insurance.
Topics: Retirement Tax Reform
2 min read
Ways & Means Committee Approves Tax Legislation
On June 13, House Ways & Means Republicans approved the American Families and Jobs Act, consisting of three bills described as an “economic growth” package. The three bills were approved on party-line votes, with Republicans supporting and Democrats opposed. The three bills were announced on June 9 by the committee’s chairman, Rep. Jason Smith (R-MO).
Topics: Legislation & Regulations Taxes Congress Tax Reform
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Ways & Means Chair Says a Tax Bill Is Coming by June
House Ways & Means Committee Chair Rep. Jason Smith (R-MO) says his committee will propose a tax package by late May or in June. The package will reflect priorities discussed at the committee’s field hearings (so far, four have been held outside of Washington), and will prioritize “working families and small businesses.” Currently, this effort appears to be entirely Republican-generated and supported.
Topics: Legislation & Regulations Taxes Congress Tax Reform
1 min read
Key Tax Writer Introduces Bill to Expand Use of HSAs to Cover In-Home Long-Term Care
Rep. Adrian Smith (R-NE) has introduced bipartisan legislation that would allow use of health savings account (HSA) funds to pay for in-home long-term care. The bill has 11 bipartisan cosponsors.
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