According to Law360, House Republicans plan to meet Tuesday to deliberate a sweeping extension of their 2017 tax overhaul that would lock in low individual rates and deduction limits, expand child care and estate tax breaks, and make permanent tax incentives for small pass-through businesses and U.S. multinational corporations.
The 28-page tax bill, released late Friday by House Ways and Means Committee Chairman Jason Smith, R-Mo., would expand most of the popular tax incentives in the 2017 Tax Cuts and Jobs Act, the signature legislation of President Donald Trump's first term. The tax bill is the product of intense negotiations between House and Senate GOP lawmakers and the White House, who hope for a vote on it by Memorial Day.
Smith's bill would make TCJA individual tax rates permanent by removing the sunset date of Dec. 31, 2025, and would permanently extend the doubled standard deduction with a temporary increase through 2028 of $1,500 for married taxpayers and $1,000 for individuals.
Personal exemptions and miscellaneous itemized deductions would be repealed permanently, and the child tax credit would be increased to $2,500 per child through 2028 before dropping to a permanent credit of $2,000. The bill would require both parents to have Social Security numbers in order to claim the credit.
The exemption for estate and gift taxes would be permanently raised to $15 million per spouse, from $13.99 million per spouse, and indexed for inflation. The TCJA exemption from the alternative minimum tax would also be made permanent.
On the business side, the bill would:
- permanently extend the deductions for foreign-derived intangible income and global intangible low-tax income.
- It would also repeal a scheduled increase in the base erosion and anti-abuse tax. and
- The bill would also extend the deduction for qualified pass-through business income and increase the deduction rate to 22%.
Smith Said The Bill Would Usher In A New Age Of Prosperity
By Building On The TCJA's Successes.
According to a Joint Committee on Taxation report released Saturday, the bill would cost $4.9 trillion over the next decade, including nearly $2.2 trillion to make the Tax Cuts and Jobs Act's individual tax rates permanent. The increased standard deduction would cost nearly $1.3 trillion, but permanently eliminating personal exemptions would raise nearly $1.9 trillion in revenue over the next 10 years, according to the report.
- The bill would lower the average tax rate for those making more than $1 million in annual income from 30.7% to 27.4%, according to a second report released by the JCT on Saturday.
- The average tax rate for taxpayers making $500,000 to $1 million would be reduced from 29.9% to 25.8%.
The legislation is subject to change and will likely be significantly altered if it eventually is passed into law. For example, it is silent on the fate of the $10,000 cap on state and local tax deductions, one of the most debated provisions of the TCJA, nor does it include Trump's campaign promise of ending the taxation of tipped income or the tax break for carried interest.
The House Ways and Means Committee's ranking member, Rep. Richard Neal, D-Mass., faulted Republicans for releasing the bill late Friday and, he said, omitting major parts of the legislation.
Trump said Friday that he and other Republicans would graciously accept a "tiny" tax increase for the rich to help lower- and middle-income workers. "Republicans should probably not do it, but I'm OK if they do!!!" Trump said in a post on Truth Social.
To fully extend and build upon the 2017 tax cuts, this means that the reconciliation bill must include at least $2 trillion in verifiable savings either through spending reductions or scaling back the size of the tax package," the group said. "If savings fall short, the Ways and Means Committee's instruction must be lowered dollar-for-dollar to keep the reconciliation bill within the agreed limits."
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