Making important headway on the proposals outlined in the legislative framework for tax reform 2.0, the U.S. House of Representatives approved the following three bills in September:
- R. 6760 – Protecting Family and Small Business Tax Cuts Act of 2018: The bill is intended to make permanent various individual tax provisions and Section 199A deduction introduced under the Tax Cuts and Jobs Act, many of which are currently set to expire after 2025.
- R. 6757 – Family Savings Act of 2018: The bill aims to encourage retirement and family savings in some of the following ways:
- Creation of Universal Savings Accounts which would allow individuals the ability to contribute up to $2,500 (cost of living adjusted) of after-tax dollars with tax-free earnings growth.
- Repeal of the maximum age IRA contribution limit of 70.5.
- Provide employees of small businesses access to retirement plans through multiple employer plan reform, reducing cost and administrative responsibilities of individual employers.
- Allow penalty-free withdrawals of up to $7,500 from retirement plans within one year of qualifying birth of child or adoption.
- Expansion of 529 plan benefits to include apprenticeship programs, homeschooling costs and education loan repayments.
- R. 6756 – American Innovation Act of 2018: The bill aims to promote new business innovation through a series of business friendly initiatives including the following:
- Businesses may elect to deduct the lesser of $20,000 or actual start-up expenses incurred.
- In the event of an ownership change, allows for preservation of NOL’s and credits attributable to the start-up period.
What’s Next? There is currently no Senate vote expected on Tax Reform 2.0 before the mid-term 2018 elections. However, House Republicans are optimistic that aspects of the bill, particularly the retirement and family savings initiatives introduced, may garner bipartisan support.
For more information, please contact Anatoli Pilchtchikov or one of our tax advisors at 301.231.6200.