By Dean Zerbe
The House Ways and Means Committee chaired by Congressman Brady (R-TX) recently passed – and the House is expected to pass shortly – three tax bills: HR 6760 – essentially an extension/permanency of the families/individual provisions from tax reform; HR 6757 – improvements in retirement savings; and, HR 6756 – a small bill to help start-ups.
While the extension of the individual provisions is a big lift and the outlook is very uncertain (with the received wisdom being that this will be put-off until down the road when the provisions are closer to expiring – 2025) – the possibilities of passing retirement provisions and the bill on start-ups has possibilities for this year in lameduck. The Senate is interested – particularly on retirement. The Democrats – especially in the Senate – will need to be at the table if there is going to be a deal and the expectation is that the tax extenders (especially energy provisions) will be on their ask list. At the moment the outlook is that a deal on some tax package is possible.
Extension of Individual Provisions From Tax Reform
The legislation makes permanent the tax reform provisions for families/individuals – reduction of the rates; expansion of the brackets; expansion of child credit, AMT phaseout thresholds; doubling of estate tax exemption amount, etc. It also makes permanent revenue raisers that partially offset the revenue loss of that tax relief – including repeal of deduction for personal exemptions; limitation on passthrough losses; and, cap of 10k on state and local taxes.
Congressman Mike Kelly (R-PA) is the lead sponsor of a series of commonsense reforms (the Senate is roughly on the same page) to improve retirement and savings – with major provisions including: reforms to strengthen multiple employer plans and pooled employer plans; repeal the prohibition on contributions to a traditional IRA by an individual who is 70 ½; and, in general, exempt from minimum distribution rules if an IRA (and similar defined contribution plans) is below $50,000 (indexed for inflation).