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Payroll Today

If you liked the TJCA … there’s more — 3 amendments clear House

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Alice Gilman

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in Payroll Today

The Tax Cuts and Jobs Act made only temporary changes to the individual income tax rates and provisions. As we’ve mentioned several times, these provisions of the tax code will expire on Dec. 31, 2025. Tax Cut 2.0 is supposed to take care of that.

The TCJA’s expiration wasn’t a glitch in the law; it was a feature—needed so that it could pass the Senate’s budget constraints (technically called the Byrd rule). TC2, which is actually three bills, makes the individual changes, including the new 20% deduction for qualified business income, permanent.

While it’s anticipated that none of these bills will become law this year, we’re going to take a look at them anyway, because next year is a new Congress with new priorities.

The bills got the thumbs up from the House during the week of Sept. 24.

Bill #1: The Family Savings Act of 2018 (H.R. 6757)

This bill would change some pension rules, including the 401(k) rules:

  • The employee notice requirement that nonelective contribution 401(k) safe harbor plans are required to provide would be eliminated. It would also give plans more flexibility to amend themselves to become nonelective 401(k) safe harbor plans
  • 401(k) plans would be prohibited from making loans to employees through credit or debit cards
  • The nondiscrimination rules would be amended to favor older employees.

Bill #2: American Innovation Act of 2018 (H.R. 6756)

This bill would simplify and expand the deduction for start up expenses. New businesses would be able to deduct up to $20,000 of the aggregate amount of start-up and organizational expenses in their first tax year. This $20,000 amount would be reduced (but not below zero) by the amount by which the aggregate amount of start-up and organizational expenses exceeded $120,000.

The bill would also make changes to the rules regarding net operating loss carryforwards, net operating losses, general business credit carryforwards and general business credits for start-up businesses.

Bill #3: Protecting Family and Small Business Tax Cuts Act of 2018 (H.R. 6760)

This bill would make permanent the TCJA’s individual income tax provisions, including the $10,000 SALT cap and the disallowance of employers’ reimbursement of employees’ moving expenses and employees’ Schedule A deductions for unreimbursed business expenses.

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