Tax

Congress is on track to pass a $428 billion tax-cut plan that would revive a key number of tax provisions, commonly known as tax extenders, rescind a number of Affordable Care Act taxes, and provide tax breaks to survivors of natural disasters.

The agreement, estimated by the Joint Committee on Taxation to cost over $426 billion over the next decade, came after a series of long, complicated negotiations between the White House, Senate Republicans and House Democrats who often struggled to find common ground.

The plan, which will pass through Congress attached to a must-pass budget bill this week, is the largest tax bill of 2019. The Senate is expected to expedite the package to President Trump’s desk now that the House has passed the two spending packages. The legislation must be signed by the President by the end of the week to ensure the federal government does not run out of funding.

Senator Chuck Grassley (R-IA) secured his top priority in tax extenders: a $15 billion provision that would extend a $1-per-gallon biodiesel tax credit and break for short-line railroads through 2022.

The legislation also renews over two dozen tax incentives through 2020, including a credit for wind energy, a tax cut for beer producers, subsidies for motorsport racetracks, and a credit for investing in low-income communities.

Affordable Care Act taxes that are set to be repealed include a 2.3% excise tax on medical devices and a health insurance industry fee that would have taken effect next year. The spending package also repeals a 40% excise tax on the most generous and expensive health-insurance plans, commonly referred to as the ‘Cadillac tax,’ which would have gone into effect in 2022.

You can view a full list of all tax provisions that were included, and their costs, here.

In addition to tax-related provisions, the spending packages also raise the legal age to purchase tobacco and nicotine vaping products to 21, includes the Bipartisan American Miners Act of 2019, which extends benefits to miners impacted by coal company bankruptcies, reauthorizes the National Flood Insurance Program, and appropriates $12.5 million each for the Centers for Disease Control and Prevention (CDC) and National Institutes of Health to study gun violence and ways to prevent it.

The Michael Best Strategies Tax Team is still studying the over 2,300 pages of legislative text and will keep clients appraised of any impactful items that are included in the spending packages.

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