Tax items in reconciliation bill

[kathyc2]

https://taxfoundation.org/research/all/federal/big-beautiful-bill-house-gop-tax-plan/

Under the title of bill, you can download to Excel the "cost" of items. 

 

[JimTaxes]

Limit the value of itemized deductions to 35 cents on the dollar?  what does not mean

[kathyc2]

33 minutes ago, JimTaxes said:

Limit the value of itemized deductions to 35 cents on the dollar?  what does not mean

Those in 37% rate are limited to taxable income reduction from itemized at a 35% rate.  Scored at ~1.5B per year.

Also included is bringing back Pease, scored at ~18B per year.

[JimTaxes]

4 minutes ago, kathyc2 said:

Those in 37% rate are limited to taxable income reduction from itemized at a 35% rate.  Scored at ~1.5B per year.

Also included is bringing back Pease, scored at ~18B per year.

thank you!

[jklcpa]

This didn't even make it out of committee in the House and why I've always had a policy of not discussing any legislation until it passes.

[kathyc2]

Whatever...  Just go ahead and delete it then.

[jklcpa]

11 hours ago, kathyc2 said:

Whatever...  Just go ahead and delete it then.

Sorry, I didn't mean the forum shouldn't discuss it. I meant that "I" personally don't because it will change.

I heard that the main objections were to the amount it would increase the deficit and debt, the SALT limitation, and by implication, probably the overall limitation on itemized deductions.

Like I said, it didn't make it to the House floor, and Republican senators were already voicing strong objections, so that we know that the Senate would not pass it it's current form there either.

 

[Catherine]

Standard response to client inquiries: there is no sense in discussing anything until a bill has been passed and signed. Until then, all bets are off.

[Lynn EA USTCP in Louisiana]

a local CPA contacted me late last week for my comments on the proposed raise in the SALT cap to $30,000.  I advised her that in all my 36 years of practice I've never commented on a proposed bill.

[Lee B]

If a client asks me how a proposed tax change might affect them, I don't mind answering their question if there is a fairly clear answer.

 

[Sara EA]

Proposals are pretty consistent that a share of some costs will be passed to the states, e.g., Medicaid, education, disaster response.  This means that even if federal taxes go down, state taxes will have to increase.  This kind of negates the argument that an increase in SALT deductions benefits blue states.  Residents of red and blue states alike will find themselves bumping into the cap.

Many of the proposals also add a lot more complexity to the tax code.  Tip income is exempt at certain income levels and certain occupations. Interest on loans for certain cars will be deductible--how do you calculate that without a lot of paperwork?  It goes on.  If they are going to pass this thing, let's hope they do it soon because our CE providers need time to put together courses and we need time to take them and digest it all .

[Randall]

I thought I saw a headline this morning that the bill has passed the whole House.  But doesn't it still have to go through the Senate?  I usually wait for it to become law.  Then we'll get some info and summaries and the IRS can start working on the forms and processing of it all.

[jklcpa]

24 minutes ago, Randall said:

I thought I saw a headline this morning that the bill has passed the whole House.  But doesn't it still have to go through the Senate?  I usually wait for it to become law.  Then we'll get some info and summaries and the IRS can start working on the forms and processing of it all.

Yes, it did. Now it goes to the Senate.

[BTS]

Am I missing the "No tax on Soc Sec" ?  I see it no where in the bill.  

[Lee B]

Here is a detailed article by the AP:

https://apnews.com/article/trump-tax-breaks-bill-medicaid-80b5781377bcd0870a1dccb3c7b8dc05

[Randall]

31 minutes ago, BTS said:

Am I missing the "No tax on Soc Sec" ?  I see it no where in the bill.  

I haven't looked.  Seems like I saw a headline about that as one of the proposals.  But there are proposals, then there are what's actually in the bill.  Let's see what the Senate passes and the House/Senate joint or compromise bill.  

[jklcpa]

1 hour ago, BTS said:

Am I missing the "No tax on Soc Sec" ?  I see it no where in the bill.  

You didn't miss it, but the proposed legislation going to the Senate is supposed to have an additional $4,000 of standard deduction for seniors.
Those over 65 were already getting a higher standard deduction, so I suspect that this won't be a full $4,000 increase from what a senior was getting already.

[kathyc2]

I downloaded the full bill from the house and skimmed through it. 

The 4,000 for over 65 as written is in additional to the higher standard deduction.  It adds a new paragraph to 63(f) and doesn't replace it.  Even those that itemize will receive the 4K deduction.  Phase out starts at 75/150K.  Interestingly, as currently written the 4K is the same for all filing statuses.

The "no tax on tips" and "no tax on overtime" appear to be an after AGI deduction.

Takes away the payback limit of APTC based on income .  Nothing to extend the PTC for those over 400% FPL from IRA.  Hopefully the Senate will correct that. If not, a couple in 60's but not eligible for MC with income of ~85K will go from paying ~7K to ~20-25K for insurance. 

Interest on auto includes such things as ATV, motorcycles, campers, trailers, etc. 

Residential energy credits go away after 2025.

Requires states to collect fee of 100/250 when plating hybrid/electric vehicles.

Lots of other items that are going to be a PITA.

A lot of the items start for 2025 tax year.  After they pass, IRS will need to issue procs, companies will need to learn what new info they need to provide, forms will need to be revised, software will need to be reprogrammed, etc.  Uggh!

 

[Lee B]

These items caught my attention:

"The bill includes a temporary boost in the standard deduction — a $1,000 increase for individuals, bringing it to $16,000 for individual filers, and a $2,000 boost for joint filers, bringing it to $32,000."

"There is also a temporary $500 increase in the child tax credit, bringing it to $2,500 for 2025 through 2028. It then returns to $2,000 and will increase to account for inflation."

"The bill increases the “SALT” cap to $40,000 for incomes up to $500,000, with the cap phasing downward for those with higher incomes. Also, the cap and income threshold will increase 1% annually over 10 years."

"The tax breaks for tips, overtime and car loan interest expire at the end of 2028. That’s also the case for a $4,000 increase in the standard deduction for seniors."

"Among the various business tax provisions, small businesses, including partnerships and S corporations, will be able to subtract 23% of their qualified business income from their taxes. The deduction has been 20%"

[Lion EA]

I really hate temporary provisions!! (Like built-in obsolescence in appliances.) More moving parts to account for when tax planning.

[Catherine]

3 hours ago, jklcpa said:

Yes, it did. Now it goes to the Senate.

After passing in the Senate, it then has to be signed into law. After that it can take effect.