After working throughout the year behind closed doors, House and Senate leaders took major steps toward passing comprehensive tax reform for the first time in more than 30 years.
The House Ways and Means Committee released its comprehensive tax reform package, H.R. 1, the Tax Cuts and Jobs Act, and proceeded to mark up and advance the legislation out of committee, in an effort to pass the legislation by Thanksgiving. The Senate also released its tax bill and will begin marking up the bill on November 13.
Both bills aim to lower the corporate tax rate to 20 percent and provide larger deductions to individual filers. Both bills also expand and extend immediate expensing of equipment purchase. The House legislation expands the amount that can be deducted from $500,000 to $5 million, whereas the Senate caps expensing at $1 million.
Most notably, in the House tax credits for residential and commercial installation of geothermal heat pumps were restored in the legislation—which had been a priority of NGWA since they expired in 2016. These provisions were left out of the Senate bill. NGWA is working to urge Senators to offer inclusion of this provision as an amendment during the mark-up.
Both the House and Senate legislation is small business friendly by increasing exemptions in the estate tax, and in the House bill, repealing the estate tax by 2024.
However, each bill is scheduled to add $1.5 trillion to the federal deficit over 10 years, and the number of interests being modified in the legislation will make passage no easy task.
Both tax reform packages contain several priorities that would improve the business climate for NGWA members, like restoring the incentives for installation of geothermal heat pumps and relieving the tax burden on most small businesses. However, the real impact will be seen once the two versions of the bill are passed and in conference.