Tick Tock- with the impeding deadline of our government funding running out this Friday, December 22nd unless Congress passes another continuing resolution or budget bill. That pressure paired, with the Alabama Senate race outcome, and the pressure of Members of Congress and their staff to make it back home for the holidays has the House and Senate in overdrive to pass the first major reform to our nation’s tax laws in decades.
Today, the House is passed the Conference Committee’s tax reform bill, and we expect that the bill will pass the Senate this evening. I expect Congress will send over the final package by Wednesday or Thursday for President Trump to sign.
While there are countless political pundits speculating on the final outcomes, and leaders are still trying to figure out how to pay for the package I wanted to share what we know. A lot of the changes I worked on with the conferees were included in the final bill – for instance, pass-throughs are entitled to take advantage of the state and local income tax and property tax deduction. Other highlights include:
- immediate expensing of HVAC equipment “HEAT Act”- thanks for all that contributed!
- a 37% top individual rate
- a 20% pass through deduction for business income. For pass-through businesses, the 20% deduction of qualified business income will lower the effective tax rate to approximately 30%. The pass-through deduction is limited to half of all wages paid to employees.
- it doubles the standard deduction, $12,000 for singles and $24,000 for couples
- a $10,000 cap on the itemized deduction for state and local income and property taxes
- a $2,000 child tax credit, refundable up to limits still being determined
- expensing of depreciable assets, sunset after 5 years
- double the estate tax exemption
- Mortgage Interest Deduction (MID) will be capped at $750,000
If all happens as planned this will mean this tax bill will be effective January 1, 2018. So, mark your calendars- your withholding changes will begin in February after W-4 forms are updated. Please keep this in mind and complete these forms quickly so you can adjust your withholdings.
While the bill is certainly not perfect, we are pretty darned excited about the potential the impact this bill, and the provisions we’ve been fighting for will have on the bottom line of America’s HVAC Owners, and ultimately your employees.
Check out this quick video for me details: