Overview
Title
To amend the Internal Revenue Code of 1986 to make permanent certain provisions of the Tax Cuts and Jobs Act affecting individuals, families, and small businesses, and for other purposes.
ELI5 AI
The "TCJA Permanency Act" is a plan to keep some rules about taxes the same so people, families, and small businesses might pay less in taxes. It also means fewer taxes when giving money to family and getting credits or deductions for kids, education, and gifts, but it might be a bit confusing and unfair to some folks living in different places.
Summary AI
This bill, known as the "TCJA Permanency Act," proposes to amend the Internal Revenue Code to permanently maintain certain provisions of the Tax Cuts and Jobs Act. It includes changes to tax rates for individuals, families, and small businesses, increases tax exemptions for estates and gifts, and modifies deductions related to state and local taxes. Additionally, it makes permanent certain benefits such as increased child tax credits, student loan discharge treatments, and certain deductions related to education and charitable contributions.
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Bill Statistics
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AnalysisAI
General Summary of the Bill
The proposed legislation seeks to amend the Internal Revenue Code of 1986, aiming to make permanent certain provisions initially introduced under the Tax Cuts and Jobs Act (TCJA). These provisions have implications for individuals, families, and small businesses. The bill covers a wide range of tax-related aspects, from modifications in income tax rates and deductions for business income of pass-through entities, to adjustments in child tax credits and the standard deduction. It also includes specific changes for estate and gift tax exemptions, alongside numerous other amendments affecting deductions and exclusions across different sections of the tax code.
Summary of Significant Issues
One prominent issue within the bill is the increase in the estate and gift tax exemption from $5 million to $10 million. This alteration has the potential to reduce tax revenue, largely benefitting wealthy individuals, and possibly widen economic inequality. Moreover, the limitation on deductions for state and local taxes may unfavorably affect taxpayers in states with higher taxes, raising questions about fairness.
Furthermore, the termination of the exclusion for qualified bicycle commuting reimbursements is a step back in promoting environmentally friendly transportation methods, causing concerns for those advocating for green policies. The bill’s complexity, notably its technical language and extensive cross-references, poses another significant issue as it might bewilder the average taxpayer and complicate compliance. Lastly, certain amendments within the bill lack sufficient context or rationale, contributing to uncertainty among taxpayers and stakeholders alike.
Impact on the Public
Broadly speaking, the bill's permanent enactment of certain tax breaks and changes will have mixed effects on different taxpayers. While some individuals and small businesses might welcome consistent tax rates and improved tax credits, others may find themselves adversely impacted by the limitations and repeals included in the bill. The restriction on state and local tax deductions could disproportionately increase tax burdens for residents of higher-tax states, potentially causing financial strain.
Additionally, without targeted provisions to address middle and lower-income taxpayers, these groups might not sufficiently benefit from the legislation. Increased charitable contribution limits and expanded uses for education savings plans offer potential benefits, though they might mainly cater to those already capable of saving.
Impact on Specific Stakeholders
Wealthier individuals and families stand to gain considerably from the raised estate and gift tax exemption, as this reduces tax liabilities on substantial transfers of wealth. However, an inherent risk lies in exacerbating economic disparities if such measures aren't counterbalanced.
Small business owners might perceive value in simplified business income deductions, yet the removal of previous provisions without clear alternatives could engender confusion and difficulty in financial planning. Similarly, withdrawing the bicycle commuting reimbursement exclusion could impact employees and employers advocating for sustainable commuting options by increasing taxable income, which might discourage bike commuting as a viable transportation method.
In conclusion, while the intent behind making certain TCJA provisions permanent seems to ensure stability and predictability in the tax code, the bill entails complex implications and benefits that will be unevenly felt across different tax-paying segments and states. Clarity, equity, and consideration for diverse financial circumstances are keys for the legislative process moving forward.
Financial Assessment
Financial References in the TCJA Permanency Act
The TCJA Permanency Act makes several financial adjustments to the Internal Revenue Code, touching on tax rates, exemptions, deductions, and credits. These changes have significant implications for tax revenue generation and taxpayer fairness across various income brackets and states.
Tax Rates and Income Brackets
One of the most notable aspects of the bill is the modification of tax rates for different categories of taxpayers. The tax brackets are outlined with specific rates and income levels:
- Married individuals filing jointly have adjusted rates, starting at 10% up to $19,050, escalating to 37% for incomes over $600,000.
- Heads of households, unmarried individuals, and those filing separately have similar graduated brackets with maximum rates applicable at varying income thresholds.
These adjustments preserve the lower rates introduced by the Tax Cuts and Jobs Act, but there is concern about how these changes may favor higher-income groups, which relates to the broader issue of inequality noted under Section 151.
Estate and Gift Tax Exemptions
Section 151 increases the estate and gift tax exemption from $5,000,000 to $10,000,000, doubling the threshold at which these taxes apply. This increase could result in substantial tax savings for wealthy individuals, potentially reducing tax revenue. The change lacks accompanying justifications and could exacerbate income inequality, as highlighted in the issues section.
Standard Deduction and Child Tax Credit
The standard deduction for individuals is significantly increased, with $18,000 for married individuals and $12,000 for single filers, as described in Section 121. Additionally, Section 122 enhances the child tax credit, offering $2,000 per qualifying child and $500 per qualifying dependent.
These increases aim to provide financial relief to families and individuals, but the complexity of adjustments and cross-references might complicate comprehension and application, possibly leading to tax filing errors as noted under Section 132.
SALT Deduction Limitation
Section 142 imposes a $10,000 cap on the deduction for state and local taxes (SALT). This limitation could disproportionately affect taxpayers in high-tax states, raising concerns about fairness and equity across states as deductions available could significantly differ.
Qualified Residence Interest and Miscellaneous Deductions
Modifications to Section 143 limit deductions related to home loans at $750,000 for acquisition indebtedness. This limitation could affect homeowners in high-cost areas negatively, as they might face greater challenges in taking advantage of these deductions.
Furthermore, Section 146 repeals the overall limitation on itemized deductions, theoretically allowing for a broader array of deductions without a cumulative cap. While initially beneficial, this repeal might inadvertently benefit high-income earners more due to the complexity and potential tax planning strategies available to them.
Business Income Deduction
Section 111 touches on the deduction for qualified business income, affecting partnerships and S corporations, although the text lacks clarity and context from previous provisions. Business owners might find themselves uncertain of the implications, particularly small business owners who may rely on these deductions to lower their tax burden.
Conclusion
The TCJA Permanency Act outlines comprehensive modifications to the tax code with significant financial implications. While many changes aim to provide relief, there are concerns about fairness, complexity, and revenue loss. Some provisions may disproportionately benefit the wealthy, and taxpayers might struggle to navigate the complex language and implications of the bill, prompting calls for clearer policy explanations and increased transparency.
Issues
The increase in the estate and gift tax exemption from $5,000,000 to $10,000,000 in Section 151 could significantly reduce tax revenue and may disproportionately benefit wealthy individuals, potentially exacerbating inequality. This change is a major fiscal policy decision that lacks transparency regarding its justification.
The limitation on individual deductions for state and local taxes in Section 142 may disproportionately impact individuals in states with higher tax rates, raising concerns about fairness or equity across different states.
The termination of the exclusion for qualified bicycle commuting reimbursement in Section 147, without providing a rationale, may negatively affect environmentally friendly transportation options and could be perceived as undermining green incentives.
The complexity of language and numerous cross-references in multiple sections, such as Sections 121, 101, and 122, could make understanding and compliance difficult for the average taxpayer, potentially leading to misunderstandings or errors in tax filings.
The amendments in Section 111 affecting the deduction for qualified business income remove critical context about previous provisions, leaving business owners unclear on the ramifications and rationale behind these changes.
Section 125, which removes a specific date for rollovers to ABLE programs from 529 programs, could lead to ambiguous interpretations on the time frame and applicability of this legislative change, raising compliance concerns.
The modification of deduction for qualified residence interest in Section 143, particularly concerning home equity loans and acquisition indebtedness, may affect taxpayers in high-cost real estate markets disproportionately, potentially disadvantaging them.
The change in the definition of 'qualified higher education expense' to include elementary and secondary expenses in Section 132 could increase government spending on 529 plans and complicate the administration of fund usage, raising oversight and potential misuse concerns.
The repeal of the deduction for personal exemptions in Section 141, along with numerous conforming amendments, introduces complexity and could obscure the broader implications of these changes on different taxpayer groups.
The transition rules for student loan discharges as described in Section 131 may cause confusion or unintended tax liabilities for loans discharged during ambiguous periods.
Sections
Sections are presented as they are annotated in the original legislative text. Any missing headers, numbers, or non-consecutive order is due to the original text.
1. Short title, etc Read Opens in new tab
Summary AI
The TCJA Permanency Act proposes making several changes to the existing tax laws. It aims to make permanent the individual tax reforms introduced under the Tax Cuts and Jobs Act, including modifications to tax rates, business income deductions for pass-through entities, and various tax benefits for individuals and families, among others.
101. Modification of rates Read Opens in new tab
Summary AI
The section of the bill describes changes to federal income tax rates for different filing statuses, including married couples filing jointly, heads of households, unmarried individuals, and estates and trusts. It also details inflation adjustments and modifications to how tax brackets apply to capital gains, as well as some technical amendments to existing tax code sections.
Money References
- (a) Married individuals filing joint returns and surviving spouses.—Section 1(a) is amended by striking the table contained therein and inserting the following: “If taxable income is:The tax is:Not over $19,05010% of taxable income.
- Over $19,050 but not over $77,400$1,905, plus 12% of the excess over $19,050.Over $77,400 but not over $165,000$8,907, plus 22% of the excess over $77,400.Over $165,000 but not over $315,000$28,179, plus 24% of the excess over $165,000.Over $315,000 but not over $400,000$64,179, plus 32% of the excess over $315,000.Over $400,000 but not over $600,000$91,379, plus 35% of the excess over $400,000.Over $600,000$161,379, plus 37% of the excess over $600,000.”.
- “If taxable income is:The tax is:Not over $13,60010% of taxable income.
- Over $13,600 but not over $51,800$1,360, plus 12% of the excess over $13,600.Over $51,800 but not over $82,500$5,944, plus 22% of the excess over $51,800.Over $82,500 but not over $157,500$12,698, plus 24% of the excess over $82,500.Over $157,500 but not over $200,000$30,698, plus 32% of the excess over $157,500.Over $200,000 but not over $500,000$44,298, plus 35% of the excess over $200,000.Over $500,000$149,298, plus 37% of the excess over $500,000.”.
- (c) Unmarried individuals other than surviving spouses and heads of households.—Section 1(c) is amended by striking the table contained therein and inserting the following: “If taxable income is:The tax is:Not over $9,52510% of taxable income.
- Over $9,525 but not over $38,700$952.50, plus 12% of the excess over $9,525.Over $38,700 but not over $82,500$4,453.50, plus 22% of the excess over $38,700.Over $82,500 but not over $157,500$14,089.50, plus 24% of the excess over $82,500.Over $157,500 but not over $200,000$32,089.50, plus 32% of the excess over $157,500.Over $200,000 but not over $500,000$45,689.50, plus 35% of the excess over $200,000.Over $500,000$150,689.50, plus 37% of the excess over $500,000.”.
- (d) Married individuals filing separate returns.—Section 1(d) is amended by striking the table contained therein and inserting the following: “If taxable income is:The tax is:Not over $9,52510% of taxable income.
- Over $9,525 but not over $38,700$952.50, plus 12% of the excess over $9,525.Over $38,700 but not over $82,500$4,453.50, plus 22% of the excess over $38,700.Over $82,500 but not over $157,500$14,089.50, plus 24% of the excess over $82,500.Over $157,500 but not over $200,000$32,089.50, plus 32% of the excess over $157,500.Over $200,000 but not over $300,000$45,689.50, plus 35% of the excess over $200,000.Over $300,000$80,689.50, plus 37% of the excess over $300,000.”.
- “If taxable income is:The tax is:Not over $2,55010% of taxable income.
- Over $2,550 but not over $9,150$255, plus 24% of the excess over $2,550.Over $9,150 but not over $12,500$1,839, plus 35% of the excess over $9,150.Over $12,500$3,011.50, plus 37% of the excess over $12,500.”.
- (f) Inflation adjustments.—Section 1(f) is amended— (1) by amending paragraph (2)(A) to read as follows: “(A) by increasing the minimum and maximum dollar amounts for each bracket for which a tax is imposed under such table by the cost-of-living adjustment for such calendar year, determined under this subsection for such calendar year by substituting ‘2017’ for ‘2016’ in paragraph (3)(A)(ii),”, (2) by amending paragraph (7) to read as follows: “(7) ROUNDING.— “(A) IN GENERAL.—Except as provided in subparagraph (B), if any increase determined under paragraph (2)(A) is not a multiple of $25, such increase shall be rounded to the next lowest multiple of $25.
- “(B) JOINT RETURNS, ETC.—In the case of a table prescribed under subsection (a), subparagraph (A) shall be applied by substituting ‘$50’ for ‘$25’ both places it appears.”, (3) by striking paragraph (8), and (4) in the heading, by striking “Phaseout of marriage penalty in 15-percent bracket; adjustments” and inserting “Adjustments”.
- (g) Application of income tax brackets to capital gains brackets.—Section 1(h) is amended— (1) in paragraph (1)(B)(i), by striking “25 percent” and inserting “22 percent”, (2) in paragraph (1)(C)(ii)(I), by striking “which would (without regard to this paragraph) be taxed at a rate below 39.6 percent” and inserting “below the maximum 15-percent rate amount”, and (3) by adding at the end the following new paragraphs: “(12) MAXIMUM 15-PERCENT RATE AMOUNT DEFINED.—For purposes of this subsection, the maximum 15-percent rate amount shall be— “(A) in the case of a joint return or surviving spouse (as defined in section 2(a)), $479,000 (½ such amount in the case of a married individual filing a separate return), “(B) in the case of an individual who is a head of household (as defined in section 2(b)), $452,400, “(C) in the case of any other individual (other than an estate or trust), $425,800, and “(D) in the case of an estate or trust, $12,700.
- PERCENT RATE BRACKET FOR ESTATES AND TRUSTS.—In the case of any estate or trust, paragraph (1)(B) shall be applied by treating the amount determined in clause (i) thereof as being equal to $2,600.
- “(14) INFLATION ADJUSTMENT.— “(A) IN GENERAL.—Each of the dollar amounts in paragraphs (12) and (13) shall be increased by an amount equal to— “(i) such dollar amount, multiplied by “(ii) the cost-of-living adjustment determined under subsection (f)(3) for the calendar year in which the taxable year begins, determined by substituting ‘calendar year 2017’ for ‘calendar year 2016’ in subparagraph (A)(ii) thereof.
- “(B) ROUNDING.—If any increase under subparagraph (A) is not a multiple of $50, such increase shall be rounded to the next lowest multiple of $50.”. (h) Conforming amendments.
111. Deduction for qualified business income Read Opens in new tab
Summary AI
The bill removes subsection (i) from Section 199A, which deals with qualified business income deductions. These changes will apply to tax years starting after the law is enacted.
112. Limitation on losses for taxpayers other than corporations Read Opens in new tab
Summary AI
In this section, there is a change to tax laws aiming at limiting how much loss a person (not a corporation) can claim on their taxes. It also includes updates to references in related tax code sections to make them consistent with this change, and these changes will take effect in the tax year after the law is passed.
121. Increase in standard deduction Read Opens in new tab
Summary AI
The bill increases the standard deduction by updating certain dollar amounts in the tax code, raising them from $4,400 to $18,000 and from $3,000 to $12,000. It also adjusts these amounts for inflation and specifies that these changes apply to taxable years beginning after the enactment of the bill.
Money References
- In general.—Section 63(c)(2) is amended— (1) by striking “$4,400” in subparagraph (B) and inserting “$18,000”, and (2) by striking “$3,000” in subparagraph (C) and inserting “$12,000”.
- (b) Inflation adjustment.—Section 63(c)(4) is amended to read as follows: “(4) ADJUSTMENTS FOR INFLATION.— “(A) IN GENERAL.—Each dollar amount in paragraph (2)(B), (2)(C), or (5) or subsection (f) shall be increased by an amount equal to— “(i) such dollar amount, multiplied by “(ii) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting for ‘2016’ in subparagraph (A)(ii) thereof— “(I) in the case of the dollar amounts contained in paragraph (2)(B) or (2)(C), ‘2017’, “(II) in the case of the dollar amounts contained in paragraph (5)(A) or subsection (f), ‘1987’, and “(III) in the case of the dollar amount contained in paragraph (5)(B), ‘1997’.
- “(B) ROUNDING.—If any increase under subparagraph (A) is not a multiple of $50, such increase shall be rounded to the next lowest multiple of $50.”. (c) Conforming amendment.—Section 63(c) is amended by striking paragraph (7).
122. Increase in and modification of child tax credit Read Opens in new tab
Summary AI
The section modifies the child tax credit by increasing the amount a taxpayer can claim for each qualifying child and dependent, sets income limits at which the credit is reduced, and makes part of the credit refundable. It also includes provisions for inflation adjustments and repeals certain previous amendments related to the child tax credit.
Money References
- (a) In general.—Section 24 is amended by striking subsections (a), (b), and (c) and inserting the following new subsections: “(a) Allowance of credit.—There shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the sum of— “(1) $2,000 for each qualifying child of the taxpayer, and “(2) $500 for each qualifying dependent (other than a qualifying child) of the taxpayer.
- “(b) Limitation based on adjusted gross income.—The amount of the credit allowable under subsection (a) shall be reduced (but not below zero) by $50 for each $1,000 (or fraction thereof) by which the taxpayer's modified adjusted gross income exceeds $400,000 in the case of a joint return ($200,000 in any other case).
- — (1) IN GENERAL.—Section 24(d)(1)(A) is amended to read as follows: “(A) the credit which would be allowed under this section determined— “(i) by substituting ‘$1,400’ for ‘$2,000’ in subsection (a)(1), “(ii) without regard to subsection (a)(2), and “(iii) without regard to this subsection (other than this subparagraph) and the limitation under section 26(a), or”. (2) MODIFICATION OF LIMITATION BASED ON EARNED INCOME.—Section 24(d)(1)(B)(i) is amended by striking “$3,000” and inserting “$2,500”.
- (3) INFLATION ADJUSTMENT.—Section 24(d) is amended by inserting after paragraph (3) the following new paragraph: “(4) ADJUSTMENT FOR INFLATION.— “(A) IN GENERAL.—The $1,400 amount in paragraph (1)(A)(i) shall be increased by an amount equal to— “(i) such dollar amount, multiplied by “(ii) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting ‘2017’ for ‘2016’ in subparagraph (A)(ii) thereof.
- “(B) ROUNDING.—If any increase under subparagraph (A) is not a multiple of $100, such increase shall be rounded to the next lowest multiple of $100.
- “(C) LIMITATION.—The amount of any increase under subparagraph (A) (after the application of subparagraph (B)) shall not exceed $600.”.
123. Increased limitation for certain charitable contributions Read Opens in new tab
Summary AI
The section amends the rules for cash donations to charities, allowing individuals to contribute up to 60% of their income to qualified organizations and to carry over any excess donations to the next five years. It also coordinates these changes with other contribution limits, specifying how they interact with existing 50% and 30% limits on charitable donations.
124. Increased contributions to ABLE accounts Read Opens in new tab
Summary AI
The section allows for increased contributions to ABLE accounts by removing the previous 2026 deadline, and it permits account holders to receive a saver's credit for contributions without the same deadline. These changes take effect for tax years starting after the bill is enacted.
125. Rollovers to ABLE programs from 529 programs Read Opens in new tab
Summary AI
The bill allows money to be moved from 529 college savings plans to ABLE accounts for individuals with disabilities without a deadline for when these transfers can happen. This change will start applying to transfers made after the law is enacted.
126. Treatment of certain individuals performing services in the Sinai Peninsula of Egypt Read Opens in new tab
Summary AI
The section amends the criteria under which people working in the Sinai Peninsula of Egypt can qualify for certain benefits, specifically including this area alongside other qualifying regions, and sets conditions for eligibility based on the presence of U.S. Armed Forces entitled to special pay due to danger. Additionally, it repeals part of the Tax Cuts and Jobs Act in this context and specifies that these changes apply to services performed after the law is enacted.
131. Treatment of student loan discharges Read Opens in new tab
Summary AI
In this section, the sunset date for special rules on student loan discharges is moved up by one year to the end of 2024. Additionally, starting in 2025, any student loan forgiven because of the borrower's death or total and permanent disability will not be counted as taxable income.
132. 529 account funding for homeschool and additional elementary and secondary expenses Read Opens in new tab
Summary AI
The section changes the tax rules so that money from certain education savings accounts can be used to cover a variety of costs for students in elementary and secondary school, including tuition, books, and tutoring, and applies to both traditional schools and homeschools. This change will take effect for any withdrawals made after the law is passed.
141. Repeal of deduction for personal exemptions Read Opens in new tab
Summary AI
The section repeals the tax deduction for personal exemptions and replaces it with a basic deduction. Additionally, it updates multiple tax code sections to reflect this change, alters the definition of dependents, and includes adjustments for inflation, applicable to tax years following the enactment.
Money References
- Definition of dependent retained.—Section 152, prior to the repeal made by subsection (a), is hereby redesignated as section 7706 and moved to the end of chapter 79. (c) Application to trusts and estates.—Section 642(b) is amended— (1) in paragraph (2)(C)— (A) in clause (i), by striking “the exemption amount under section 151(d)” and all that follows through the period at the end and inserting “the dollar amount in effect under section 7706(d)(1)(B).”, and (B) by striking clause (iii), (2) by striking paragraph (3), and (3) by striking “Deduction For Personal Exemption” in the heading thereof and inserting “Basic Deduction”.
- (33) Section 63(f) is amended by striking all that precedes paragraph (3) and inserting the following: “(f) Additional standard deduction for the aged and blind.— “(1) IN GENERAL.—For purposes of subsection (c)(1), the additional standard deduction is, with respect to a taxpayer for a taxable year, the sum of— “(A) $600 if the taxpayer has attained age 65 before the close of such taxable year, and “(B) $600 if the taxpayer is blind as of the close of such taxable year.
- DETERMINED.—For purposes of subparagraph (A), the amount determined under this subparagraph is— “(i) the dollar amount in effect under section 7706(d)(1)(B), multiplied by “(ii) the number of the taxpayer’s dependents for the taxable year in which the levy occurs.
- Section 7706(d)(1)(B), as redesignated by this section, is amended by striking “the exemption amount (as defined in section 151(d))” and inserting “$4,150”.
- (B) Section 7706(d), as redesignated by this section, is amended by adding at the end the following new paragraph: “(6) INFLATION ADJUSTMENT.—The $4,150 amount in paragraph (1)(B) shall be increased by an amount equal to— “(A) such dollar amount, multiplied by “(B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which such taxable year begins, determined by substituting ‘calendar year 2017’ for ‘calendar year 2016’ in subparagraph (A)(ii) thereof.
- If any increase determined under the preceding sentence is not a multiple of $50, such increase shall be rounded to the next lowest multiple of $50.”.
142. Limitation on deduction for State and local, etc., taxes Read Opens in new tab
Summary AI
The section modifies tax laws to limit the deduction for state and local taxes on an individual's federal tax return. It specifies that individuals cannot deduct foreign real property taxes and caps the total tax deduction at $10,000, or $5,000 for married people filing separately, applicable for tax years beginning after the law's enactment.
Money References
- (a) In general.—Section 164(b)(6) is amended by striking all that precedes “The preceding sentence” and inserting the following: “(6) LIMITATION ON INDIVIDUAL DEDUCTIONS.—In the case of an individual— “(A) no deduction shall be allowed under this chapter for foreign real property taxes paid or accrued during the taxable year, and “(B) the aggregate amount of the deduction allowed under this chapter for taxes described in paragraphs (1), (2), and (3) of subsection (a) and paragraph (5) of this subsection (and any tax described in any such paragraph taken into account under section 216(a)(1)) paid or accrued by the taxpayer during the taxable year shall not exceed $10,000 ($5,000 in the case of a married individual filing a separate return).”. (b) Effective date.—The amendment made by this section shall apply to taxable years beginning after the date of the enactment of this Act.
143. Limitation on deduction for qualified residence interest Read Opens in new tab
Summary AI
The bill modifies rules for deducting interest from home loans, specifically limiting deductions for mortgages started after December 15, 2017, to $750,000 and keeping a higher limit of $1,000,000 for older loans under certain conditions. It also addresses refinancing and changes how previous laws interact with these updates, taking effect for future tax years once the law is enacted.
Money References
- (a) Interest on home equity indebtedness.—Section 163(h)(3)(A) is amended by striking “during the taxable year on” and all that follows through “residence of the taxpayer.” and inserting “during the taxable year on acquisition indebtedness with respect to any qualified residence of the taxpayer.”. (b) Limitation on acquisition indebtedness.—Section 163(h)(3)(B)(ii) is amended to read as follows: “(ii) LIMITATION.—The aggregate amount treated as acquisition indebtedness for any period shall not exceed the excess (if any) of— “(I) $750,000 ($375,000, in the case of a married individual filing a separate return), over “(II) the sum of the aggregate outstanding pre-October 13, 1987, indebtedness (as defined in subparagraph (D)) plus the aggregate outstanding pre-December 15, 2017, indebtedness (as defined in subparagraph (C)).”.
- (c) Treatment of indebtedness incurred on or before December 15, 2017.—Section 163(h)(3)(C) is amended to read as follows: “(C) TREATMENT OF INDEBTEDNESS INCURRED ON OR BEFORE DECEMBER 15, 2017.— “(i) IN GENERAL.—In the case of any pre-December 15, 2017, indebtedness, subparagraph (B)(ii) shall not apply and the aggregate amount of such indebtedness treated as acquisition indebtedness for any period shall not exceed the excess (if any) of— “(I) $1,000,000 ($500,000, in the case of a married individual filing a separate return), over “(II) the aggregate outstanding pre-October 13, 1987, indebtedness (as defined in subparagraph (D)).
- (e) Coordination with exclusion of income from discharge of indebtedness.—Section 108(h)(2) is amended by striking “applied by substituting ‘$750,000 ($375,000’ for ‘$1,000,000 ($500,000’ in clause (ii) thereof and”.
144. Modification of deduction for personal casualty losses Read Opens in new tab
Summary AI
The section modifies the rules for deducting personal casualty losses in taxes. It removes the previous limitations that applied to certain years and ensures the new amendments apply to losses from federally declared disasters occurring in taxable years after the law is enacted.
145. Termination of miscellaneous itemized deductions Read Opens in new tab
Summary AI
The section changes the rules about what deductions individuals, estates, and trusts can claim on their taxes by not allowing certain miscellaneous itemized deductions and explaining how to calculate adjusted gross income for estates and trusts. These changes will take effect for tax years starting after the law is officially enacted.
146. Repeal of overall limitation on itemized deductions Read Opens in new tab
Summary AI
The section eliminates the cap on itemized deductions for tax purposes by removing a specific section of the tax code. It also updates other related parts of the code to align with this change and defines the "applicable amount" for different filing statuses, which will increase annually based on the cost of living adjustments starting from the year the law is enacted.
Money References
- (2) Section 164(b)(5)(H)(ii)(III) is amended by striking “(as determined under section 68(b))”. (3) Section 164(b)(5)(H) is amended by adding at the end the following new clause: “(iii) APPLICABLE AMOUNT DEFINED.—For purposes of clause (ii), the term ‘applicable amount’ means— “(I) $300,000 in the case of a joint return or a surviving spouse, “(II) $275,000 in the case of a head of household, “(III) $250,000 in the case of an individual who is not married and who is not a surviving spouse or head of household, and “(IV) ½ the amount applicable under subclause (I) in the case of a married individual filing a separate return.
- In the case of any taxable year beginning in calendar years after the date of the enactment of this clause, each of the dollar amounts in this clause shall be increased by an amount equal to such dollar amount, multiplied by the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting ‘2012’ for ‘2016’ in subparagraph (A)(ii) thereof.
- If any amount after adjustment under the preceding sentence is not a multiple of $50, such amount shall be rounded to the next lowest multiple of $50.”. (c) Effective date.—The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.
147. Termination of exclusion for qualified bicycle commuting reimbursement Read Opens in new tab
Summary AI
The section terminates the exclusion for qualified bicycle commuting reimbursements from being considered taxable income. It changes several existing laws to remove references to this exclusion, making these reimbursements taxable for years beginning after the new law is enacted.
148. Qualified moving expense reimbursement exclusion limited to members of Armed Forces Read Opens in new tab
Summary AI
The section modifies the rules for tax exclusion on moving expense reimbursements so that it now only applies to members of the United States Armed Forces on active duty who move due to military orders and a permanent change of station. This change will be effective for taxable years starting after the law is enacted.
149. Deduction for moving expenses limited to members of Armed Forces Read Opens in new tab
Summary AI
The section amends the rules about moving expenses for members of the U.S. Armed Forces, allowing them to deduct these expenses when moving due to a military order. Additionally, it states that in-kind moving and storage expenses given to these members or their families are not taxable and don't need to be reported.
150. Limitation on wagering losses Read Opens in new tab
Summary AI
The bill proposes changing Section 165(d) by removing the deadline that limits the rule on wagering losses to certain years. This change would apply to tax years starting after the law is enacted.
151. Increase in estate and gift tax exemption Read Opens in new tab
Summary AI
Section 151 amends the estate and gift tax exemption by increasing the exemption amount from $5,000,000 to $10,000,000. The changes apply to estates of people who pass away and gifts made after this law is enacted.
Money References
- (a) In general.—Section 2010(c)(3) is amended in subparagraph (A), by striking “$5,000,000” and inserting “$10,000,000”.
201. Increased exemption for individuals Read Opens in new tab
Summary AI
The text outlines amendments to tax exemption amounts in Section 55 of the tax code, including increasing individual exemption amounts, adjusting phase-out thresholds, and implementing inflation adjustments. It repeals the taxation rule for unearned income of children and specifies that these changes are effective for taxable years following the enactment of the Act.
Money References
- In general.—Section 55(d)(1) is amended— (1) by striking “$78,750” in subparagraph (A) and inserting “$109,400”, and (2) by striking “$50,600” in subparagraph (B) and inserting “$70,300”.
- (b) Phase-Out of exemption amount.—Section 55(d)(2) is amended— (1) by striking “$150,000” in subparagraph (A) and inserting “$1,000,000”, and (2) by striking subparagraphs (B) and (C) and by inserting the following new subparagraphs: “(B) 50 percent of the dollar amount applicable under subparagraph (A) in the case of a taxpayer described in paragraph (1)(B) or (1)(C), and “(C) $75,000 in the case of a taxpayer described in paragraph (1)(D).”. (c)
- Inflation adjustment.—Section 55(d)(3) is amended to read as follows: “(3) INFLATION ADJUSTMENT.—Each dollar amount described in clause (i) or (ii) of subparagraph (B) shall be increased by an amount equal to— “(A) such dollar amount, multiplied by “(B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting— “(i) in the case of a dollar amount contained in paragraph (1)(D) or (2)(C) or in subsection (b)(1)(A), ‘calendar year 2011’ for ‘calendar year 2016’ in subparagraph (A)(ii) thereof, and “(ii) in the case of a dollar amount contained in paragraph (1)(A), (1)(B), or (2)(A), ‘calendar year 2017’ for ‘calendar year 2016’ in subparagraph (A)(ii) thereof.
- Any increased amount determined under this paragraph shall be rounded to the nearest multiple of $100 ($50 in the case of the dollar amount contained in paragraph (2)(C)).”. (d) Repeal of coordination with rules relating to the taxation of unearned children.—Section 59 is amended by striking subsection (j).