October 26, 2022
Republican lawmakers a part of the tax-writing House Ways and Means Committee met virtually on October 26th to discuss making permanent the individual tax provisions in the 2017 tax reform bill.
The individual tax cuts included in the reform bill are scheduled to expire after December 31, 2025. Corporate tax cuts in the legislation were made permanent. Republican lawmakers now seek to even things out by making the individual provisions permanent.
Arguably, the most notable provisions set to expire after 2025 are the individual income tax rate reductions and the 20% deduction for certain pass-thru entities. Honorable mentions that are also set to expire are the increased Child Tax Credit and standard deduction, as well as the Alternative Minimum Tax exemption. (More about who could pay the AMT if it returns is here.)
During today’s meeting, lawmakers and a business owner talked about the importance to extend the pass-thru deduction and individual rate cuts, reverse the amortization of research and development costs (allow expensing), and return the interest deduction (163(j)) to pre-tax reform levels. Other tax measures were also mentioned.
Making these tax cuts permanent would be very expensive, which could be politically problematic (driving up debt as interest rates increase could haunt future re-election bids).
It is more likely that if these provisions are extended, they will be done annually, which essentially means that the entire individual tax code would become a tax extender.
A Repeat of 2010?
Extending the individual provisions in the 2017 tax reform bill is a definite ‘maybe.’
Will history repeat itself? It is too soon to tell.
Here are some questions that need answered to determine the fate of the 2017 individual tax cuts:
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