The U.S. House of Representatives has passed the Protecting Family and Small Business Tax Cuts Act of 2018 by a vote of 220-191. This was the third and final bill in the Tax Reform 2.0 package considered in the House last week. The other two bills—the Family Savings Act of 2018 and the American Innovation Act—were passed by the House last week.
The Protecting Family and Small Business Tax Cuts Act of 2018 makes permanent the individual tax cuts that were contained in the Tax Cuts and Jobs Act (signed into law in December 2017). It also contains some provisions that will impact savings arrangements, should the bill pass in the Senate and become law.
- The ability of beneficiaries of Achieving a Better Life Experience (ABLE) accounts to contribute their own earned income above the ABLE limit would be made permanent (the Tax Cuts and Jobs Act requires this provision to expire the end of 2025)
- The ability to roll 529 education savings plan assets to ABLE accounts would be made permanent (the Tax Cuts and Jobs Act requires this provisions to expire the end of 2025)
- The Sinai Peninsula of Egypt would be considered a “combat zone” (the Tax Cuts and Jobs Act has the Sinai Peninsula of Egypt listed as a qualified hazardous duty area)
- The 7.5 percent adjusted gross income (AGI) threshold for medical expense deductions and for the IRA early distribution penalty tax exception for medical expenses would be extended to December 31, 2020 (it was 10 percent of AGI prior to the Tax Cuts and Jobs Act, which changed it to 7.5 percent of AGI and to increase back to 10 percent after December 31, 2018).
The bill now moves to the Senate for consideration. Prospects of this bill passing the Senate are not good, but the other two bills in Tax Reform 2.0 are considered to have better odds. Watch this Ascensus.com News for further details.