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Tax Changes Are Coming: Are You In The Know?
Tax changes cross the finish line in Congress! This is what you need to know:
The U.S. House & Senate recently passed versions of tax reform meant to make our personal and business taxes less complex and better for our economy. Late last week, Senators and Representatives appointed to a conference committee reached a compromise on legislative language, blending provisions from the House and Senate bills into one final bill.
Since Congressional leadership used a budgetary process known as reconciliation, Congress needed a simple majority for final passage, and tax reform is expected to be signed by President Trump soon.
Below is a list of items important to CACI member companies & individuals, as well as additional energy provisions included in H.R. 1, the Tax Cuts & Jobs Act.
From the House & Senate Conference Committee:
“For job creators of all sizes, the Tax Cuts and Jobs Act:”
- Lowers the corporate tax rate to 21% (beginning Jan. 1, 2018) – down from 35%, which today is the highest in the industrialized world – the largest reduction in the U.S. corporate tax rate in our nation’s history.
- Delivers significant tax relief to Main Street job creators by:
- Offering a first-ever 20% tax deduction that applies to the first $315,000 of joint income earned by all businesses organized as S corporations, partnerships, LLCs, and sole proprietorships. For Main Street job creators with income above this level, the bill generally provides a deduction for up to 20% on business profits – reducing their effective marginal tax rate to no more than 29.6%.
- Establishing strong safeguards so that wage income does not receive the lower marginal effective tax rates on business income – helping to ensure that Main Street tax relief goes to the local job creators it was designed to help most.
- Allows businesses to immediately write off the full cost of new equipment to improve operations and enhance the skills of their workers – unleashing growth of jobs, productivity, and paychecks.
- Protects the ability of small businesses to write off interest on loans, helping these Main Street entrepreneurs start or expand a business, hire workers, and increase paychecks.
- Preserves important elements of the existing business tax system, including:
- Retaining the low-income housing tax credit that encourages businesses to invest in affordable housing so families, individuals, and seniors can find a safe and comfortable place to call home.
- Preserving the Research & Development Tax Credit that encourages our businesses and workers to develop cutting-edge “Made in America” products and services.
- Retaining the tax-preferred status of private-activity bonds that are used to finance valuable infrastructure projects.
- Eliminates the Corporate Alternative Minimum Tax, thereby lowering taxes and eliminating confusion and uncertainty so American job creators can focus on growing their business and hiring more workers, rather than on burdensome paperwork.
- Modernizes our international tax system so America’s global businesses will no longer be held back by an outdated “worldwide” tax system that results in double taxation for many of our nation’s job creators.
- Makes it easier for American businesses to bring home foreign earnings to invest in growing jobs and paychecks in our local communities.
- Prevents American jobs, headquarters, and research from moving overseas by eliminating incentives that now reward companies for shifting jobs, profits, and manufacturing plants abroad.
“For individuals and families, the Tax Cuts and Jobs Act:”
- Lowers individual taxes and sets the rates at 0%, 10%, 12%, 22%, 24%, 32%, 35%, and 37% so people can keep more of their hard-earned money.
- Significantly increases the standard deduction to protect roughly double the amount of what you earn each year from taxes – from $6,500 and $13,000 under current law to $12,000 and $24,000 for individuals and married couples, respectively.
- Continues to allow people to write off the cost of state and local taxes – up to $10,000. Gives individuals and families the ability to deduct property taxes and income – or sales – taxes to best fit their unique circumstances.
- Takes action to support more American families by:
- Expanding the Child Tax Credit from $1,000 to $2,000 for single filers and married couples to help parents with the cost of raising children. The tax credit is fully refundable up to $1,400 and begins to phase-out for families making over $400,000. Parents must provide a child’s valid Social Security Number in order to receive this credit.
- Preserving the Child and Dependent Care Tax Credit to help families care for their children and older dependents such as a disabled grandparent who may need additional support.
- Preserving the Adoption Tax Credit so parents can continue to receive additional tax relief as they open their hearts and homes to an adopted child.
- Preserves the mortgage interest deduction – providing tax relief to current and aspiring homeowners.
- For all homeowners with existing mortgages that were taken out to buy a home, there will be no change to the current mortgage interest deduction.
- For homeowners with new mortgages on a first or second home, the home mortgage interest deduction will be available up to $750,000.
- Provides relief for Americans with expensive medical bills by expanding the medical expense deduction for 2017 and 2018 for medical expenses exceeding 7.5 percent of adjusted gross income, and rising to 10 percent beginning in 2019.
- Continues and expands the deduction for charitable contributions so people can continue to donate to their local church, charity, or community organization.
- Eliminates Obamacare’s individual mandate penalty tax – providing families with much-needed relief and flexibility to buy the health care that’s right for them if they choose.
- Maintains the Earned Income Tax Credit to provide important tax relief for low-income Americans working to build better lives for themselves.
- Improves savings vehicles for education by allowing families to use 529 accounts to save for elementary, secondary and higher education.
- Provides support for graduate students by continuing to exempt the value of reduced tuition from taxes.
- Retains popular retirement savings options such as 401(k)s and Individual Retirement Account
- Increases the exemption amount from the Alternative Minimum Tax (AMT) to reduce the complexity and tax burden for millions of Americans.
- Provides immediate relief from the Death Tax by doubling the amount of the current exemption to reduce uncertainty and costs for many family-owned farms and businesses when they pass down their life’s work to the next generation.
“For greater American energy security and economic growth, the Tax Cuts and Jobs Act:”
- Establishes an environmentally responsible oil and gas program in the non-wilderness 1002 Area of the Arctic National Wildlife Refuge (ANWR). Congress specifically set aside the 1.57-million acre 1002 Area for potential future development. Two lease sales will be held over the next decade and surface development will be limited to 2,000 federal acres – just one ten-thousandth of all of ANWR. Click HERE to see the Republican Policy Committee’s white paper.
- Significantly boosts American energy production. Responsible development in the 1002 Area will raise tens of billions of dollars for deficit reduction in the decades to come, while creating thousands of new jobs, reducing our dependence on foreign oil, and helping to keep energy affordable for American families and businesses.
- Provides a temporary increase in offshore revenue sharing for the Gulf Coast in 2020 and 2021, allowing those states to invest in priorities such as coastal restoration and hurricane protection.”
*NOTABLY**: The conference report does not include several House provisions relating to energy tax credits.
- The House provisions that were not included in the conference bill include:
- Removing inflation adjustment for the production tax credit (PTC);
- Codifying a strict continuous construction requirement for facilities intended to obtain the PTC or ITC;
- Removing phase outs for the 10% solar investment tax credit (ITC);
- Restoring the ITC for other technologies like fuel cells;
- Repealing the enhanced oil recovery credit and the oil and gas marginal wells production credit; and
- Modifying the credit for production from advanced nuclear power facilities and allowing transfer of the tax credit to entities involved in nuclear facility construction.
- The Base Erosion Anti-Abuse Tax (BEAT) provision in the conference report has been tweaked to avoid unintentionally penalizing energy tax credits.
- Under the version of BEAT in the Senate version of H.R. 1, the tax would apply to companies whose tax liability was less than 10 percent of their taxable income. Renewable energy companies were particularly concerned that wind and solar credits could reduce a corporation’s tax liability too far, triggering BEAT provisions.
- In the conference report, energy companies can offset up to 80 percent of the credits when calculating their tax liability, lowering the likelihood of triggering BEAT.
Sign Up Now to Sponsor a CACI Council Meeting
As the 2018 legislative session approaches, we want to invite you to once again participate in CACI’s Issue Councils. CACI councils offer a unique opportunity for CACI members to add their expertise and judgment to our policy-making and influence legislation and regulations that impact business. Council meetings provide an open and frank dialogue between our members, key legislators and state agency leaders. This is also your chance to attend council meetings that you have not attended in the past. The following Councils are available to all CACI members:
Each Council will meet at Noon at the CACI offices throughout the session. Lunch is served at each meeting. Sponsorship of council meetings by our members is crucial to maintaining the practice of providing lunch to each member during these important council meetings. We need sponsors for every meeting in the coming year, so we would like to encourage members to sign up now to sponsor a lunch! Sponsors receive recognition in both email reminders for the meeting and our online Events Calendar, as well as during the meeting itself. CACI does all of the ordering and setup of the lunch and the sponsorship is always a flat rate of $600. Please contact Laura Moss for more details or to sign up as a sponsor. Again, sponsorship by our members is essential to providing our members with lunch during these meetings; we appreciate your ongoing support!
Please see below for specific dates for each council. Councils always meet from Noon to 1:15 p.m. in the CACI Conference Room: 1600 Broadway, Suite 1000, Colorado State Bank Building.
2018 Council Meeting Dates
|Energy & Environment Council:||Labor & Employment Council:|
|January 31st||January 24th|
|February 28th||February 21st|
|March 28th||March 14th|
|April 25th||April 11th|
|Governmental Affairs Council:||Tax Council:|
|January 30th||January 19th|
|February 13th||February 9th|
|March 13th||March 9th|
|April 17th||April 13th|
|HealthCare Council:||Federal Council:|
|January 18th||February 6th|
|February 15th||April 3rd|
|March 22nd||May 1st|
|April 26th||July 17th|
|November 27th (if needed)|
To learn more about our councils, click here.
Thank you and please contact Laura Moss with any questions you may have!
Now Accepting 2018 EXECs Advocacy Applications
The CACI EXECs Advocacy Program delivers experiential insight into prominent Colorado companies. Through business tours and policy-based forums in partnership with key Colorado executives and elected officials, you will learn about the different industries that impacts Colorado’s economy.
WHAT ARE THE BENEFITS?
- Develop a strong foundation in Colorado business policy and advocacy
- Network with other leaders from Colorado companies
- Gain perspective on critical issues that impact the different regions of Colorado and the industries that support them
WHO SHOULD APPLY?
Rising leaders who are passionate about shaping and enhancing Colorado’s economy and strengthening Colorado’s business climate.
WHAT IS THE COST?
$2100 per person includes all required program materials, travel, food, and beverages. Class fees are non-refundable and non-transferable. Programs range from half day to full day commitments.
Program dates* :
*Dates Subject to Change
For questions regarding the program, please contact Lalitha Christian at LChristian@COchamber.com