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By Keith Hill
Dependent-care assistance, employee achievement awards, educational assistance, and moving expenses are among benefits provided by employers that would no longer be tax free to employees under the tax reform bill released Nov. 2 by House Republicans.
The Tax Cuts and Jobs Act, H.R. 1, would set federal income tax brackets at 12, 25, and 35 percent and maintain the existing 39.6 percent rate for individuals earning more than $1 million.
The brackets would be as follows: households with income up to $24,000 would pay no income tax; the 12 percent bracket would apply to households earning up to $90,000; the 25 percent bracket would apply to households earning up to $260,000; and the 35 percent bracket would apply to households earning up to $1 million.
In a September framework released by the Trump administration, the tax brackets were reduced to three: 12, 25, and 35 percent.
In addition to repealing the tax exclusion for employee achievement awards, dependent care assistance programs, and adoption assistance programs and otherwise qualified moving expenses, the bill would also repeal the work opportunity tax credit, modify the Federal Insurance Contributions Act employer credit on tipped employee income, reduce the deductibility of entertainment expenses, and limit employer options in deducting executive pay in excess of $1 million a year.
The bill would increase the child tax credit to $1,600 per child younger than 17 from $1,000, and adjust the charitable mileage rate for inflation rather than setting it at 14 cents per mile.
The bill does not change pre-tax levels for retirement accounts.
Most of the bill’s provisions would apply to tax years starting Jan. 1, 2018, and later.
The House plans to pass the tax plan before the end of the year. The Senate Finance Committee is working on its version of a tax reform plan.
To contact the reporter on this story: Keith Hill at firstname.lastname@example.org
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