On Dec. 13, the House and Senate Republican conferees for H.R. 1, the Tax Cuts and Jobs Act of 2017, reached an agreement to resolve the differences between the two versions of the tax reform legislation. Last week, AGC sent a letter to the House and Senate negotiators outlining the construction industry’s priorities for the conference committee. AGC also worked with Senator Inhofe (R-Okla.) to ensure that trusts could access the pass-through business deduction, which was initially excluded in the Senate legislation. Based on comments made by multiple Senators, this effort is believed to be successful.
While no information about the agreement has been officially released—as of publication—press reports indicate that the broad outline of the agreement is as follows:
- Cut the corporate rate to 21 percent from 35 percent beginning in 2018;
- Cut the top individual rate to 37 percent for the highest earners, down from 39.6 percent;
- Provide a 20 percent deduction on pass-through business income, and extend that break to trusts as well as individuals;
- Repeal the Corporate Alternative Minimum Tax;
- Cap the mortgage interest deduction to loans less than $750,000; and
- Limit combined deductions for state and local income taxes and property taxes to $10,000.
There are still many unanswered questions about the agreement, including what happens to the Individual Alternative Minimum Tax (AMT), Private Activity Bonds (PABs), and the “small contractor exemption” from percentage of completion method of accounting, which could have a significant impact on construction businesses. Press reports also indicate that the final conference report will be filed on Friday, setting up a vote on final passage next week.
As the final details of the conference report are worked out over the next two days, AGC will continue to engage with policy makers to ensure that construction industry priorities are considered in the final bill.
For more information, contact Matthew Turkstra at email@example.com or (202) 547-4733.