Share
Republicans on the House Ways and Means Committee released a partial draft of their long-anticipated tax reform package late Friday night, offering a first glimpse into several key provisions affecting the real estate economy.
While details remain under wraps as negotiations continue behind closed doors, the initial release sheds light on proposals likely to be central to the full legislation. Barring any delays, the complete version is expected to be unveiled by Tuesday, when the formal committee mark-up process is set to begin. During mark-up, lawmakers publicly write and debate the bill. Among the headline items in Friday’s draft:
- Retain current individual rates. Current rates for individual taxpayers, set as part of the 2017 Tax Cuts and Jobs Act, would be made permanent by the bill, a move strongly supported by the National Association of REALTORS®.
- Increase pass-through deduction. The bill proposes increasing the pass-through deduction for small businesses and independent contractors from 20% to 22% and making the mortgage interest deduction permanent. Ensuring the extension of both deductions are top priorities for NAR.
However, several significant provisions were left out of this initial draft, most notably any changes to the state and local tax deduction, or SALT, cap.
“We fully expect SALT relief to be included in the bill in some form. The question is, how much?” says Shannon McGahn, NAR executive vice president and chief advocacy officer. “We have been working with the SALT caucus and House leadership on this issue for several years, providing original research and polling showing the value and importance of the SALT deduction. In a national poll commissioned by NAR just a few weeks ago, 61% of voters supported raising or eliminating the SALT caps outright, and 74% said fairness in double taxation is a strong reason to do so. That is a compelling case for support.”
Republican lawmakers from high-tax states like New York and California will play a critical role in shaping the outcome of the SALT negotiations. If the final bill fails to deliver adequate relief, they could block the measure by voting as a bloc. To pass the bill, Republicans can lose no more than three GOP votes in the House.
Also missing from the current draft are some expected revenue raisers and President Trump’s proposals to eliminate taxes on tips and overtime pay, end taxation on Social Security income, and introduce a deduction for auto loan interest.
