The tax revamp in the 2017 Tax Cuts and Jobs Act would become permanent under a bill with heavy Republican support introduced Monday.
Florida Republican Rep. Vern Buchanan, vice-chair of the House Ways and Means Committee, on Monday re-introduced the TCJA Permanency Act, which he originally filed last September during the Democratic-controlled 117th Congress.
The original bill won the support of 72 Republican congressmen, and the current bill is also expected to enjoy strong Republican support. GOP leaders have named making the TCJA provisions permanent one of their top priorities in the House, now narrowly controlled by Republicans.
The bill would preserve the $10,000 cap on state and local tax deductions, one of the TCJA’s provisions that most irked muni issuers. Buchanan’s legislation does not address tax-exempt advance refunding, which was stripped out of the tax code by the TCJA.
“As Congress works to extend certain aspects of the 2017 Tax Cuts and Jobs Act, we think that it provides a good opportunity to review some provisions that removed key financing tools such as tax-exempt advance refundings,” said Brett Bolton, Vice President of Federal Legislative and Regulatory Policy at the Bond Dealers of America. “We plan to continue to educate Hill Leaders on this and other important muni provisions as the debate continues to heat up.”
The TCJA brought significant changes to the tax code, most of which are scheduled to expire on Dec. 31, 2025.
“In 2017, Republicans delivered the most comprehensive overhaul of the U.S. tax code in more than three decades and achieved historic economic growth,” said Buchanan. “We need to provide some much-needed relief and certainty to hardworking families and Main Street businesses and ensure these tax cuts do not expire.”
The bill would maintain the increase in the standard deduction, the alternative minimum tax exemption, a reduced estate tax, a maximum child tax credit of $2,000, up from the previous $1,000 maximum, and the extra 20% deduction for qualified income of pass-through businesses. It would also expand eligible uses of 529 savings plans.
Many of the corporate tax provisions, including a reduction of the top corporate income tax rate to 21% from 35%, are already permanent.
The bill is unlikely to gain traction in the Democrat-controlled Senate.
The Congressional Budget Office last May estimated that extending the individual and estate tax provisions would cost $2.2 trillion through 2032 and that extending the business tax provisions would cost $2.7 trillion.
The “scheduled expiration is the most significant factor pushing up tax revenues relative to income over the next 10 years,” the CBO said. “The provisions that are scheduled to change will result in higher statutory tax rates, a smaller standard deduction, the return of personal exemptions, and a reduction in the child tax credit,” the report said. “CBO projects that the scheduled changes to those tax provisions would boost annual receipts from individual income taxes relative to GDP by 0.8 percentage points after 2025.”
A November, 2022 analysis of Buchanan’s bill by the Tax Policy Center estimated that the move would lower tax revenue by $3 trillion through 2036. Taxpayers making more than $400,000 would be the biggest beneficiaries of the permanent tax cuts, the group said.