Lawmakers in the House released their plan, dubbed the Tax Cuts and Jobs Act, on Thursday. Video provided by Newsy Newslook
Changes to widely used parts of the tax code such as the mortgage deduction and the child tax credit grabbed the headlines when the 429-page bill dubbed the Tax Cuts and Jobs Act was unveiled Thursday by House Republicans.
But a closer look shows there are scores of benefits in the tax code that would be eliminated or become harder to claim under as Congress tries to make taxes lower for more people and simpler to understand.
Here’s a look at 15 tax credits, deductions or exclusions that would change, according to a summary of the bill and the full text. Most of the changes would be effective next year.
Adoption: A tax credit worth up to $13,750 per child would end.
Alimony: To eliminate what Ways and Means Committee documents referred to as a “divorce subsidy,” alimony would no longer be deductible by the payor for decrees issued after 2017. Payments would be excluded from the recipient’s income.
Classroom costs: Teachers could no longer write off the cost of supplies they buy.
College boosters: Sports fans would no longer be able to deduct 80% of the cost of donations to colleges if they are made only to become eligible to buy seats for games or get preferences such as prime parking spots.
Disaster losses: Currently, losses from theft or events such as flood, fire or tornado that exceed 10% of adjusted gross income are deductible. The bill would repeal that deduction, with one exception — disasters given special treatment by a prior act of Congress. A law enacted Sept. 29 increased the deduction for losses caused by Hurricanes Harvey, Irma and Maria, and it was sponsored by Rep. Kevin Brady, R-Texas. Brady, the chairman of the Ways and Means Committee, is also sponsoring the tax overhaul.
Employee achievement awards: Complicated rules that allowed some cash awards from employers to be tax-free to the worker would become taxable.
Employer-provided housing: Rules allowing for some workers to get housing and meals tax-free from their employers would face a new cap of $50,000, and benefits would be phased out for those earning more than $120,000.
Home sale gains: Right now, the gain on the sale of a home is not taxable if it is under $500,000 for joint filers as long as the home was the owner’s primary residence for two of the previous five years. New rules would require a home to be the primary home for five of the past eight years to qualify, and the income exclusion would be phased out for taxpayers with incomes over $500,000.
Major medical costs: The decision to eliminate the deduction for medical expenses exceeding 7.5% of adjusted gross income was one of the bill’s “tough calls,” Brady said Friday. “The call is this: Do we want a tax code that has special provisions that you may need once in your life, or do we want a tax code that lowers rates every year of your life?” he said.
Moving expenses: The cost of moving 50 miles or farther to take a new job had been deductible, but that would end.
Office day care center: Companies could no longer claim a credit of 25% of the expenses for employee child care.
Rare disease research: A credit for 50% of the cost of clinical testing of drugs for rare diseases and conditions would be repealed.
Stadium bonds: State and local governments could still issue bonds for your favorite professional sports teams, but the interest would not be tax-free for bonds issued after Thursday.
Tax preparation fees: The tax code would no longer let you deduct the cost of paying someone to figure out the tax code for you.
Work perks: Employers could no longer deduct the cost of workplace gyms, entertainment, amusement or recreation activities, facilities, or membership dues relating to social purposes. An exception is provided for benefits are treated as taxable compensation for the employee.
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