The House Ways and Means Committee on Thursday approved a Farm Bureau-supported bill that would make permanent several important tax reform provisions that are set to expire after 2025. The Protecting Family and Small Business Tax Cuts Act of 2018 (H.R. 6760) addresses bonus depreciation and the estate tax, among other tax provisions.
The Tax Cuts and Jobs Act, passed in 2017, reduced taxes for all businesses, but only the tax cuts for incorporated businesses operated as C corporations are permanent. The vast majority of farms and ranches, however, file their taxes as sole-proprietors, partnerships or S corporations.
“Failure to [make these provisions permanent] will result in a huge tax increase. In addition, the uncertainty caused by temporary tax provisions makes the already tough business of running a farm or ranch even harder,” American Farm Bureau Federation President Zippy Duvall wrote in a letter urging committee members to support the bill.
The legislation would make permanent the following provisions that are particularly important to farm and ranch businesses:
- Reduced pass-through tax rates and expanded brackets
- The Section 199A new 20 percent business income deduction
- Unlimited bonus depreciation (expensing)
- The doubled estate tax exemption ($11 million person/$22 million couple)
- The increased alternative minimum tax threshold for individuals
The Protecting Family and Small Business Tax Cuts Act of 2018 was introduced as part of a three-bill package dubbed “Tax Reform 2.0” by the House Ways and Means Committee. The other two bills, also approved by the committee on Thursday, are the Family Savings Act of 2018 (H.R. 6757) and the American Innovation Act of 2018 (H.R. 6756).