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Wednesday, 20 December 2017 15:04

What Made the Cut in the Final Tax Cut Bill

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The Conference Committee in Congress worked last week to meld together the House and Senate versions of their tax cuts bill. Their compromise bill was passed on Tuesday, December 19th, by the House. While the Senate passed it that Wednesday, some last minute changes required Tuesday night by reconciliation rules meant the House had to pass the final bill again on Wednesday, before President Trump signed it into law on Friday, December 22nd. The final product was a little closer to the Senate version of the bill, but included a few last-minute surprises for employers and tax payers alike.
There was a lot of debate regarding certain Employee Benefits, which we noted in last month’s newsletter.  These changes are effective 1/1/2018 unless otherwise noted. Here’s where the final bill came down:
  • Individual Mandate: The mandate, which helps to stabilize the individual market, but is unpopular with those who don’t want coverage, will be repealed effective 1/1/2019.
  • Moving Reimbursements: Neither employers or employees will be allowed to deduct the cost of relocating an employee, during the tax years 2018 through 2025.
  • Education Benefits: Employers may continue to provide up to $5,250 in tax free educational benefits to employees, which were originally on the chopping block with the House bill. In related news, the ability to deduct student loan debt and receive a graduate school tuition waiver tax free will remain intact.
  • Dependent Care Assistance Programs (DCAP): While the House bill proposed to eliminate the $5,000 a year that families can set aide pre-tax to help with dependent care expenses, the final bill makes no changes to DCAPs.
  • Paid Leave Tax Credit: The Senate version included a tax credit for employers who replace at least 50% of compensation for employees out on Family and Medical Leave, and this provision made it through to the final bill. It is unclear whether employers who provide short term disability benefits will also qualify, or only those providing salary continuation.
  • Employer-paid commuting benefits: Employers who pay for parking or public transportation for their employees may no longer deduct the costs. Qualified bicycle commuting expenses will no longer be tax exempt for employees. Employees can still set aside their own money pre-tax. Read more here.
  • Adoption Assistance: Employers may continue to provide tax-favored assistance to employees to assist with adoption.
  • Employee Achievement Awards: Employers who grant service awards to employees upon anniversary and/or retirement will face much stricter limits of what may now be deducted as a business expense.
  • Stricter Meals and Entertainment Definitions: Employee meals and snacks provided for the convenience of the employer will now only be 50% deductible, until 2025 when the deduction is eliminated.
  • Executive Pay: There are significant changes in the final bill regarding rules on Executive Compensation, which are outside the scope of our expertise. Please contact your legal counsel or a qualified compensation consultant for more details on this topic.
Please note these are all just general summaries of provisions of the tax bill and are not intended as tax advice. Please consult your tax counsel for specific details applicable to your organization.
 
For a more general recap of how this new law will affect you or your business, check out this story from Reuters or this one from the New York Times
 
And, as always, please don’t hesitate to contact us with any questions! Please note, this article was updated once the President signed the bill into law.
 
Read 413 times Last modified on Tuesday, 02 January 2018 13:07
Kristen Russell

Kristen founded Fall River Employee Benefits as the culmination of her insurance industry career as an actuary, underwriting executive & consultant. As an Assistant Vice President at Great-West Healthcare (now part of CIGNA), she managed a $1 Billion block of health insurance. She also worked as a Senior Consultant at Reden & Anders, consulting to insurance companies and large employers throughout the country. Ms. Russell received a Bachelor of Science, Business Administration in Actuarial Science, is a member of the American Academy of Actuaries and achieved Fellowship in the Society of Actuaries through a rigorous nine-year series of exams.

Kristen grew up in Iowa but has lived in Colorado since 1993, currently living near our office in the Lower Highlands neighborhood near downtown Denver.  She enjoys bicycling, hiking, traveling and has a special passion for non-profit volunteering. She is married to an incredibly talented photojournalist, has two adult stepdaughters and an adorable Border Collie/Lab mix named Chaco.