Major Enacted Tax Legislation, 2010-2019

Fourth Continuing Appropriations for Fiscal Year 2018, Federal Register Printing Savings, Healthy Kids, Health-Related Taxes, and Budgetary Effects

• Delayed implementation of the medical device excise tax and the high cost employer-sponsored health coverage excise tax (“Cadillac” tax) until 2020 and 2022 respectively.

Bipartisan Budget Act of 2018

• Retroactively extended a variety of expired tax provisions through 2018, including tax credits for energy efficient and renewable energy investments, the deduction for qualified tuition and related higher education expenses, and empowerment zone tax incentives.

Tax Cuts and Jobs Act of 2017

• Individual income tax changes (all of which expire after 2025).
  
  • Lowered income tax rates at all levels of taxable income except the lowest bracket and lowered the income range for upper brackets.
  • Repealed personal and dependent exemptions, which equalled$4,150 for each taxpayer, spouse, and eligible dependent in 2017.
  • Child Tax Credit.
    • Increased the credit from $1,000 to $2,000 per qualifying child under 17 with a valid Social Security number.
    • Increased the income threshold at which point the credit phases out to $200,000 for single filers and $400,000 for joint filers.
    • Increased the refundable portion of the credit to 15% of earnings in excess of $2,500 (up to a maximum refundable credit of $1,400).
    • Added an additional nonrefundable credit of $500 for other dependents, such as children aged 17-18, full-time college students aged 19-24, and non-child dependents.
    • Reduced the top corporate income tax rate from 35 percent to 21 percent, and eliminated the graduated corporate rate schedule.
    • Repealed the corporate alternative minimum tax.
    • Repealed the domestic production activities deduction.
    • Extended 100 percent bonus depreciation until 2022 and then phases it out in 20 percentage-point increments through 2027.
    • Increased the Section 179 expensing limit to $1 million for qualified property.
    • Limited the amount of net interest businesses may deduct to 30 percent of earnings before interest, taxes, depreciation and amortization (EBITDA) through 2021; beginning in 2022, the 30 percent restriction applies to earnings before interest and taxes (EBIT).
    • Limited the deduction for net operating losses (NOLs) to 80 percent of a business’s net annual income .
    • Eliminated most NOL carry-backs and extended carry-forwards indefinitely.
    • Shifted the taxation of multinational firms from a worldwide basis to a modified territorial tax system, exempting from taxation the dividends that domestic corporations receive from foreign corporations in which they own at least a 10 percent stake.
    • Imposed a 10.5 percent minimum tax on Global Intangible Low-Taxed Income (GILTI)—foreign profits that exceed a 10 percent return on foreign qualified business asset investments (QBAI), which is a proxy for a firm’s “normal” return on capital.
    • Lowered the corporate tax rate on foreign-derived intangible income (FDII)—income received from exporting products whose intangible assets are held in the United States—to 13.125 percent.
    • Added a new base erosion and anti-abuse tax (BEAT), which taxes at a 10.5 percent rate the sum of a corporation’s taxable income plus all deductible payments made to foreign affiliates; multinational firms pay the higher of their burden under BEAT or the regular corporate tax.
    • Reduced excise taxes on alcoholic beverages through 2019.

    Consolidated Appropriations Act, 2016

    • Delayed the effective date of the high cost employer-sponsored health coverage excise tax (“Cadillac” tax) until 2020, and allowed the tax to be deductible for employers who pay it.
    • Temporarily suspended the medical device excise tax until 2018.
    • Modified and extended certain credits related to renewable energy and energy efficient investments.

    Protecting Americans from Tax Hikes Act of 2015 (PATH)

    • Permanently extended a variety of expiring tax provisions, including the American opportunity tax credit, earnings thresholds for the additional child tax credit and earned income tax credit, the research and experimentation tax credit, and deductibility of sales taxes in lieu of income taxes under the state and local sales tax (SALT) deduction.
    • Extended through 2019 a variety of other expiring tax provisions, including the new markets tax credit, the work opportunity tax credit, and bonus depreciation
    • Extended the disallowance rules under the earned income tax credit to the child tax credit and the American opportunity tax credit, denying future eligibility for 2-10 years for fraudulent applicants.
    • Modified rules relating to section 529 qualified tuition programs and qualified ABLE programs.
    • Permitted rollovers from employer-sponsored retirement plans and traditional IRAs into SIMPLE retirement accounts.
    • Modified rules concerning real estate investment trusts (REITs), in particular, restricted the ability of C corporations to separate assets into a REIT, and increased from 5 percent to 10 percent the amount of stock ownership in a publicly-traded REIT a foreigner may own without incurring liability under the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA).

    Tax Increase Prevention Act of 2014

    • Extended a variety of expiring tax provisions for one year, including the deduction for educator expenses, deductibility of sales taxes in lieu of income taxes under the state and local sales tax (SALT) deduction, the new markets tax credit, the research and experimentation tax credit, and a number of renewable energy and energy efficiency tax credits.

    American Taxpayer Relief Act of 2012

    • Permanently extended certain 2001 tax cuts.
      • Retained 10/15/25/28/33/35 percent tax
        rate structure.
      • Allowed 39.6 percent bracket to return for single filers with AGI over $400,000 ($450,000 for married taxpayers filing jointly).
      • Repealed the limitation on itemized deductions (Pease) and the personal exemption phaseout (PEP) for single taxpayers with AGI under $250,000 ($300,000 for married couples filing jointly).
      • Permanently extended child tax credit (CTC) of $1,000 per child and partial refundability of the credit based on earnings over $10,000, indexed for inflation from 2001. (See below for additional enhancements to the CTC contained in the bill.)
      • Extended marriage penalty relief for the standard deduction, earned income tax credit (EITC), and 15 percent bracket.
      • Extended education tax relief, including increase in the annual contribution limit to Coverdell Education Savings Accounts, extension of exclusion for employer provided education assistance, and increase in the phaseout ranges for the student loan interest deduction.
      • Extended increase in maximum child and dependent care tax credit rate to 35 percent, increase in eligible expenses to $3,000 for one child ($6,000 for two or more), and increase in the start of the phaseout.
      • Extended increase in expense limit and exclusion of adoption related expenses to $10,000 and increase in start of phaseout.
      • Extended $5 million estate and gift tax exemption and top estate tax rate of 40 percent.
      • Retained 0/15 percent tax rates on long-term capital gains and qualified dividends for all taxpayers except those in the top income tax bracket.
      • Allowed 20 percent rate to return for taxpayers in the top bracket.
      • Repealed the 8/18 percent tax rates on capital gains from the sale of assets held for more than five years.
      • Extended the American Opportunity Tax Credit.
      • Reduced the earnings threshold for the refundable portion of the CTC to $3,000, not indexed for inflation.
      • Extended increase in the beginning of the EITC phaseout for married taxpayers filing jointly of $5,000 (indexed from 2008) above the phaseout for single filers and 45 percent phase-in rate for families with three or more children.
      • Increased the AMT exemption amount to $50,600 for single filers and $78,750 for married taxpayers filing jointly in 2012.
      • Indexed the AMT exemption amount, exemption phaseout threshold, and income bracket for inflation beginning in 2013.

      Middle Class Tax Relief and Job Creation Act of 2012

      • Payroll tax holiday extension.
        • Extended 2 percentage point decrease in the employee OASDI tax to 4.2 percent through December 31, 2012.
        • Similarly extended 2 percentage point decrease in the OASDI tax rate for self-employed individuals to 10.4 percent through December 31, 2012.

        Temporary Payroll Tax Cut Continuation Act of 2011

        • Payroll tax holiday extension.
          • Temporarily extended the 2 percentage point decrease in the employee Old Age, Survivors, and Disability Insurance (OASDI) tax rate to 4.2 percent for the first two months of 2012.
          • Similarly extended the 2 percentage point decrease in the OASDI tax rate for self-employed individuals to 10.4 percent for the first $18,350 of self-employment income (one-sixth of the 2012 taxable wage base of $110,100—the equivalent of a 2-month extension).

          Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010

          • Extended 2001 tax cuts through 2012.
            • Retained 10/15/25/28/33/35 percent bracket structure.
            • Extended repeal of overall limitation on itemized deductions (Pease) and the personal exemption phaseout (PEP).
            • Extended $1,000 child tax credit (CTC) and refundability based on income in excess of $10,000 threshold, indexed from 2001. (See below for further modifications to the CTC.)
            • Extended marriage penalty relief for the standard deduction, earned income tax credit (EITC), and 15 percent bracket.
            • Extended education tax relief including increased contribution limit for Coverdell Education Savings Accounts, extension of exclusion for employer provided educational assistance, and extension of student loan interest deduction with increased phaseout ranges.
            • Increased credit rate, eligible expenses, and phaseout for dependent care tax credit.
            • Increased expense limit, exclusion, and beginning of phase out for adoption credit and exclusion of adoption expenses.
            • Extended employer-provided childcare credits.
            • Extended American Opportunity Tax Credit.
            • Extended reduction of earnings threshold for refundable child tax credit to $3,000.
            • Extended increase in EITC rate for families with three or more children and increase in phaseout range for married couples.
            • Increased the AMT exemption to $47,450 for single filers and $72,450 for married couples filing jointly through 2011.
            • Extended the allowance of personal nonrefundable credits against the AMT through 2011.
            • Increased bonus depreciation to 100 percent for 2011 and extended 50 percent bonus depreciation for 2012.
            • Set Section 179 expensing amount at $125,000, with the threshold limit beginning at $500,000 for 2011 and 2012.
            • Reduced the employee Old Age, Survivors, and Disability Insurance (OASDI) tax rate by two percentage points to 4.2 percent for 2011.
            • Similarly reduced the Self Employment Contributions Act (SECA) tax rate by two percentage points to 10.4 percent for 2011

            Patient Protection and Affordable Care Act of 2010 and Health Care and Education Reconciliation Act of 2010

            • Individual premium assistance credits and cost-sharing subsidies.
              • Established refundable premium assistance credit for households between 100 and 400 percent of the federal poverty line to help offset the cost of private health insurance premiums.
              • Established cost-sharing subsidy to reduce annual out-of-pocket cost-sharing for households between 100 and 400 percent of the federal poverty line.
              • Credits and subsidies available beginning in 2014.
              • Established penalty for not maintaining minimum essential coverage to be assessed as an additional Federal tax, phased in beginning in 2014.
              • Imposed excise tax on indoor tanning services beginning July 2010.
              • Imposed an additional 0.9 percent hospital insurance tax on high-income taxpayers beginning in 2013.
              • Imposed 3.8 percent additional Medicare contribution tax on net investment income above a threshold beginning in 2013.
              • Allowed the value of Indian tribe health care benefits to be excluded from gross income.
              • Modified gross income exclusion for certain health care related loan repayment programs for tax years after 2008.
              • Beginning in 2011, increased the additional tax on distributions from a health savings account or Archer medical savings account not used for qualified medical expenses.
              • Increased the floor for the itemized deduction for medical expenses from 7.5 percent to 10 percent for the regular income tax for tax years after 2012. For individuals 65 and older, the floor remains at 7.5 percent through 2016.
              • Extended and expanded adoption credit and income exclusion for employer-provided adoption assistance.
              • Allowed exclusion for employer-provided health insurance for an employee’s child under age 27.
              • Allowed small employers to offer reimbursement for premiums for a health plan offered on an exchange as a qualified benefit under a cafeteria plan beginning in 2014.
              • Starting in 2018, imposed excise tax on insurers offering employer-sponsored health insurance whose aggregate cost exceeds a threshold amount. Disallowed reimbursements of non-prescription medicines through a health flexible spending arrangement or similar plan beginning in 2011.
              • Limited the amount of medical expenses that may be reimbursed as part of a health flexible spending arrangement offered as part of a cafeteria plan starting in 2013.
              • Provided safe harbor for small employers from nondiscrimination requirements for cafeteria plans.
              • Required employers offering health insurance to provide employees with vouchers to purchase health insurance on an exchange beginning in 2014.
              • Imposed a fee on insured and self-insured health plans to go towards the Patient-Centered Outcomes Research Trust Fund beginning October 2012.
              • Imposed an aggregate fee on health insurance providers, apportioned based on market share beginning in 2014.
              • Limited the deduction that health insurance providers may take for remuneration of employees paid after 2012.
              • Limited eligibility for certain expense deductions (Section 833) of certain health organizations beginning in 2010.
              • Provided funding for the Secretary of Health and Human Services (HHS) to promote the creation of qualified nonprofit health insurance issuers.
              • Provided tax exemption for reinsurance entities established for transitional reinsurance program for individual state markets.
              • Established new requirements for charitable hospitals to qualify for tax exempt status.
              • Repealed business deduction for expenses allocable to Medicare Part D subsidy beginning in 2013.
              • Required information reporting on payments to corporations beginning in 2012.
              • Established investment tax credit for medical research through 2010.
              • Imposed a fee on prescription drug manufacturers and importers to go towards the Medicare Part B trust fund starting in 2011.
              • Imposed excise tax on medical device manufacturers beginning in 2013.
              • Modified the cellulosic biofuel producer credit to exclude certain fuels sold or used after 2009.
              • Clarified and codified the application of the economic substance doctrine.
              • Changed timing of estimated corporate tax payments in the third quarter of 2014.
              • Authorized IRS to disclose information from an individual’s tax return to the Secretary of HHS to determine the amount of premium assistance or cost-sharing reduction for which the individual is eligible.
              • Authorized IRS to release information from a taxpayer’s return in order to establish the appropriate amount of Medicare Part B or Part D premium subsidy.
              • Required employers to report on their employees’ Forms W-2 the value of employer-sponsored health insurance starting in 2011.
              • Established requirement for insurers and employers offering insurance to report insurance coverage information to covered individuals and to the IRS beginning in 2014.