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Congress Passes Tax Bill

On December 20, Congress approved the conference report for H.R. 1, the Tax Cuts and Jobs Act. The Senate passed its version of the tax bill (S. 1) on December 1 (see The Source, 12/1/17); the House passed its version on November 16 (see The Source, 11/17/17). The conference report reconciled differences between the two versions.

Among other provisions, the measure increases the child tax credit to $2,000 per child for tax years 2018-2025. The credit begins to phase out for families at $400,000 in adjusted gross income for joint filers. The refundable portion of the credit also increases from $1,000 to $1,400; in order to claim the credit, taxpayers would have to provide a Social Security Number (SSN) for each eligible child. Current law provides a $1,000 tax credit that begins to phase out for families at $110,000 in adjusted gross income for joint filers. The legislation also includes a $500 refundable credit for dependents other than children; a SSN is not required to claim the credit.

In addition, the bill makes alimony and separate maintenance payments non-deductible by the payer. Currently alimony payments are deducted by the payer and included as income to the recipient. Settlements and fees related to sexual harassment or abuse cases are non-deductible if payments were subject to nondisclosure agreements.

The legislation also eliminates the individual mandate provision of the Patient Protection and Affordable Care Act (P.L. 111-148), which requires individuals to purchase health insurance.

The vote clears the bill for the president’s signature.

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