The Tax Cuts and Jobs Act (H.R.1)
was approved by Congress on December 20, 2017 and passed largely along party lines. It is expected it be signed by President Trump on January 3, 2018.
is significant for several reasons. It is the first time the tax code has been overhauled in 31 years. It will also be the most significant legislative achievement of the Trump Administration and the 115th Congress to date. NECA has long said that high tax rates and a complex tax code hampers our nation’s competitive standing and hinders our economic growth. The time and money NECA contractors spend to comply with our complex tax code could be—and should be—spent on growing their businesses and creating jobs. That is why comprehensive tax reform needed to be tackled.
NECA has spent the past several years strongly advocating for a tax reform measure that embraces a few basic principles:
- It should be comprehensive
- It should ensure rate parity between different types of businesses
- Repeal the estate tax and the alternative minimum tax
- Make permanent long-standing tax provisions schedule to expire
It is our analysis that the final conference agreement reflects a series of compromises in multiple areas. Many items will greatly benefit NECA contractors and several others could make tax planning challenging for others.
The central tenet of the agreement reduces taxes for corporations from 35 percent down to 21 percent. NECA also fought to ensure all pass-through businesses of all types would be treated fairly under the new tax code. The final bill will give all pass-through firms, including those organized as trusts, a tax deduction of 20 percent, providing those companies with an effective tax rate of 29.6 percent. NECA also fought to successfully include a provision that would allow companies to deduct up to 30 percent of their annual earnings before interest, taxes, depreciation and amortization. Those are some of the wins NECA contractors all over the country will be able to take advantage of in the coming years. This analysis
will provide a detailed overview of all the provisions included in the new law.
View NECA's analysis of HR1