United States – US tax reform achieves important milestones

14. december 2017

US tax reform proposals continue to move quickly through the legislative process and achieved several important milestones this past week, including approval of the House bill, amendments to the Senate proposal, and approval of the Senate proposal by the Senate Finance Committee. Click here for a summary of the potential impacts of tax reform to company mobility and rewards programs, including a side-by-side comparison of the current proposals.

For more details on the latest steps in the legislative process and a detailed comparison of the current proposals, refer to the November 17 Tax News & Views publication.

Updates to provisions impacting Mobility programs
An amendment to the original Senate proposal would “sunset”, after 2025, the changes to the individual side of the tax code included in the original proposal, including marginal rates and changes to credits and deductions as noted below. Absent action by Congress in a later year, these provisions would expire after 2025 and the individual tax rules would revert back to current law. This proposal is in contrast to the current House proposal, in which the individual tax relief provisions are permanent.

Updates to provisions impacting Rewards programs
Several notable provisions impacting rewards programs that were included in the original Senate proposal were removed before its passage by the Finance Committee, including changes affecting the tax treatment of nonqualified deferred compensation, proposed safe harbor rules for worker classification, and restrictions on 401(k) “catch up” contributions for certain employees.  

Affordable Care Act changes
One additional noteworthy provision from the current Senate proposal is the reduction to zero of the penalty imposed on individuals who do not have adequate health insurance coverage (the “individual mandate” enacted in the Patient Protection and Affordable Care Act of 2010). This raises substantial revenue (the result of fewer people receiving tax credits and thereby making more revenue available for tax reform). This amendment would be effective for months beginning after December 31, 2018.

However, it is important to note that the proposal does not include changes to the employer mandate, which requires employers to offer healthcare coverage to 95% of full-time employees. Similarly, we anticipate that employer information reporting requirements (i.e., Forms 1095-B, 1095-C) will remain in-place.

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