Early on the morning of December 20, the Senate passed the reconciled tax bill along party lines by a vote of 51-48. While the Senate’s passage was expected, the last-minute changes to the bill weren’t. Two provisions were modified before the final Senate vote, and the bill’s actual name was changed. Formerly known as the Tax Cuts and Jobs Act of 2017 (TCJA), the tax bill was renamed the Tax Reconciliation Act of 2017. The House also passed the revised version of the bill December 20. The next step for the bill to become law is President Donald Trump’s signature, which could potentially occur by the original Republican deadline of Christmas Day.
In addition to the name change, the following provisions were modified to ensure the bill met the Senate’s reconciliation rules that require all measures to relate to federal revenue and spending:
- The reconciled bill includes a provision that would allow Section 529 plan distributions, up to $10,000 per year, to be used for elementary and high school expenses in addition to college-related expenses. The late change to the Senate bill would exclude home-schooling expenses from this tax-advantaged savings plan.
- A college endowment excise-tax exemption for schools with fewer than 500 tuition-paying students was modified prior to the Senate’s passage to remove the “tuition-paying” qualifier. Private colleges and universities would be subject to a 1.4 percent excise tax on net investment income; however, the modified provision only would apply to institutions with all of the following:
- 500 or more students
- More than 50 percent of students located in the United States
- Assets with a value of at least $500,000 per student
Our previous alert includes a more in-depth analysis of several provisions included in the reconciled bill prior to the modifications mentioned above. Visit BKD’s Tax Reform Resource Center for a comparison of the final bill with current tax law and contact Julia or your trusted BKD advisor to discuss how these changes may affect your situation.