Bill Overview
Title: TCJA Permanency Act
Description: This bill makes permanent provisions affecting individual and business taxpayers that were enacted in 2017 by the Tax Cuts and Jobs Act and are scheduled to expire at the end of 2025. The bill makes permanent reductions in individual and capital gain tax rates. The bill increases the standard tax deduction for individual taxpayers. It also increases and modifies the child tax credit and raises the contribution base for the tax deduction for charitable contributions. The bill allows additional contributions to ABLE accounts (tax-exempt accounts designed to enable individuals with disabilities to save and pay for disability-related expenses). It exempts from taxation combat zone benefits of members of the Armed Forces serving in the Sinai Peninsula of Egypt and limits the deduction for moving expenses to active duty members of the Armed Forces. Additionally, the bill expands the types of elementary and secondary school expenses eligible for payment from qualified tuition programs (529 programs); lowers to $750,000 the amount of mortgage debt eligible for an interest expense tax deduction; reinstates after 2023 the exclusion of income from the gross income of student loan borrowers for loan debt discharged due to death or total and permanent disability; makes permanent the limitation on the tax deduction for state and local taxes and denies a deduction for foreign real property taxes; makes permanent the tax deduction of the income of certain pass-through business entities; repeals the tax deduction for personal tax exemptions and the exclusion of employer-provided bicycle commuter fringe benefits; terminates certain miscellaneous itemized tax deductions; doubles the estate and gift tax exemption amount; and makes permanent the increase of the alternative minimum tax exemption amount for individual taxpayers.
Sponsors: Rep. Buchanan, Vern [R-FL-16]
Target Audience
Population: Individuals and businesses affected by tax provisions of the TCJA Permanency Act
Estimated Size: 240000000
- The bill affects both individuals and businesses by making permanent provisions from the TCJA, which originally impacted tax rates, deductions, and credits for these groups.
- Individual taxpayers will be affected by the reduction in individual and capital gain tax rates, increasing disposable income for many.
- The modification of the child tax credit and the increase in the standard deduction will impact families, particularly those with children.
- Individuals with disabilities who have ABLE accounts will see changes allowing increased contributions, impacting how they save for disability-related expenses.
- Armed Forces members serving in specific areas and those with specific benefits will be affected by certain exemptions and limitations in taxation.
- The bill impacts the education sector through changes to what expenses can be covered by 529 education savings plans.
- Homeowners will be impacted by the changes to mortgage interest deductions.
- Individuals with student loans may be affected by the reinstatement of exclusion for discharged debt due to death or disability.
- Businesses, particularly those structured as pass-through entities, will be impacted by permanent deductions on income.
- High-income earners and those facing estate taxes will see impacts from increased exemptions.
Reasoning
- The TCJA Permanency Act affects a wide range of individuals and businesses, so diversity in interviews is key.
- Individuals with children and disabilities will be directly impacted by changes in deductions and credits, making their inclusion important.
- Homeowners, military personnel, students, and business owners are other directly affected groups.
- A mix of people with varying incomes will show different perspectives, as the policy influences tax rates broadly.
- The budget considerations mean emphasizing more common situations that affect larger population groups, while still including less common scenarios for completeness.
- The policy's tax implications for businesses and estates mean showing impacts on both small to medium enterprises and larger financial situations.
Simulated Interviews
Teacher (New York, NY)
Age: 30 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 18/20
Statement of Opinion:
- The increased standard deduction and child tax credit will definitely help my family financially.
- As a teacher, being able to contribute more towards my children's 529 plans is a huge relief.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 8 | 6 |
| Year 10 | 8 | 6 |
| Year 20 | 7 | 5 |
Small Business Owner (Houston, TX)
Age: 41 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 20.0 years
Commonness: 15/20
Statement of Opinion:
- The permanent deduction of income for pass-through businesses is beneficial.
- The limitation on state and local tax deductions might slightly affect me, but overall it's positive.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 7 | 5 |
| Year 10 | 7 | 5 |
| Year 20 | 7 | 5 |
College Student (Chicago, IL)
Age: 22 | Gender: female
Wellbeing Before Policy: 4
Duration of Impact: 5.0 years
Commonness: 10/20
Statement of Opinion:
- Reinstating the exclusion of discharged student loans tax is crucial for people like me with debt.
- Temporary relief gives certainty and lowers financial stress in case of unforeseen events like disability.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 4 |
| Year 2 | 5 | 4 |
| Year 3 | 5 | 4 |
| Year 5 | 6 | 5 |
| Year 10 | 5 | 4 |
| Year 20 | 4 | 4 |
Retired Engineer (Los Angeles, CA)
Age: 60 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 13/20
Statement of Opinion:
- Lowering the mortgage interest deduction doesn't impact me as much since my mortgage is already paid.
- The increase in capital gains allow us to withdraw more comfortably from retirement investments.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 7 |
Software Developer (Seattle, WA)
Age: 48 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 0.0 years
Commonness: 17/20
Statement of Opinion:
- I don't have children but the increased standard deduction still benefits my tax filings.
- Doesn’t directly impact my day-to-day as much.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 7 |
| Year 10 | 7 | 7 |
| Year 20 | 7 | 7 |
Military Officer (Phoenix, AZ)
Age: 36 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 12.0 years
Commonness: 8/20
Statement of Opinion:
- Exemption for combat zone benefits is important for us who are deployed.
- Additional child tax credits are a nice bonus for military families.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 7 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 6 | 5 |
Healthcare Worker (Miami, FL)
Age: 29 | Gender: female
Wellbeing Before Policy: 4
Duration of Impact: 5.0 years
Commonness: 12/20
Statement of Opinion:
- The cap on mortgage interest deductions means I'll have to adjust my budget.
- Overall tax relief might make up for it, but it's a tough balance.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 4 | 3 |
| Year 2 | 4 | 3 |
| Year 3 | 4 | 3 |
| Year 5 | 5 | 4 |
| Year 10 | 5 | 4 |
| Year 20 | 5 | 3 |
Attorney (Boston, MA)
Age: 50 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 7/20
Statement of Opinion:
- The increased cap on charitable deductions helps with planning my contributions.
- Not all provisions affect me directly but there are tax planning advantages.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 7 |
Freelance Writer (Denver, CO)
Age: 40 | Gender: other
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 14/20
Statement of Opinion:
- Mortgage deductions see some limitations, impacting housing budget.
- However, pass-through income deductions benefit my freelance earnings.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 7 | 5 |
| Year 10 | 7 | 5 |
| Year 20 | 6 | 5 |
Retired Business Owner (Atlanta, GA)
Age: 72 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 5.0 years
Commonness: 11/20
Statement of Opinion:
- More investment distributions come through with lower capital gains tax sustained.
- Estate tax exemptions give me peace of mind for family wealth planning.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 9 | 8 |
| Year 2 | 9 | 8 |
| Year 3 | 9 | 8 |
| Year 5 | 9 | 8 |
| Year 10 | 9 | 8 |
| Year 20 | 8 | 8 |
Cost Estimates
Year 1: $30000000000 (Low: $25000000000, High: $35000000000)
Year 2: $31000000000 (Low: $26000000000, High: $36000000000)
Year 3: $32000000000 (Low: $27000000000, High: $37000000000)
Year 5: $33000000000 (Low: $28000000000, High: $38000000000)
Year 10: $35000000000 (Low: $30000000000, High: $40000000000)
Year 100: $40000000000 (Low: $35000000000, High: $45000000000)
Key Considerations
- A key risk is the exacerbation of federal budget deficits due to decreased tax revenues.
- The permanency of lower tax rates could reduce fiscal flexibility in responding to future economic crises or needs.
- An increase in economic activity due to discretionary income improvement might help offset some revenue losses, but projections are uncertain.
- Distributional effects favor more affluent individuals and businesses due to sustained lower taxes and increased estate tax exemptions.