[Washington DC] – Today, Congress passed the Tax Cuts and Jobs Act (H.R. 1), which makes major changes to the federal tax code and now awaits President Trump’s signature. The House of Representatives had to revote on the legislation today because of some minor procedural issues. Yesterday, the House approved the conference report largely along party lines by a vote of 227 to 203. The Senate followed by passing the legislation by a vote of 51 to 48. No Democrats in either chamber voted for the bill.
The National Lumber and Building Material Dealers Association (NLBMDA) strongly supports several provisions in the legislation, including lowering the corporate income tax rate to 21 percent, repealing the corporate alternative minimum tax (AMT), and the immediate write-off of capital purchases (excluding land) through 2022. Moreover, although the estate tax was not repealed, the exemption levels were doubled ($11.2 million for individuals, $22.4 million for couples), indexed for inflation, and the step-up in basis was preserved.
The mortgage interest deduction is retained, and still applies to both a primary residence and second home, but with the cap reduced from $1 million to $750,000. Unfortunately, the home equity loan interest deduction is eliminated. NLBMDA fought hard in preserving the mortgage interest deduction and is pleased that it remains a financial incentive for home ownership.
Small businesses structured as pass-through entities (limited partnerships, LLCs, and S corporations) also benefit from the legislation. Instead of being subject to individual income tax rates, a new 20% deduction is established for pass-through income subject to some limitations. NLBMDA supports leveling the playing field for small businesses so they can continue to grow and innovate.
However, NLBMDA is concerned about drastic changes to the state and local tax (SALT) deduction. The bill retains the SALT deduction but replaces the unlimited cap with a $10,000 cap. Taxpayers can still claim property taxes and either income or sales taxes. These changes will harm individuals living in areas with higher local and state taxes, and make it more difficult for businesses in those areas to retain and attract workers.
“The tax code is too complex and riddled with inefficient loopholes,” said NLBMDA Chair Rick Lierz, President and CEO of Franklin Building Supply in Boise, Idaho. “Tax reform if done properly can help the housing industry continue to grow and increase economic growth.”
About the National Lumber and Building Material Dealers Association (NLBMDA)
The National Lumber and Building Material Dealers Association (NLBMDA) represents its members in the national public policy arena, with emphasis on efforts to 1) promote the industry and educate legislators and public policy personnel; and 2) assist legislative, regulatory, standard-setting and other government or private bodies in the development of laws, regulations and policies affecting lumber and building material dealers, its customers and suppliers. Founded in 1917, the association represents over 6,000 member locations operating single or multiple lumber yards and component plants serving homebuilders, subcontractors, general contractors, and consumers in the new construction, repair and remodeling of residential and light commercial.