Changes to SALT and Mortgage Interest Deduction Included in Senate-Passed Tax Reform Bill
NLBMDA Will Continue Working with House and Senate Leaders to Make Changes to the Final Agreement
[Washington DC] - The Senate passed the Tax Cuts and Jobs Act (H.R. 1) overnight by a vote of 51 to 49. The legislation includes changes to the state and local tax (SALT) deduction and mortgage interest deduction, which could negatively affect housing and residential construction. On November 16, the House of Representatives passed its own tax reform plan.
A conference committee of House and Senate members will now work to reconcile the two bills setting up a final vote in both chambers before the end of the year. President Donald Trump has publicly said he would like the legislation signed into law by Christmas. NLBMDA will continue working with House and Senate leaders to make changes to the final agreement that benefits lumber dealers and the housing industry.
However, NLBMDA remains deeply concerned about changes to the state and local tax (SALT) deduction. The legislation eliminates the itemized deductions for state and local income and sales taxes, but allows individuals to deduct up to $10,000 for property 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 Senate agreement also modifies the mortgage interest deduction by eliminating the home equity loan interest deduction. Under current law, interest payments on up to $100,000 of home equity loan debt is eligible for deduction. In a victory for NLBMDA, the legislation retains the deduction for interest payments on up to $1 million of mortgage debt, as well as the deduction for second homes.
NLBMDA maintains its support for comprehensive tax reform to increase economic growth and opportunity. However, NLBMDA remains concerned that the Senate-passed legislation could harm residential construction and the LBM industry.
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. www.dealer.org.