Historic Tax Reform Bill Heads to President’s Desk
Provides Tax Cuts to Middle-Class, Opens 1002 Area of ANWR
U.S. Senator Murkowski (R-AK) applauded passage of the Tax Cuts and Jobs Act conference report, comprehensive tax reform that reduces taxes and encourages the economic growth needed to create jobs and generate wealth. The legislation includes a section written by Senator Murkowski, which contains an important step in creating new economic opportunities by opening up the non-wilderness 1002 Area of the Arctic National Wildlife Refuge (ANWR) for responsible energy development. The bill now heads to the President to be signed into law.
“The passage of this bill marks a defining moment in our nation’s history. It’s been 31 years since we last reformed the tax code—and this bill comes not a moment too soon. It’s time we deliver relief, tax cuts, and good jobs for hard-working Americans,” Senator Murkowski said. “The combination of developing more of our natural resources and stimulating America’s economy through tax cuts will create opportunities for our nation and enable Americans to keep more of their hard-earned dollars. It doubles the standard deduction, doubles the child tax credit, and lowers each individual tax bracket. This bill also provides a tremendous opportunity for small businesses. Bottom line, it will be good for our economy, good for jobs and growth, and good for families and businesses.”
As chairman of the Committee on Energy and Natural Resources, Murkowski is the author of the bill’s second title, which opens a small portion of the non-wilderness 1002 Area of ANWR for responsible energy development. It establishes an environmentally protective oil and gas development program with two lease sales required over the next ten years, and puts Alaska and the entire nation on a path toward greater economic prosperity for decades to come.
“This is a watershed moment for Alaska and all of America,” Murkowski said. “We have fought to open the 1002 Area for a very long time, and now, our day has finally arrived. I thank all who kept this effort alive over the decades, especially Ted Stevens and Frank Murkowski, and all who supported this bill. Alaskans can now look forward to our best opportunity to refill the Trans-Alaska Pipeline System, thousands of jobs that will pay better wages, and potentially $60 billion in royalties for our state alone. This is a major victory for Alaska that will help us fulfill the promises of our statehood and give us renewed hope for growth and prosperity.”
Additional Bill Highlights:
- Nearly Doubles the Standard Deduction: For an individual, the standard deduction goes from $6,500 to $12,000. For joint filers, it goes from $13,000 to $24,000.
- Double the Child Tax Credit: The child tax credit is doubled from the current $1,000 to $2,000 and its refundability expanded, allowing more families to benefit.
- Lower Tax Rates: Individual tax rates for middle-income Americans are reduced, which will help taxpayers keep even more of their hard-earned money. To allow America companies a more competitive edge and encourage jobs to return from oversees, the corporate rate is lowered to 21%.
- Small Business:
- Pass-Throughs: This bill enables small business owners to keep more of their hard earned dollars, as less of their income will be taxable. It allows owners of pass-throughs (S-corps, partnerships, limited liability companies and sole proprietorships) to deduct 20% of qualified pass-through income from their overall personal income tax liability.
- Section 179 Expensing: Allows businesses to deduct the full cost of equipment used in a business, rather than depreciating it over many years. The bill increases the section 179 expensing maximum deduction from $500,000 to $1,000,000. This will provide immediate and practical relief to business owners in every industry throughout Alaska, keeping pace with the reality of today’s business environment.
- Small Brewers: Cuts the excise tax on small brewers in half. With dozens of small brewers in Alaska and growing, this will make a positive impact on not only producers but also consumers.
- Home Mortgage Interest Deduction: The bill provides tax relief to current and aspiring homeowners by keeping current law treatment for mortgages taken in acquiring a home but repeals the deduction for interest with respect to home equity loans.
- Death Tax: Doubles the exemption amount for the federal estate, gift, and generation-skipping transfer taxes from $5 million to $10 million. This will provide relief for many Alaskans such as fishermen with vessels, gear, permits, quota, and other business and personal capitalization who wish to pass the family business down.
- Individual Mandate Tax Penalty: Eliminates this burdensome tax penalty levied on people who couldn’t afford insurance or chose not to. By repealing the individual mandate, nothing else about the structure of the Affordable Care Act would be changed, those who qualify for subsidies will still be able to retain them.
- Settlement Trust Improvement Act: Includes an amendment by Senator Murkowski permitting Native Corporations to deduct from their taxable income the amount of any contribution of cash or assets that the Native Corporation makes to a Settlement Trust and to assign certain payments described in the Alaska Native Claims Settlement Act (ANCSA) to a Settlement Trust without having to recognize any associated income, encouraging Native Corporations to make those contributions.
- Education Related Provisions: Maintains all of the tax incentives to pursue postsecondary education that exist in current law. Students and parents will continue to benefit from tax deductions for tuition and student loan interest, exemptions for student tuition waivers, and employer-provided assistance. The Lifetime Learning Credit and American Opportunity Tax credit for higher education expenses, Coverdell and 529 savings plans, and the $250 teacher expenses deduction will all continue to help Alaskans.