Tax reform 2.0 has been announced. Though the outline lacks details and should be considered a work in progress, it’s worth tracking these developing dynamics. The following is an overview of the proposal from the Committee on Ways & Means regarding the initiatives and objectives of Tax Reform 2.0.
Protecting Middle-Class and Small Business Tax Cuts
Make the individual and small business tax cuts enacted under the Tax Cuts and Jobs Act (TCJA) permanent.
Promoting Family Savings
Retirement Savings: Tax Reform 2.0 contains a range of proposals to help local businesses provide retirement plans to their workers—and to help workers participate in those plans so their retirement years are more secure by helping families start saving earlier and to save more throughout their lives.
- Create a new Universal Savings Account to offer a fully flexible savings tool for families.
- Expand 529 Education accounts. Build upon the improvements in the Tax Cuts and Jobs Act so families can also use their education savings to pay for apprenticeship fees to learn a trade, cover the cost of homeschooling, and help pay off student debt.
- New Baby savings. Allow families to access their own retirement accounts penalty-free for expenses when welcoming a new child into the family, whether by birth or adoption. And allowing families to replenish those accounts in the future.
Spurring New Business Innovation
Growing Brand-New Entrepreneurs. Tax Reform 2.0 would focus on incentives for a start-up business to promote innovation, productivity, and job creation.
- Expansion of start-up cost write-off
- Remove barriers to growth
There is a long road ahead before an agreement is reached and a new tax bill introduced. The announcement of Tax Reform 2.0 is in the early stages of development and will be a work in progress. Legislative text and a House Ways and Means Committee markup of the proposal are expected in September.
Nicole McOmber, CPA is a Healthcare CPA and the leader of the Jones & Roth Healthcare Team. She specializes in practice management, advisory services, and tax & accounting services for medical practices and clinics across Oregon & Southwest Washington.