WASHINGTON — The credit union tax exemption appears to have escaped unscathed as Republicans in Congress have released details of a massive rewrite of the U.S. tax code they hope to pass.
"As of now, the credit union tax status remains unchanged in this bill and the bill looks good from a credit union perspective, but this is an ongoing process and change can happen anytime. CUNA will be thoroughly reviewing the bill and remains engaged with both chambers of Congress as this process continues, ensuring policymakers are fully aware of the credit union difference in the financial services marketplace and in the lives of our 110 million members," said CUNA President/CEO Jim Nussle, who formerly served as chair of the House Budget Committee and director of the Office of Management and Budget under the Bush Administration. “We thank the House for taking this first step in needed tax reform, and like those who are pushing toward reform, CUNA, leagues and credit unions are committed to building and supporting a strong middle class in this country."
NAFCU, too, said it will be working closely with Congress as the bill advances."As of now, the credit union tax status remains unchanged in this bill and the bill looks good from a credit union perspective, but this is an ongoing process and change can happen anytime. CUNA will be thoroughly reviewing the bill and remains engaged with both chambers of Congress as this process continues, ensuring policymakers are fully aware of the credit union difference in the financial services marketplace and in the lives of our 110 million members," said CUNA President/CEO Jim Nussle, who formerly served as chair of the House Budget Committee and director of the Office of Management and Budget under the Bush Administration. “We thank the House for taking this first step in needed tax reform, and like those who are pushing toward reform, CUNA, leagues and credit unions are committed to building and supporting a strong middle class in this country."
"NAFCU thanks House Republican leaders for continuing to recognize the economic value the credit union tax exemption provides to the U.S. economy and American consumers," said NAFCU President and CEO Dan Berger. "We’re staying in close contact with lawmakers in both the House and Senate – especially those on the House Ways and Means Committee and Senate Finance Committee – to ensure the preservation of credit unions' tax exemption and to look out for credit union interests as this process continues to unfold."
Changes to Individual Tax Rates The plan that may eventually go to the president for his signature will likely undergo a number of changes as it now works its way through Congress and the heavy lobbying begins. But for now, the tax reform plan includes:
The plan establishes three tax brackets, 12%, 25% and 35%, plus a top-teir rate of 39.6% for the highest incomes. The income levels for those brackets have not yet been disclosed, however.
Changes Affecting the Middle Class
The House proposal would nearly double the standard deduction for middle-class families, expanding it to $24,000 for married couples, from $12,700, and setting it at $12,000 for individuals, from $6,530 today. The plan also calls for increasing the child tax credit to $1,600 from $1,000, plus a $300 credit for each parent and non-child dependent.
No Changes to 401(k) Retirement Plans
After initial reports that the House plan would eliminate tax breaks on 401(k)s, the plan now calls for no changes for both traditional retirement accounts and Roth accounts.
Changes to Mortgage Interest Deduction
Under the proposed plan, existing homeowners can keep the deduction, but future purchases will be capped at $500,000.
Elimination of the Medical Expense Deduction
In the talking points released by the Republicans, the plan calls for eliminating the medical expense deduction, which the Republican backers said will be made up for by an overall reduction in tax rates. Those with high medical expenses, however, could be hit hard.
No Repeal of the Estate Tax–For Now
The proposal will double the estate tax exemption to roughly $11 million, from $5.49 million, but it also calls for the repeal of the estate tax altogether over a six-year phase-in.
Limits to State and Local Tax Deductions
Expected to be a hot issue, the proposed bill calls for limiting the deduction for state and local taxes to property taxes, and then capping that at $10,000.
CUToday
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