WILL HAVE IMPACTS ON ALASKA HOMEOWNERS
The House Ways and Means Committee is finishing its work on tax reform, and the Senate is busy with its own version, both bills should be ready for a vote before the end of the year, and then conference committee.
Both bills are likely to preserve the mortgage interest deduction, at least for properties valued up to $500,000.
In Alaska, that’s a whole lot of houses. And the deduction now taken for municipal taxes are still in play, which means homeowners in Anchorage might not be able to deduct the $2,000 to $7,000 per year that they typically pay the Muni.
Both House and Senate bills have a child tax credit increase ranging from $1,000 to $1,600 per dependent child.
Both increase the standard deduction for single people who earn under $12,000. Those who file jointly and earn under $24,000 would not pay income tax.
At present the two bills diverge in areas that matter to Alaskans:
The House bill eliminates the deduction for medical costs, while the Senate version keeps it. For those who buy Obamacare, that House version is a double whammy, since their out-of-pocket costs run in the many thousands of dollars.
The House version has an adoption credit and a deduction for moving expenses for military members.
It also changes rules governing 501(c)(3) nonprofits, so religious organizations such as churches can endorse political candidates without losing their IRS tax-exempt status. This should make everyone pause, because churches can be anything anymore.
In the Senate version, the top individual tax rate would be 38.6 percent, while in the House version, it tops out at 39.6 percent, a difference that can surely be worked out in conference.
The Senate leaves energy tax subsidies untouched, which means oil drillers can take deductions for drilling costs for things like materials and maintenance.
The Senate version also has a production tax credit for renewable energy and it’s worth billions of dollars. Over in the House, the credits are reduced by more than one third and there are other time-factor limitations.
The Senate bill has a $7,500 tax credit for electric-vehicles.
WHAT’S NEXT: On Monday, Nov. 13, the Senate Finance Committee will take up the bill and the amendment process will continue.