100th Day of the Legislative Session Approaching: Tax Reform at Forefront
April 12, 2018
The 100th day of the 2018 legislative session is next week. However, negotiations between the chambers continue on key fiscal issues that need to be addressed before adjournment.
The Senate and House each introduced a new tax reform plan this week, but the plans are not in agreement. The House amended HSB 671, originally the Governor’s tax reform bill, with their own tax bill. The bill does not include corporate tax reform and only allows 25% of the 20% Qualified Business Income deduction important to many smaller businesses and manufacturers. The House plan does not eliminate federal deductibility and includes small adjustments to income tax rates for individuals and sales tax modernization. The House Ways and Means committee passed the bill with the tax plan amendment this afternoon on a party line vote. Click here to see a summary of the House amendment.
The Senate tax bill outlined on Thursday in a Senate Ways and Means subcommittee amends SSB 3195 and lays out a five-year tax plan that includes corporate tax reform, full 20% QBI, a more significant tax rate reduction for individuals and corporations and eliminates federal deductibility. The Senate plan also addresses sales tax modernization and sunsets and reduces some tax credits. Click here for a one-page summary document of the Senate tax plan.
Tax reform and the budget are tightly linked, and we have yet to see budget targets for Fiscal Year 2019, as negotiations on tax reform are on the front burner. With two competing proposals between the House and Senate, we expect that neither bill as currently written is in final form. Negotiations between the House and Senate will continue into next week.