Tax Cuts and Jobs Act sent to president’s desk for signature

The House and Senate took final votes today, putting the finishing touches on the Tax Cuts and Jobs Act, a major rewrite of the tax code. The president is expected to sign the bill in early January. The final bill reconciles differences between the original House and Senate versions, with mixed results for the health care community.

First, the final bill will allow health care organizations to continue the use of tax-exempt private-activity bonds. These bonds are an important source of low-cost capital financing and have been used by health care organizations across South Dakota to construct facilities and to increase access to care. The final bill, unfortunately, repeals the exclusion from gross income for interest on advance refunding bonds.

In addition, the bill also maintains provisions enabling individuals and families to deduct qualified medical expenses. In fact, the threshold was lowered from 10 percent to 7.5 percent for two years: 2017 and 2018. Every year, nearly 10 million Americans use this income tax deduction.

The final legislation contained language repealing the ACA individual insurance mandate through removal of the penalty for not having insurance. The provision is delayed and becomes effective January 2019. The consequences of this provision have been widely discussed and estimates are that up to 14 million individuals will lose health care coverage.