Changes to the Tax Cuts and Jobs Act were released late on November 14 by Senator Orrin Hatch. These changes are being made to the original Senate Finance Committee Chairman's mark of the bill.

Some of the changes bring the Senate bill into conformity with similar provisions in the House Bill, while others (such as the removal of the shared responsibility payment beginning in 2019 that has gotten much press coverage) are brand new provisions not seen in the House bill. The revisions also serve to bring the Senate Bill into compliance with the Byrd rule.

The Joint Committee on taxation has released an explanation of these changes.

The revisions include:

Removed from Senate Bill
- Deferred compensation provisions
- Worker classification and reporting revisions
- No expansion of early distribution tax to 457 plans
- Elimination of catch-up contributions for high income employees
In 2019 individual shared responsibility payment will be set to zero
Rates set to 12%, 22%, 24%, 32%, 35% and 38.5% and lower brackets expanded
Child tax credit raised to $2,000
Individual cuts, child credit and passthrough deduction expire at the end of 2025
Passthrough 17.4% deduction
- W2 rule only applies to taxpayers with taxable income over $500,000 ($250,000)
- Same rule for applying deduction to service enterprises
Longer depreciation period for farms opting to get full interest deduction
Qualified film, television and live theatrical production property will qualify for 100% bonus depreciation
ADS period for residential rentals shortened to 30 years
Net operating loss offset limited to 80% of taxable income for years beginning in 2023
No deduction for meals provided for the convenience of the employer
Allows additional ABLE contribution if made by beneficiary up to the lesser of
- Federal poverty level or
- Beneficiary’s compensation for the year
ABLE contributions qualify for Saver’s Credit
Rollovers between 529 plans and ABLE plans
Extend time to contest IRS levy from nine months to two years
Relief for improper levy on retirement account to allow for “late” rollover and return of earnings
Prohibits increase in user fees for installment agreements
Additional year to claim refund for improperly incarcerated individuals
Increase deduction above the line for educator expenses to $500
No deduction for attorneys for litigation costs for expenses paid on contingent fee cases until contingency resolved
New Form 1040SR for simplified return for those over 65
Allow 529 plans to be set up for unborn child
Amortize research expenditures over 5 year period for expenses paid after 2025
Business credit equal to 12.5% of wages paid for employees on FMLA leave if pay at least 50% of regular – and increased if greater (up to 25%) (only applies for 2018 and 2019)
Modifications to low income housing credit
ESBT beneficiaries expanded to include nonresident aliens
ESBT subject to individual (not trust) rules for charitable contributions
Allows some fines to be deducted if show in the nature of restitution
Special rules for replanting of citrus crop following casualty loss
No deduction for sexual harassment or abuse subject to a nondisclosure agreement
Remove rule allowing alternative charity reporting charitable contribution substantiation
Bar recharacterization of Roth IRA contributions/rollovers
Extended period to rollover deemed plan loan distributions
Change stock option/RSU taxation
- Must elect to defer recognition upon vesting (otherwise immediately taxable)
- Can delay no more than 5 years
- Stock can’t be publicly traded
- Additional limitations apply
Some changes will disappear in 2026 if 10 year revenue target met
- Net operating loss deduction 80% rule
- Denial of deduction for meals provided for convenience of employer
- Amortization of research expenditures