Protecting Family and Small Business Tax Cuts Act of 2018

To amend the Internal Revenue Code of 1986 to make permanent certain provisions of the Tax Cuts and Jobs Act affecting individuals, families, and small businesses. 1. Short title, etc (a) Short title This Act may be cited as the Protecting Family and Small Business Tax Cuts Act of 2018 (b) Amendment of 1986 code Except as otherwise expressly provided, whenever in this Act an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1986. (c) References to the Tax Cuts and Jobs Act Title I of Public Law 115–97 Tax Cuts and Jobs Act (d) Table of contents The table of contents of this Act is as follows: Sec. 1. Short title, etc. Title I—Individual reform made permanent Subtitle A—Rate reform Sec. 101. Modification of rates. Subtitle B—Deduction for qualified business income of pass-thru entities Sec. 111. Deduction for qualified business income. Sec. 112. Limitation on losses for taxpayers other than corporations. Subtitle C—Tax benefits for families and individuals Sec. 121. Increase in standard deduction. Sec. 122. Increase in and modification of child tax credit. Sec. 123. Increased limitation for certain charitable contributions. Sec. 124. Increased contributions to ABLE accounts. Sec. 125. Rollovers to ABLE programs from 529 programs. Sec. 126. Treatment of certain individuals performing services in the Sinai Peninsula of Egypt. Sec. 127. Extension of reduction in threshold for medical expense deduction. Subtitle D—Education Sec. 131. Treatment of student loans discharged on account of death or disability. Subtitle E—Deductions and exclusions Sec. 141. Repeal of deduction for personal exemptions. Sec. 142. Limitation on deduction for State and local, etc. taxes. Sec. 143. Limitation on deduction for qualified residence interest. Sec. 144. Modification of deduction for personal casualty losses. Sec. 145. Termination of miscellaneous itemized deductions. Sec. 146. Repeal of overall limitation on itemized deductions. Sec. 147. Termination of exclusion for qualified bicycle commuting reimbursement. Sec. 148. Qualified moving expense reimbursement exclusion limited to members of Armed Forces. Sec. 149. Deduction for moving expenses limited to members of Armed Forces. Sec. 150. Limitation on wagering losses. Subtitle F—Increase in estate and gift tax exemption Sec. 151. Increase in estate and gift tax exemption. Title II—Increased exemption for Alternative Minimum Tax made permanent Sec. 201. Increased exemption for individuals. I Individual reform made permanent A Rate reform 101. Modification of rates (a) Married individuals filing joint returns and surviving spouses Section 1(a) If taxable income is: The tax is: Not over $19,050 10% of taxable income. Over $19,050 but not over $77,400 $1,905, plus 12% of the excess over $19,050. Over $77,400 but not over $165,000 $8,907, plus 22% of the excess over $77,400. Over $165,000 but not over $315,000 $28,179, plus 24% of the excess over $165,000. Over $315,000 but not over $400,000 $64,179, plus 32% of the excess over $315,000. Over $400,000 but not over $600,000 $91,379, plus 35% of the excess over $400,000. Over $600,000 $161,379, plus 37% of the excess over $600,000. . (b) Head of households Section 1(b) If taxable income is: The tax is: Not over $13,600 10% of taxable income. Over $13,600 but not over $51,800 $1,360, plus 12% of the excess over $13,600. Over $51,800 but not over $82,500 $5,944, plus 22% of the excess over $51,800. Over $82,500 but not over $157,500 $12,698, plus 24% of the excess over $82,500. Over $157,500 but not over $200,000 $30,698, plus 32% of the excess over $157,500. Over $200,000 but not over $500,000 $44,298, plus 35% of the excess over $200,000. Over $500,000 $149,298, plus 37% of the excess over $500,000. . (c) Unmarried individuals other than surviving spouses and heads of household Section 1(c) If taxable income is: The tax is: Not over $9,525 10% of taxable income. Over $9,525 but not over $38,700 $952.50, plus 12% of the excess over $9,525. Over $38,700 but not over $82,500 $4,453.50, plus 22% of the excess over $38,700. Over $82,500 but not over $157,500 $14,089.50, plus 24% of the excess over $82,500. Over $157,500 but not over $200,000 $32,089.50, plus 32% of the excess over $157,500. Over $200,000 but not over $500,000 $45,689.50, plus 35% of the excess over $200,000. Over $500,000 $150,689.50, plus 37% of the excess over $500,000. . (d) Married individuals filing separate returns Section 1(d) If taxable income is: The tax is: Not over $9,525 10% of taxable income. Over $9,525 but not over $38,700 $952.50, plus 12% of the excess over $9,525. Over $38,700 but not over $82,500 $4,453.50, plus 22% of the excess over $38,700. Over $82,500 but not over $157,500 $14,089.50, plus 24% of the excess over $82,500. Over $157,500 but not over $200,000 $32,089.50, plus 32% of the excess over $157,500. Over $200,000 but not over $300,000 $45,689.50, plus 35% of the excess over $200,000. Over $300,000 $80,689.50, plus 37% of the excess over $300,000. . (e) Estates and trusts Section 1(e) If taxable income is: The tax is: Not over $2,550 10% of taxable income. Over $2,550 but not over $9,150 $255, plus 24% of the excess over $2,550. Over $9,150 but not over $12,500 $1,839, plus 35% of the excess over $9,150. Over $12,500 $3,011.50, plus 37% of the excess over $12,500. . (f) Inflation adjustments Section 1(f) (1) by striking 1993 2018 (2) by amending paragraph (2)(A) to read as follows: (A) by increasing the minimum and maximum dollar amounts for each bracket for which a tax is imposed under such table by the cost-of-living adjustment for such calendar year, determined under this subsection for such calendar year by substituting ‘2017’ for ‘2016’ in paragraph (3)(A)(ii), , (3) in paragraph (7)(B), by striking all that precedes (other than with respect to (B) Special rule In the case of a table prescribed in lieu of the table contained in subsection (b), (c), or (d), subparagraph (A) , (4) by striking paragraph (8), and (5) in the heading, by striking Phaseout of marriage penalty in 15-percent bracket; adjustments Adjustments (g) Special rules for certain children with unearned income (1) In general Section 1(g) (g) Special rules for certain children with unearned income (1) In general In the case of any child to whom this subsection applies— (A) Modifications to applicable rate brackets In determining the amount of tax imposed by this section for the taxable year on such child, the income tax table otherwise applicable under this section to such child shall be applied with the following modifications: (i) 24 The maximum taxable income which is taxed at a rate below 24 percent shall not be more than the sum of— (I) the earned taxable income of such child, plus (II) the minimum taxable income for the 24-percent bracket in the table under subsection (e) (as adjusted under subsection (f)) for the taxable year. (ii) 35 The maximum taxable income which is taxed at a rate below 35 percent shall not be more than the sum of— (I) the earned taxable income of such child, plus (II) the minimum taxable income for the 35-percent bracket in the table under subsection (e) (as adjusted under subsection (f)) for the taxable year. (iii) 37 The maximum taxable income which is taxed at a rate below 37 percent shall not be more than the sum of— (I) the earned taxable income of such child, plus (II) the minimum taxable income for the 37-percent bracket in the table under subsection (e) (as adjusted under subsection (f)) for the taxable year. (B) Coordination with capital gains rates For purposes of applying section 1(h)— (i) the maximum zero rate amount shall not be more than the sum of— (I) the earned taxable income of such child, plus (II) the amount in effect under subsection (h)(13) for the taxable year, and (ii) the maximum 15-percent rate amount shall not be more than the sum of— (I) the earned taxable income of such child, plus (II) the amount in effect under subsection (h)(12)(D) for the taxable year. . (2) Earned taxable income Section 1(g)(3) (3) Earned taxable income For purposes of this subsection, the term earned taxable income . (3) Conforming amendment So much of paragraph (5) of section 1(g) as precedes subparagraph (A) thereof is amended to read as follows: (5) Special rules for determining parent eligible to make election For purposes of paragraph (7), the parent referred to in subparagraph (A)(iv) thereof is— . (h) Application of income tax brackets to capital gains brackets Section 1(h) (1) in paragraph (1)(B)(i), by striking 25 percent 22 percent (2) in paragraph (1)(C)(ii)(I), by striking which would (without regard to this paragraph) be taxed at a rate below 39.6 percent below the maximum 15-percent rate amount (3) by adding at the end the following new paragraphs: (12) Maximum 15 For purposes of this subsection, the maximum 15-percent rate amount shall be— (A) in the case of a joint return or surviving spouse (as defined in section 2(a)), $479,000 ( ½ (B) in the case of an individual who is the head of a household (as defined in section 2(b)), $452,400, (C) in the case of any other individual (other than an estate or trust), $425,800, and (D) in the case of an estate or trust, $12,700. (13) Determination of 0 In the case of any estate or trust, paragraph (1)(B) shall be applied by treating the amount determined in clause (i) thereof as being equal to $2,600. (14) Inflation adjustment (A) In general In the case of any taxable year beginning after 2018, each of the dollar amounts in paragraphs (12) and (13) shall be increased by an amount equal to— (i) such dollar amount, multiplied by (ii) the cost-of-living adjustment determined under subsection (f)(3) for the calendar year in which the taxable year begins, determined by substituting calendar year 2017 calendar year 2016 (B) Rounding If any increase under subparagraph (A) is not a multiple of $50, such increase shall be rounded to the next lowest multiple of $50. . (i) Application of section 15 (1) In general Subsection (a) of section 15 If any rate of tax In the case of a corporation, if any rate of tax (2) Conforming amendments (A) Section 15 (B) Section 6013(c) sections 15, 443, and 7851(a)(1)(A) section 443 (C) The heading of section 15 on corporations Effect of changes (D) The table of sections for part III of subchapter A of chapter 1 Sec. 15. Effect of changes on corporations. . (j) Conforming amendments (1) Section 1 (2) Section 3402(q)(1) third lowest fourth lowest (k) Effective date (1) In general The amendments made by this section shall apply to taxable years beginning after December 31, 2017. (2) Application of section 15 Section 15 (A) section 1(j) of such Code (as in effect before its repeal by this section), or (B) any amendment made by this Act. B Deduction for qualified business income of pass-thru entities 111. Deduction for qualified business income (a) In general Section 199A (b) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2017. 112. Limitation on losses for taxpayers other than corporations (a) In general Section 461 (1) by amending subsection (l)(1) to read as follows: (1) Limitation In the case of a taxpayer other than a corporation, any excess business loss of the taxpayer for the taxable year shall not be allowed. , and (2) by striking subsection (j) and redesignating subsections (k) and (l) (as amended) as subsections (j) and (k), respectively. (b) Conforming amendments (1) Section 58(a)(2)(A) 461(k) 461(j) (2) Section 461(i)(4) subsection (k) subsection (j) (3) Section 464(d)(2)(B)(iii) section 461(k)(2)(E) section 461(j)(2)(E) (4) Subparagraphs (B) and (C) of section 1256(e)(3) are each amended by striking section 461(k)(4) section 461(j)(4) (c) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2017. C Tax benefits for families and individuals 121. Increase in standard deduction (a) In general Section 63(c)(2) (1) by striking $4,400 $18,000 (2) by striking $3,000 $12,000 (b) Inflation adjustment Section 63(c)(4) (4) Adjustments for inflation (A) In general In the case of a taxable year beginning after 2018, each dollar amount in paragraph (2)(B), (2)(C), or (5) or subsection (f) shall be increased by an amount equal to— (i) such dollar amount, multiplied by (ii) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting for 2016 (I) in the case of the dollar amounts contained in paragraph (2)(B) or (2)(C), 2017 (II) in the case of the dollar amounts contained in paragraph (5)(A) or subsection (f), 1987 (III) in the case of the dollar amount contained in paragraph (5)(B), 1997 (B) Rounding If any increase under subparagraph (A) is not a multiple of $50, such increase shall be rounded to the next lowest multiple of $50. . (c) Conforming amendments (1) Section 1(f)(7)(A) section 63(c)(4), (2) Section 1(f)(7)(B) sections 63(c)(4) and section (3) Section 63(c) (d) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2017. 122. Increase in and modification of child tax credit (a) In general Section 24 (a) Allowance of credit There shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the sum of— (1) $2,000 for each qualifying child of the taxpayer, and (2) $500 for each qualifying dependent (other than a qualifying child) of the taxpayer. (b) Limitation based on adjusted gross income The amount of the credit allowable under subsection (a) shall be reduced (but not below zero) by $50 for each $1,000 (or fraction thereof) by which the taxpayer's modified adjusted gross income exceeds $400,000 in the case of a joint return ($200,000 in any other case). For purposes of the preceding sentence, the term “modified adjusted gross income” means adjusted gross income increased by any amount excluded from gross income under section 911, 931, or 933. (c) Qualifying child; qualifying dependent For purposes of this section— (1) Qualifying child The term qualifying child (A) who is a qualifying child (as defined in section 7706(c)) of the taxpayer, (B) who has not attained age 17 at the close of the calendar year in which the taxable year of the taxpayer begins, and (C) whose name and social security number are included on the taxpayer’s return of tax for the taxable year. (2) Qualifying dependent The term qualifying dependent resident of the United States (3) Social security number defined For purposes of this subsection, the term social security number (A) to a citizen of the United States or pursuant to subclause (I) (or that portion of subclause (III) that relates to subclause (I)) of section 205(c)(2)(B)(i) of the Social Security Act, and (B) on or before the due date of filing such return. . (b) Portion of credit refundable (1) In general Section 24(d)(1)(A) (A) the credit which would be allowed under this section determined— (i) by substituting $1,400 $2,000 (ii) without regard to subsection (a)(2), and (iii) without regard to this subsection and the limitation under section 26(a), or . (2) Modification of limitation based on earned income Section 24(d)(1)(B)(i) $3,000 $2,500 (3) Inflation adjustment Section 24(d) (4) Adjustment for inflation (A) In general In the case of a taxable year beginning after 2018, the $1,400 amount in paragraph (1)(A)(i) shall be increased by an amount equal to— (i) such dollar amount, multiplied by (ii) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting 2017 2016 (B) Rounding If any increase under subparagraph (A) is not a multiple of $100, such increase shall be rounded to the next lowest multiple of $100. (C) Limitation The amount of any increase under subparagraph (A) (after the application of subparagraph (B)) shall not exceed $600. . (4) Conforming amendments (A) Section 24(e) (e) Taxpayer identification requirement No credit shall be allowed under this section if the identifying number of the taxpayer was issued after the due date for filing the return of tax for the taxable year. . (B) Section 24 (c) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2017. 123. Increased limitation for certain charitable contributions (a) In general Section 170(b)(1)(G) (G) Cash contributions (i) In general Any contribution of cash to an organization described in subparagraph (A) shall be allowed to the extent that the aggregate of such contributions does not exceed 60 percent of the taxpayer’s contribution base for the taxable year, reduced by the aggregate amount of contributions allowable under subparagraph (A) for such taxpayer for such year. (ii) Carryover If the aggregate amount of contributions described in clause (i) exceeds the limitation of clause (i), such excess shall be treated (in a manner consistent with the rules of subsection (d)(1)) as a charitable contribution to which clause (i) applies in each of the 5 succeeding years in order of time. . (b) Coordination with limitations on other contributions (1) Coordination with 50 percent limitation Section 170(b)(1)(A) Any charitable contribution Any charitable contribution other than a contribution described in subparagraph (G) (2) Coordination with 30 percent limitation Section 170(b)(1)(B) (A) in the matter preceding clause (i), by striking to which subparagraph (A) applies to which subparagraph (A) or (G) applies (B) by amending clause (ii) to read as follows: (ii) the excess of— (I) the sum of 50 percent of the taxpayer’s contribution base for the taxable year, plus so much of the amount of charitable contributions allowable under subparagraph (G) as does not exceed 10 percent of such contribution base, over (II) the amount of charitable contributions allowable under subparagraphs (A) and (G) (determined without regard to subparagraph (C)). , and (C) in the matter following clause (ii), by striking (to which subparagraph (A) does not apply) (to which neither subparagraph (A) nor (G) applies) (c) Effective date The amendments made by this section shall apply to contributions made in taxable years beginning after December 31, 2017. 124. Increased contributions to ABLE accounts (a) Increase in limitation for contributions from compensation of individuals with disabilities Section 529A(b)(2)(B)(ii) before January 1, 2026 (b) Allowance of saver’s credit for ABLE contributions by account holder Section 25B(d)(1)(D) made before January 1, 2026, (c) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2017. 125. Rollovers to ABLE programs from 529 programs (a) In general Section 529(c)(3)(C)(i)(III) before January 1, 2026, (b) Effective date The amendments made by this section shall apply to distributions after December 31, 2017. 126. Treatment of certain individuals performing services in the Sinai Peninsula of Egypt (a) In general Section 112(c)(2) (1) by striking means any area means— (A) any area , and (2) by striking the period at the end and inserting , and (B) the Sinai Peninsula of Egypt. . (b) Period of treatment Section 112(c)(3) (1) by striking only if performed only if— (A) in the case of an area described in paragraph (2)(A), such service is performed , and (2) by striking the period at the end and inserting , and (B) in the case of the area described in paragraph (2)(B), such service is performed during any period with respect to which one or more members of the Armed Forces of the United States are entitled to special pay under section 310 of title 37, United States Code (relating to special pay; duty subject to hostile fire or imminent danger), for service performed in such area. . (c) Conforming amendment The Tax Cuts and Jobs Act is amended by striking section 11026. (d) Effective date The amendments made by this section shall apply with respect to services performed on or after the date of the enactment of this Act. 127. Extension of reduction in threshold for medical expense deduction (a) In general Section 213(a) (7.5 percent in the case of any taxable year beginning after December 31, 2018, and ending before January 1, 2021) 10 percent (b) Conforming amendments (1) Section 56(b)(1) (2) Section 213 (c) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2018. D Education 131. Treatment of student loans discharged on account of death or disability (a) In general Section 108(f)(5) after December 31, 2017, and before January 1, 2026 (b) Effective date The amendment made by this section shall apply to discharges of indebtedness after December 31, 2017. E Deductions and exclusions 141. Repeal of deduction for personal exemptions (a) In general Part V of subchapter B of chapter 1 is hereby repealed. (b) Definition of dependent retained Section 152, prior to the repeal made by subsection (a), is hereby redesignated as section 7706 and moved to the end of chapter 79. (c) Application to trusts and estates Section 642(b) (1) in paragraph (2)(C)— (A) in clause (i), by striking the exemption amount under section 151(d) the dollar amount in effect under section 7706(d)(1)(B). (B) by striking clause (iii), (2) by striking paragraph (3), and (3) by striking Deduction For Personal Exemption Basic Deduction (d) Application to nonresident aliens Section 873(b) (e) Modification of return requirement (1) In general Section 6012(a)(1) (1) Every individual who has gross income for the taxable year, except that a return shall not be required of— (A) an individual who is not married (determined by applying section 7703) and who has gross income for the taxable year which does not exceed the standard deduction applicable to such individual for such taxable year under section 63, or (B) an individual entitled to make a joint return if— (i) the gross income of such individual, when combined with the gross income of such individual’s spouse, for the taxable year does not exceed the standard deduction which would be applicable for such taxable year under section 63 if such individual and such individual’s spouse made a joint return, (ii) such individual’s spouse does not make a separate return, and (iii) neither such individual nor such individual’s spouse is an individual described in section 63(c)(4) who has income (other than earned income) in excess of the amount in effect under section 63(c)(4)(A). . (2) Bankruptcy estates Section 6012(a)(8) the sum of the exemption amount plus the basic standard deduction under section 63(c)(2)(C) the standard deduction in effect under section 63(c)(1)(B) (3) Conforming amendment Section 6012 (f) Conforming amendments (1) Section 1(f)(7), as amended by section 121, (A) by striking , section 68(b)(2) or section 151(d)(4) or section 68(b)(2) (B) by striking (other than with respect to section 151(d)(4)(A)) (2) Section 1(g)(5)(A) section 152(e) section 7706(e) (3) Section 2(a)(1)(B) (A) by striking section 152 section 7706 (B) by striking with respect to whom the taxpayer is entitled to a deduction for the taxable year under section 151 whose TIN is included on the taxpayer’s return of tax for the taxable year (4) Section 2(b)(1)(A)(i) (A) in the matter preceding subclause (I)— (i) by striking section 152(c) section 7706(c) (ii) by striking section 152(e) section 7706(e) (B) in subclause (II), by striking section 152(b)(2) or 152(b)(3) section 7706(b)(2) or 7706(b)(3) (5) Section 2(b)(1)(A)(ii) if the taxpayer is entitled to a deduction for the taxable year for such person under section 151 if the taxpayer included such person’s TIN on the return of tax for the taxable year (6) Section 2(b)(1)(B) if the taxpayer is entitled to a deduction for the taxable year for such father or mother under section 151 if such father or mother is a dependent of the taxpayer and the taxpayer included such father or mother’s TIN on the return of tax for the taxable year (7) Section 2(b)(3)(B) (A) by striking section 152(d)(2) section 7706(d)(2) (B) by striking section 152(d) section 7706(d) (8) Section 21(b)(1)(A) section 152(a)(1) section 7706(a)(1) (9) Section 21(b)(1)(B) section 152 section 7706 (10) Section 21(e)(5)(A) section 152(e) section 7706(e) (11) Section 21(e)(5) section 152(e)(4)(A) section 7706(e)(4)(A) (12) Section 21(e)(6)(A) (A) who is a dependent of either the taxpayer or the taxpayer’s spouse for the taxable year, or . (13) Section 21(e)(6)(B) section 152(f)(1) section 7706(f)(1) (14) Section 25A(f)(1)(A)(iii) with respect to whom the taxpayer is allowed a deduction under section 151 (15) Section 25A(g)(3) If a deduction under section 151 with respect to an individual is allowed to another taxpayer If an individual is a dependent of another taxpayer (16) Section 25B(c)(2)(A) any individual with respect to whom a deduction under section 151 is allowed to another taxpayer any individual who is a dependent of another taxpayer (17) Section 25B(c)(2)(B) section 152(f)(2) section 7706(f)(2) (18) Section 32(c)(1)(A)(ii)(III) a dependent for whom a deduction is allowable under section 151 to another taxpayer a dependent of another taxpayer (19) Section 32(c)(3) (A) in subparagraph (A)— (i) by striking section 152(c) section 7706(c) (ii) by striking section 152(e) section 7706(e) (B) in subparagraph (B), by striking unless the taxpayer is entitled to a deduction under section 151 for such taxable year with respect to such individual (or would be so entitled but for section 152(e) if such individual is not treated as a dependent of such taxpayer for such taxable year by reason of section 7706(b)(2) (determined without regard to section 7706(e)) (C) in subparagraph (C), by striking section 152(c)(1)(B) section 7706(c)(1)(B) (20) Section 35(d)(1)(B) with respect to whom the taxpayer is entitled to a deduction under section 151(c) if the taxpayer included such person’s TIN on the return of tax for the taxable year (21) Section 35(d)(2) (A) by striking section 152(e) section 7706(e) (B) by striking section 152(e)(4)(A) section 7706(e)(4)(A) (22) Section 36B(b)(2)(A) section 152 section 7706 (23) Section 36B(b)(3)(B) unless a deduction is allowed under section 151 for the taxable year with respect to a dependent unless the taxpayer has a dependent for the taxable year (and the taxpayer included such dependent’s TIN on the return of tax for the taxable year) (24) Section 36B(c)(1)(D) with respect to whom a deduction under section 151 is allowable to another taxpayer who is a dependent of another taxpayer (25) Section 36B(d)(1) equal to the number of individuals for whom the taxpayer is allowed a deduction under section 151 (relating to allowance of deduction for personal exemptions) for the taxable year the sum of 1 (2 in the case of a joint return) plus the number of individuals who are dependents of the taxpayer for the taxable year (26) Section 36B(e)(1) 1 or more individuals for whom a taxpayer is allowed a deduction under section 151 (relating to allowance of deduction for personal exemptions) for the taxable year (including the taxpayer or his spouse) 1 or more of the taxpayer, the taxpayer’s spouse, or any dependent of the taxpayer (27) Section 42(i)(3)(D)(ii)(I) section 152 section 7706 (28) Section 45R(e)(1)(A)(iv) (A) by striking section 152(d)(2) section 7706(d)(2) (B) by striking section 152(d)(2)(H) section 7706(d)(2)(H) (29) Section 51(i)(1) (A) by striking section 152(d)(2) section 7706(d)(2) (B) by striking section 152(d)(2)(H) section 7706(d)(2)(H) (30) Section 56(b)(1)(D), as amended by the preceding provisions of this Act, is amended— (A) by striking , the deduction for personal exemptions under section 151, (B) by striking and deduction for personal exemptions (31) Section 63(b) and (32) Section 63(c), as amended by section 121, (33) Section 63(c)(4), as redesignated, is amended— (A) by striking with respect to whom a deduction under section 151 is allowable to who is a dependent of (B) by striking certain (34) Section 63(d) and (35) Section 63(f) (f) Additional standard deduction for the aged and blind (1) In general For purposes of subsection (c)(1), the additional standard deduction is, with respect to a taxpayer for a taxable year, the sum of— (A) $600 if the taxpayer has attained age 65 before the close of such taxable year, and (B) $600 if the taxpayer is blind as of the close of such taxable year. (2) Application to married individuals (A) Joint returns In the case of a joint return, paragraph (1) shall be applied separately with respect to each spouse. (B) Certain married individuals filing separately In the case of a married individual filing a separate return, if— (i) the spouse of such individual has no gross income for the calendar year in which the taxable year of such individual begins, (ii) such spouse is not the dependent of another taxpayer for a taxable year beginning in the calendar year in which such individual’s taxable year begins, and (iii) the TIN of such spouse is included on such individual’s return of tax for the taxable year, the additional standard deduction shall be determined in the same manner as if such individual and such individual’s spouse filed a joint return. . (36) Section 63(f)(3) paragraphs (1) and (2) subparagraphs (A) and (B) of paragraph (1) (37) Section 72(t)(2)(D)(i)(III) section 152 section 7706 (38) Section 72(t)(7)(A)(iii) section 152(f)(1) section 7706(f)(1) (39) Section 105(b) (A) by striking as defined in section 152 as defined in section 7706 (B) by striking section 152(f)(1) section 7706(f)(1) (C) by striking section 152(e) section 7706(e) (40) Section 105(c)(1) section 152 section 7706 (41) Section 125(e)(1)(D) section 152 section 7706 (42) Section 129(c)(1) (1) who is a dependent of such employee or of such employee’s spouse, or . (43) Section 129(c)(2) section 152(f)(1) section 7706(f)(1) (44) Section 132(h)(2)(B) (A) by striking section 152(f)(1) section 7706(f)(1) (B) by striking section 152(e) section 7706(e) (45) Section 139D(c)(5) section 152 section 7706 (46) Section 139E(c)(2) section 152 section 7706 (47) Section 162(l)(1)(D) section 152(f)(1) section 7706(f)(1) (48) Section 170(g)(1) section 152 section 7706 (49) Section 170(g)(3) section 152(d)(2) section 7706(d)(2) (50) Section 172(d) (51) Section 213(a) section 152 section 7706 (52) Section 213(d)(5) section 152(e) section 7706(e) (53) Section 213(d)(11) section 152(d)(2) section 7706(d)(2) (54) Section 220(b)(6) with respect to whom a deduction under section 151 is allowable to who is a dependent of (55) Section 220(d)(2)(A) section 152 section 7706 (56) Section 221(d)(4) section 152 section 7706 (57) Section 222(c)(3) with respect to whom a deduction under section 151 is allowable to who is a dependent of (58) Section 223(b)(6) with respect to whom a deduction under section 151 is allowable to who is a dependent of (59) Section 223(d)(2)(A) section 152 section 7706 (60) Section 401(h) section 152(f)(1) section 7706(f)(1) (61) Section 402(l)(4)(D) section 152 section 7706 (62) Section 409A(a)(2)(B)(ii)(I) section 152(a) section 7706(a) (63) Section 441(f)(2)(B)(iii) , but only the adjusted amount of the deductions for personal exemptions as described in section 443(c) (64) Section 443 (A) in subsection (b)— (i) by striking paragraph (3), and (ii) by striking modified taxable income taxable income (B) by striking subsection (c), and (C) by redesignating subsections (d) and (e) as subsections (c) and (d), respectively. (65) Section 501(c)(9) section 152(f)(1) section 7706(f)(1) (66) Section 529(e)(2)(B) section 152(d)(2) section 7706(d)(2) (67) Section 529A(e)(4) (A) by striking section 152(d)(2)(B) section 7706(d)(2)(B) (B) by striking section 152(f)(1)(B) section 7706(f)(1)(B) (68) Section 643(a)(2) (A) by striking (relating to deduction for personal exemptions) (relating to basic deduction) (B) by striking Deduction for personal exemption Basic deduction (69) Section 703(a)(2) (70) Section 874 (71) Section 891 under section 151 and (72) Section 904(b)(1) (1) Deduction for estates and trusts For purposes of subsection (a), the taxable income of an estate or trust shall be computed without any deduction under section 642(b). . (73) Section 931(b)(1) (1) any deduction from gross income, or . (74) Section 933 (A) by striking as a deduction from his gross income any deductions (other than the deduction under section 151, relating to personal exemptions) any deduction from gross income (B) by striking as a deduction from his gross income any deductions (other than the deduction for personal exemptions under section 151) any deduction from gross income (75) Section 1212(b)(2)(B)(ii) (ii) in the case of an estate or trust, the deduction allowed for such year under section 642(b). . (76) Section 1361(c)(1)(C) section 152(f)(1)(C) section 7706(f)(1)(C) (77) Section 1402(a) (78) Section 2032A(c)(7)(D) section 152(f)(2) section 7706(f)(2) (79) Section 3402(m)(1) other than the deductions referred to in section 151 and (80) Section 3402(r)(2) the sum of— the basic standard deduction (as defined in section 63(c)) for an individual to whom section 63(c)(2)(C) applies. (81) Section 5000A(b)(3)(A) section 152 section 7706 (82) Section 5000A(c)(4)(A) the number of individuals for whom the taxpayer is allowed a deduction under section 151 (relating to allowance of deduction for personal exemptions) for the taxable year the sum of 1 (2 in the case of a joint return) plus the number of the taxpayer’s dependents for the taxable year (83) Section 6013(b)(3)(A) (A) by striking had less than the exemption amount of gross income had no gross income (B) by striking had gross income of the exemption amount or more had any gross income (C) by striking the flush language following clause (iii). (84) Section 6014(a) section 6012(a)(1)(C)(i) section 6012(a)(1)(B)(iii) (85) Section 6014(b)(4) 63(c)(5) 63(c)(4) (86) Section 6103(l)(21)(A)(iii) (iii) the number of the taxpayer’s dependents, . (87) Section 6213(g)(2)(H) section 21 (relating to expenses for household and dependent care services necessary for gainful employment) or section 151 (relating to allowance of deductions for personal exemptions) subsection (a)(1)(B), (b)(1)(A)(ii), or (b)(1)(B) of section 2 or section 21, 35(d)(1)(B), 36B(b)(3)(B), or 63(f)(2)(B) (88) Section 6334(d) (A) by amending paragraph (2) to read as follows: (2) Exempt amount (A) In general For purposes of paragraph (1), the term exempt amount (i) the sum of the amount determined under subparagraph (B) and the standard deduction, divided by (ii) 52. (B) Amount determined For purposes of subparagraph (A), the amount determined under this subparagraph is— (i) the dollar amount in effect under section 7706(d)(1)(B), multiplied by (ii) the number of the taxpayer’s dependents for the taxable year in which the levy occurs. (C) Verified statement Unless the taxpayer submits to the Secretary a written and properly verified statement specifying the facts necessary to determine the proper amount under subparagraph (A), subparagraph (A) shall be applied as if the taxpayer were a married individual filing a separate return with no dependents. , and (B) by striking paragraph (4). (89) Section 7702B(f)(2)(C)(iii) section 152(d)(2) section 7706(d)(2) (90) Section 7703(a) part V of subchapter B of chapter 1 and (91) Section 7703(b)(1) section 152(f)(1)) section 7706(f)(1)) who is a dependent of such individual for the taxable year (or would be but for section 7706(e)), (92) Section 7706(a), as redesignated by this section, is amended by striking this subtitle subtitle A (93) (A) Section 7706(d)(1)(B), as redesignated by this section, is amended by striking the exemption amount (as defined in section 151(d)) $4,150 (B) Section 7706(d), as redesignated by this section, is amended by adding at the end the following new paragraph: (6) Inflation adjustment In the case of any taxable year beginning in a calendar year beginning after 2018, the $4,150 amount in paragraph (1)(B) shall be increased by an amount equal to— (A) such dollar amount, multiplied by (B) the cost-of-living adjustment determined under section 1(c)(2)(A) for the calendar year in which such taxable year begins, determined by substituting calendar year 2017 calendar year 2016 If any increase determined under the preceding sentence is not a multiple of $50, such increase shall be rounded to the next lowest multiple of $50. . (94) Section 7706(e)(3), as redesignated by this section, is amended by inserting (as in effect before its repeal) section 151 (95) Section 7706(f)(6)(B), as redesignated by this section, is amended by striking clause (i) and designating clauses (ii), (iii), and (iv) as clauses (i), (ii), and (iii), respectively. (96) The table of parts for subchapter B of chapter 1 (97) The table of sections for chapter 79 Sec. 7706. Dependent defined. . (g) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2017. 142. Limitation on deduction for State and local, etc. taxes (a) In general Section 164(b)(6) The preceding sentence Make this match technicals. (6) Limitation on individual deductions In the case of an individual— (A) no deduction shall be allowed under this chapter for foreign real property taxes paid or accrued during the taxable year, and (B) the aggregate amount of the deduction allowed under this chapter for taxes described in paragraphs (1), (2), and (3) of subsection (a) and paragraph (5) of this subsection paid or accrued by the taxpayer during the taxable year shall not exceed $10,000 ($5,000 in the case of a married individual filing a separate return). . (b) Effective date The amendment made by this section shall apply to taxable years beginning after December 31, 2017. 143. Limitation on deduction for qualified residence interest (a) Interest on home equity indebtedness Section 163(h)(3)(A) during the taxable year on residence of the taxpayer. during the taxable year on acquisition indebtedness with respect to any qualified residence of the taxpayer. (b) Limitation on acquisition indebtedness Section 163(h)(3)(B)(ii) (ii) Limitation The aggregate amount treated as acquisition indebtedness for any period shall not exceed the excess (if any) of— (I) $750,00 ($375,000, in the case of a married individual filing a separate return), over (II) the sum of the aggregate outstanding pre-October 13, 1987, indebtedness (as defined in subparagraph (D)) plus the aggregate outstanding pre-December 15, 2017, indebtedness (as defined in subparagraph (C)). . (c) Treatment of indebtedness incurred on or before December 15, 2017 Section 163(h)(3)(C) (C) Treatment of indebtedness incurred on or before December 15, 2017 (i) In general In the case of any pre-December 15, 2017, indebtedness, subparagraph (B)(ii) shall not apply and the aggregate amount of such indebtedness treated as acquisition indebtedness for any period shall not exceed the excess (if any) of— (I) $1,000,000 ($500,000, in the case of a married individual filing a separate return), over (II) the aggregate outstanding pre-October 13, 1987, indebtedness (as defined in subparagraph (D)). (ii) Pre-December 15, 2017, indebtedness For purposes of this subparagraph— (I) In general The term pre-December 15, 2017, indebtedness (II) Binding written contract exception In the case of a taxpayer who enters into a written binding contract before December 15, 2017, to close on the purchase of a principal residence before January 1, 2018, and who purchases such residence before April 1, 2018, the term pre-December 15, 2017, indebtedness (iii) Refinancing indebtedness (I) In general In the case of any indebtedness which is incurred to refinance indebtedness, such refinanced indebtedness shall be treated for purposes of this subparagraph as incurred on the date that the original indebtedness was incurred to the extent the amount of the indebtedness resulting from such refinancing does not exceed the amount of the refinanced indebtedness. (II) Limitation on period of refinancing Subclause (I) shall not apply to any indebtedness after the expiration of the term of the original indebtedness or, if the principal of such original indebtedness is not amortized over its term, the expiration of the term of the 1st refinancing of such indebtedness (or if earlier, the date which is 30 years after the date of such 1st refinancing). . (d) Coordination with treatment of indebtedness incurred on or before October 13, 1987 Section 163(h)(3)(D) (1) by striking clause (ii) and redesignating clauses (iii) and (iv) as clauses (ii) and (iii), respectively, and (2) in clause (iii) (as so redesignated)— (A) by striking clause (iii) clause (ii) (B) by striking clause (iii)(I) clause (ii)(I) (e) Coordination with exclusion of income from discharge of indebtedness Section 108(h)(2) $1,000,000 ($500,000 $750,000 ($375,000 (f) Conforming amendment Section 163(h)(3) (g) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2017. 144. Modification of deduction for personal casualty losses (a) In general Section 165(h)(5)(A) in a taxable year beginning after December 31, 2017, and before January 1, 2026, (b) Conforming amendments (1) Section 165(h)(5)(B) for any taxable year to which subparagraph (A) applies (2) Section 165(h)(5) for taxable years 2018 through 2025 to losses attributable to Federally declared disasters (c) Effective date The amendments made by this section shall apply to losses sustained in taxable years beginning after December 31, 2017. 145. Termination of miscellaneous itemized deductions (a) In general Section 67 (1) by amending subsection (a) to read as follows: (a) In general In the case of an individual, miscellaneous itemized deductions shall not be allowed. , and (2) by striking subsection (g). (b) Movement of definition of adjusted gross income for estates and trusts (1) Section 67 (2) Section 641 (d) Computation of adjusted gross income For purposes of this title, the adjusted gross income of an estate or trust shall be computed in the same manner as in the case of an individual, except that— (1) the deductions for costs which are paid or incurred in connection with the administration of the estate or trust and which would not have been incurred if the property were not held in such trust or estate, and (2) the deductions allowable under sections 642(b), 651, and 661, shall be treated as allowable in arriving at adjusted gross income. . (c) Conforming amendments (1) Section 56(b)(1)(A) (A) Certain taxes No deduction (other than a deduction allowable in computing adjusted gross income) shall be allowed for any taxes described in paragraph (1), (2), or (3) of section 164(a) or clause (ii) of section 164(b)(5)(A). . (2) Section 56(b)(1)(C), as amended by the preceding provisions of this Act, is amended by striking subparagraph (A)(ii) subparagraph (A) (3) Section 62(a) subtitle title (4) Section 641(c)(2)(E) (E) Section 642(c) shall not apply. . (5) Section 1411(a)(2) (as defined in section 67(e)) (6) Section 6654(d)(1)(C) (7) Section 67 2-percent floor on Denial of (8) The table of sections for part 1 of subchapter B of chapter 1 Sec. 67. Denial of miscellaneous itemized deductions. . (d) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2017. 146. Repeal of overall limitation on itemized deductions (a) In general Part 1 of subchapter B of chapter 1 (b) Conforming amendments (1) Section 1(f)(7)(A), as amended by sections 121 and 141, is amended by striking or section 68(b)(2) (2) Section 56(b)(1), as amended by the preceding provisions of this Act, is amended by striking subparagraph (E). (3) Section 164(b)(5)(H)(ii)(III) (as determined under section 68(b)) (4) Section 164(b)(5)(H) (iii) Applicable amount defined For purposes of clause (ii), the term applicable amount (I) $300,000 in the case of a joint return or a surviving spouse, (II) $275,000 in the case of a head of household, (III) $250,000 in the case of an individual who is not married and who is not a surviving spouse or head of household, and (IV) ½ the amount applicable under subclause (I) in the case of a married individual filing a separate return. For purposes of this paragraph, marital status shall be determined under section 7703. In the case of any taxable year beginning in calendar years after 2017, each of the dollar amounts in this clause shall be increased by an amount equal to such dollar amount, multiplied by the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting 2012 2016 . (c) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2017. 147. Termination of exclusion for qualified bicycle commuting reimbursement (a) In general Section 132(f)(1) (b) Conforming amendments (1) Section 132(f)(2) and , and (2) Section 132(f)(4) (other than a qualified bicycle commuting reimbursement) (3) Section 132(f) (4) Section 274(l)(2) after December 31, 2017, and before January 1, 2026 (c) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2017. 148. Qualified moving expense reimbursement exclusion limited to members of Armed Forces (a) In general Section 132(g) (1) by striking by an individual by a qualified military individual (2) by striking paragraph (2) and inserting the following new paragraph: (2) Qualified military individual For purposes of this subsection, the term qualified military individual . (b) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2017. 149. Deduction for moving expenses limited to members of Armed Forces (a) In general Section 217 (1) by amending subsection (a) to read as follows: (a) Deduction allowed There shall be allowed as a deduction moving expenses paid or incurred during the taxable year by a member of the Armed Forces of the United States on active duty who moves pursuant to a military order and incident to a permanent change of station. , (2) by striking subsections (c), (d), (f), and (g) and redesignating subsections (h), (i), (j), and (k) as subsections (c), (d), (f) and (g), respectively, and (3) by inserting after subsection (d), as so redesignated, the following new subsection: (e) Expenses furnished in kind Any moving and storage expenses which are furnished in kind (or for which reimbursement or an allowance is provided, but only to the extent of the expenses paid or incurred)— (1) to such member, his spouse, or his dependents, shall not be includible in gross income, and no reporting with respect to such expenses shall be required by the Secretary of Defense or the Secretary of Transportation, as the case may be, and (2) to such member’s spouse and his dependents with regard to moving to a location other than the one to which such member moves (or from a location other than the one from which such member moves), this section shall apply with respect to the moving expenses of his spouse and dependents as if his spouse commenced work as an employee at a new principal place of work at such location. . (b) Conforming amendments (1) Subsections (d)(3)(C) and (e) of section 23 are each amended by striking section 217(h)(3) section 217(c)(3) (2) Section 7872(f) (3) Section 217 Moving expenses Certain moving expenses of members of Armed Forces (4) The table of sections for part VII of subchapter B of chapter 1 Sec. 217. Certain moving expenses of members of Armed Forces. . (c) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2017. 150. Limitation on wagering losses (a) In general Section 165(d) in the case of taxable years beginning after December 31, 2017, and before January 1, 2026, (b) Effective date The amendment made by this section shall apply to taxable years beginning after December 31, 2017. F Increase in estate and gift tax exemption 151. Increase in estate and gift tax exemption (a) In general Section 2010(c)(3) $5,000,000 $10,000,000 (b) Conforming amendments (1) Section 2001(g) (g) Modifications to gift tax payable to reflect different tax rates For purposes of applying subsection (b)(2) with respect to 1 or more gifts, the rates of tax under subsection (c) in effect at the decedent’s death shall, in lieu of the rates of tax in effect at the time of such gifts, be used both to compute— (1) the tax imposed by chapter 12 with respect to such gifts, and (2) the credit allowed against such tax under section 2505, including in computing— (A) the applicable credit amount under section 2505(a)(1), and (B) the sum of the amounts allowed as a credit for all preceding periods under section 2505(a)(2). . (2) Section 2010(c)(3) (c) Effective date The amendments made by this section shall apply to estates of decedents dying and gifts made after December 31, 2017. II Increased exemption for Alternative Minimum Tax made permanent 201. Increased exemption for individuals (a) In general Section 55(d)(1) (1) by striking $78,750 $109,400 (2) by striking $50,600 $70,300 (b) Phase-out of exemption amount Section 55(d)(2) (1) by striking $150,000 $1,000,000 (2) by striking subparagraphs (B) and (C) and by inserting the following new subparagraphs: (B) 50 percent of the dollar amount applicable under subparagraph (A) in the case of a taxpayer described in paragraph (1)(B) or (1)(C), and (C) $75,000 in the case of a taxpayer described in paragraph (1)(D). , (c) Inflation adjustment Section 55(d)(3) (3) Inflation adjustment In the case of any taxable year beginning in a calendar year after 2018, each dollar amount described in clause (i) or (ii) of subparagraph (B) shall be increased by an amount equal to— (A) such dollar amount, multiplied by (B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting— (i) in the case of a dollar amount contained in paragraph (1)(D) or (2)(C) or in subsection (b)(1)(A), calendar year 2011 calendar year 2016 (ii) in the case of a dollar amount contained in paragraph (1)(A), (1)(B), or (2)(A), calendar year 2017 calendar year 2016 Any increased amount determined under this paragraph shall be rounded to the nearest multiple of $100 ($50 in the case of the dollar amount contained in paragraph (2)(C)). . (d) Conforming amendment Section 55(d) (e) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2017. September 24, 2018 Reported with an amendment, committed to the Committee of the Whole House on the State of the Union, and ordered to be printed

Summary: Protecting Family and Small Business Tax Cuts Act of 2018 This bill amends the Internal Revenue Code to make permanent several tax provisions that were enacted in 2017 and are scheduled to expire at the end of 2025. The bill makes permanent provisions that: reduce individual tax rates, modify the taxation of the unearned income of children, allow a deduction for qualified business income of pass-through entities, increase the standard deduction, increase and modify the child tax credit, increase the limitation for certain charitable contributions, allow additional contributions to ABLE accounts (tax-favored accounts designed to enable individuals with disabilities to save for and pay for disability-related expenses), allow certain members of the Armed Forces in the Sinai Peninsula of Egypt to receive combat zone tax benefits, exclude from gross income discharges of student loan debt due to the death or disability of the student, repeal the deduction for personal exemptions, limit individual deductions for state and local taxes, limit the mortgage interest deduction, double the estate and gift tax exemption amount, increase the alternative minimum tax exemption amount for individuals, and repeal or limit several other deductions and exclusions. The bill also: extends through 2020 the reduction in the adjusted gross income threshold for the medical expense deduction, modifies the capital gains tax brackets, and modifies tax filing requirements for married taxpayers.