How the House and Senate Tax Bills Stack Up and What You Can Do to Improve Them for the Industry

The House and Senate are working on different tax reform packages. AGC created a chart comparing key sections of each bill. The biggest tax-related concern is how tax reform treats pass-through businesses. The bills each take a different approach at taxing pass throughs and are granting a lot more tax relief to C corporations. We are working hard to get improvements for pass-through entities and have made some progress.

The House bill also repeals private activity bonds and the Historic tax credit, which would eviscerate the market for the rehabilitation of historic buildings. AGC is asking you to contact your members of Congress and urge them to treat S-corps fairly as compared to C-corps and maintain incentives for public and private construction in tax reform.

Provision

House Version

Senate Version

Corporate Rates

20%

20% beginning 1/1/19

Personal Service Corporations (C-Corp)

25%

20%

Standard Deduction

Increased to $12,000 for individuals, $24,000 for married filing jointly

Increased to $12,000 for individuals, $24,000 for married filing jointly

Alternative Minimum Tax (AMT)

Corporate and Individual AMT Repealed

Corporate and Individual AMT Repealed

Pass-Through Business Income

Capped at 25%;

 

Income for active shareholders* over 25% defaults to 70% ordinary income and 30% to 25% rate cap;

 

Alternative "return on investment" calculation available if depreciable capital times Federal short-term rate plus 7 percent exceeds 30% net business income;

17.4% deduction on pass-through income;

 

Deduction not allowed for reasonable compensation paid to S-Corp owners;

 

Limited to half of W-2 wages;

 

View the full chart here.

For more information, contact Matthew Turkstra at matthew.turkstra@agc.org or (202) 547-4733.

Associated General Contractors of America