With Noem’s Leadership, House Passes Tax Reform Proposal
WASHINGTON, D.C. – The U.S. House of Representatives today passed a landmark tax reform proposal, drafted in part by Rep. Kristi Noem. The Tax Cuts and Jobs Act, which has found support from many South Dakotans, is expected to increase wages by 3.1 percent, add nearly 1 million jobs, and raise after-tax incomes by thousands of dollars, according to the non-partisan Tax Foundation. Meanwhile, the Joint Committee on Taxation found there would be “a tax benefit to all income categories.”
“I have worked hours going line by line through this legislation to make sure the policies contained in it are going to work for families, that they’ll increase wages for folks, and create more opportunity in America,” said Noem.
On the House Ways & Means Committee, which has primary jurisdiction over tax reform, Noem has championed many of the bill’s family-centered policies. Noem was vocal about the need to significantly expand the Child Tax Credit and led efforts to ensure the Child Care Credit and flexible spending benefits remained in the House proposal.
“I am extremely proud of the steps we’ve taken to strengthen families in this bill,” continued Noem. “South Dakota has the highest rate of working moms in the nation. Parents are already stretched thin, so the provisions in this bill are designed to help them – help them pay their bills, take care of their kids, go to work, and maybe at the end of the day, take a weekend where they can go and do something fun with their kids. That’s important to South Dakota.”
The Tax Cuts and Jobs Act also includes a handful of provisions Noem has previously introduced as stand-alone legislation. More specifically, the House tax reform proposal fully and permanently repeals the Death Tax by 2025, based on Noem’s Death Tax Repeal Act. Additionally, the bill excludes the Indian Health Service’s Student Loan Repayment program from tax, a provision that was pulled from Noem’s 2016 HEALTTH Act. Moreover, as one of the only members of the House Ways & Means Committee with a background in agriculture, Noem championed efforts to give farmers, ranchers, and small businesses better expensing tools and drive down the tax rate for small businesses.
“If we’re going to keep kids in South Dakota, we need to create opportunities in South Dakota,” Noem explained. “This tax reform package protects family farms from one generation to the next and makes it easier for South Dakota’s hardworking job creators to thrive.”
The Senate continues to debate their version of tax reform. Once passed, the House and Senate will go to Conference to merge the two documents before both chambers take a final vote and put the legislation on the president’s desk.
Simplifies the tax code so an individual or family can file their taxes on a form as simple as a postcard.
Significantly lowers individual tax rates to Zero, 12%, 25% and 35%, while also nearly doubling the standard deduction to $24,000 for married couples and $12,000 for single filers. High-income Americans will maintain the 39.6% rate.
- 0%: Married couples making less than $24,000 / Single filers making less than $12,000 (the increased standard deduction protects these families from taxation)
- 12%: Married couples making $24,000-$90,000 / Single filers making $12,000-$45,000
- 25%: Married couples making $90,000-$260,000 / Single filers making $45,000-$200,000
- 35%: Married couples making $260,000-$1,000,000 / Single filers making $200,000-$500,000
- 39.6%: Married couples making more than $1,000,000 / Single filers making more than $500,000
Provides unprecedented support for families after strong leadership from Noem on the issue:
- Increases the Child Tax Credit to $1,600 per child (60% larger than under current policy).
- Eliminates the “marriage penalty.”
- Creates a new Family Flexibility Credit, which provides a credit of $300 for each parent and non-child dependent.
- Preserves the Child and Dependent Care Tax Credit (also known as the Child Care Credit) to better support working parents.
- Allows unborn children to be named beneficiaries of 529 education savings plans
Phases in full and permanent Death Tax Repeal by doubling the Death Tax exemption levels for the first seven years and then fully repealing the Death Tax by 2025. The provision is based on Noem’s Death Tax Repeal Act of 2017.
Preserves and strengthens the Earned Income Tax Credit with provisions to stop widely reported fraud.
Gives support at important milestones in life:
- Preserves the Home Mortgage Interest Deduction for existing mortgages and maintains the home mortgage interest deduction for newly purchased homes up to $500,000.
- Retains popular retirement savings options, such as the 401(k)s and IRAs.
- Streamlines higher-education benefits.
Excludes the Indian Health Service’s Student Loan Repayment program from tax to help in recruiting. It’s based on Noem’s HEALTTH Act.
Continues the deduction for charitable contributions.
Allows businesses to immediately write off the full cost of new equipment, which is critical for South Dakota’s agriculture community and was a priority Noem made known during Ways & Means Committee debates.
Creates opportunities to create more jobs and raise wages.
- Creates a separate and historically low small business tax rate.
- Lowers the corporate tax rate to a globally competitive 20%.