Congressional leaders struck a tax-policy deal late Monday, capping a long weekend of negotiations with an agreement that will extend lapsed and expiring tax breaks but won’t be as expansive as many lawmakers had hoped, The Wall Street Journal reported.
The extended breaks included incentives for biodiesel producers, which expired at the end of 2017 but would last through 2022 if enacted. A more generous medical-expense deduction for individuals that lapsed at the end of 2018 would run through 2020. A tax credit for short-line railroad maintenance would last through 2022. Breaks for brewers and distillers set to lapse this year would continue through 2020.
The measures are being added to a spending bill slated for passage this week before Congress finishes its work for the year. But lawmakers came up short of a broader tax deal that some had sought. As late as Monday evening, they were discussing making some of the tax breaks permanent, the Journal adds.
Democrats didn’t get tax-break expansions for renewable energy or electric vehicles and didn’t get the tax credits for low-income families that they had sought. And Republicans didn’t get to fix an error in the Tax Cuts and Jobs Act of 2017 that has slowed building renovations, the Journal noted.
The result is a deal that largely maintains the status quo or revives dead tax breaks, which will placate businesses temporarily. It also sets Congress up for another mixed bag of a tax bill next year or in 2021.
Earlier Monday, congressional negotiators came to an agreement on other, much larger, tax provisions. Those included repeals of three taxes from the Affordable Care Act—part of a package that would reduce projected revenue by $377 billion over a decade—and a bipartisan retirement bill. The retirement bill also eliminates a tax increase, created by the 2017 law, that has been hurting survivors of deceased members of the military and some low-income students.
The tax deals reached Monday mark a victory of sorts for lawmakers who have been trying in vain to get the targeted tax breaks resolved. Sen. Chuck Grassley (R., Iowa) has been warning about the potentially dire consequences for the biodiesel industry without the incentives. Rep. Richard Neal (D., Mass.) has been trying to finish the retirement bill, which encourages the use of annuities, raises the minimum age for taxing mandatory retirement-account distributions and limits tax planning using inherited IRAs.