Key Elements of 2017 Tax Reform

Published on January 9th, 2018

On Dec. 22, President Trump signed into law the tax-reform bill passed by Congress. The bill has many provisions, some of which are related to employee benefits and/or will be important to LCMS ministries and workers.

As part of our work with the Church Alliance, a coalition of chief executives from 38 church benefit boards including CPS President and CEO Jim Sanft, we keep close track of activity in Washington, D.C., and how it may impact our ministries and workers. Here is the link to the story on our website: http://www.concordiaplans.org/blog/key-elements-of-2017-tax-reform/

Below are some key provisions of the 2017 Tax Reform Act. For further information on any item listed below, you can view the text of the bill here. 

  • Repeal of Obamacare Individual Mandate: Beginning Jan. 1, 2019, individuals will no longer incur a penalty for failing to obtain minimum essential health coverage. Note: All Concordia Health Plan options provide this minimum essential coverage.
  • Medical Expense Deduction Threshold Temporarily Reduced: The threshold for deducting unreimbursed medical expenses of the taxpayer, spouse and dependents will temporarily be lower for most taxpayers. For tax years 2017 and 2018 the threshold on medical expense deductions is reduced from 10 percent to 7.5 percent of adjusted gross income. This means that for these years, taxpayers can deduct such expenses once this lower threshold is surpassed.
  • Expanded Use of 529 Account Funds: With the 2017 Act, 529 account distributions now may be used for tuition at an elementary or secondary public, private or religious school and are treated as if they are “qualified higher education expenses.” This change is effective for distributions made Jan. 1, 2018 or later that total $10,000 or less per beneficiary per tax year.
  • Suspension of Exclusion for Moving Expense Reimbursement: From Jan. 1, 2018 through Dec. 31, 2025, any moving expense reimbursement paid by an employer is treated as taxable income to the employee. The only exception is for members of the Armed Forces.
  • Suspension of Moving Expenses Deduction: Under pre-Act law, taxpayers could claim a deduction for moving expenses incurred in connection with starting a new job under certain situations. From Jan. 1, 2018 through Dec. 31, 2025 this deduction may not be claimed, except for members of the Armed Forces in certain circumstances.
  • Student Loan Discharged on Death or Disability: A taxpayer’s gross income generally includes the amount of a discharged (forgiven) loan, with some exceptions. Beginning Jan. 1, 2018 through Dec. 31, 2025, certain student loans that are forgiven due to death or total and permanent disability of the student may be excluded from gross income.
  • Relief from Early Withdrawal Tax for Qualified 2016 Disaster Distributions: A distribution from a qualified retirement plan (including the Concordia Retirement Savings Plan) before age 59 ½ generally is subject to a 10 percent “penalty” tax, in addition to the income tax that ordinarily applies. The 2017 Act provides an exception to this tax for up to $100,000 of qualified distributions made on or after Jan. 1, 2016, and before Jan. 1, 2018, to an individual whose principal residence at any time during calendar year 2016 was located in a 2016 disaster area. The individual must have sustained an economic loss by reason of the events that led to the Presidential disaster declaration. Other relief for these distributions also was provided by the 2017 Act.

Concordia Plan Services will continue to monitor activities in Washington, D.C., and any other potential impact of 2017 Tax Reform. Further updates will be posted on ConcordiaPlans.org.