Hoeven: Senate Passes Tax Reform Lowering Rates Across the Board for Individuals and Families, Providing Relief for Small Businesses, Farmers and Ranchers

Legislation Includes Hoeven Amendment to Ensure Fair Treatment of Cooperatives

WASHINGTON – Senator John Hoeven today announced that the Senate has passed tax reform legislation that lowers rates across-the-board for hard-working Americans, while also providing the nation’s small businesses, farmers and ranchers with relief. The bill includes a Hoeven amendment to ensure the fair treatment of cooperatives in North Dakota and across the nation. 

“We worked hard to provide North Dakotans with tax relief that enables them to keep more of their hard-earned paychecks,” said Hoeven. “The legislation passed by Congress lowers rates across the board for individuals and families. At the same time, it modernizes our tax code and provides our small businesses, farmers and ranchers with tax relief that will enable them to grow and invest. This tax relief plan, coupled with regulatory relief, will unleash economic growth to grow wages and income, as well as government revenues. This tax relief bill is good for America and good for North Dakota.”

Middle-class families will see a tax cut of:

  • More than $1,300 for a single parent with one child earning $41,000.
  • More than $2,000 for a median income family of four earning $73,000.
  • More than $2,600 for a married small business owner earning $100,000.

Hoeven worked to ensure that the legislation provided relief for North Dakota small businesses, including farmers and ranchers. The senator’s amendment to ensure fair treatment of cooperatives was included in the legislation. Additionally, Hoeven worked to secure the following highlights:

Cuts Tax Rates Across the Board for Hardworking Individuals and Families

  • Increases the standard deduction, which means that Americans will not be taxed on the first $12,000 of income for individuals, $24,000 for married couples and $18,000 for a single parent with dependents. 
  •  9 out of 10 taxpayers will likely use the expanded standard deduction.
  • Maintains the state and local tax deduction up to $10,000 for individuals and families.
  • Doubles the Child Tax Credit to $2,000 per child
  • Preserves the Child and Dependent Care Tax Credit
  • Encourages businesses to provide paid family and medical leave by providing a tax credit
  • Preserves the Adoption Tax Credit
  • Retains Retirement Savings Options
  • Continues tax deductions, including for: 
    • Student Loan Interest and Tuition Waivers
    • Medical Expenses
    • Charitable Contributions
    • Home Mortgage Interest

Benefits to Small Businesses, Farmers and Ranchers

  • Ensures the fair treatment of cooperatives and their members. 
  • For the first five years, allows full expensing or writing off the cost of new investments, which is phased down over an additional four year period.
  • Expands the Section 179 expensing of equipment on a permanent basis.
  • Doubles the estate tax exemption, while maintaining the step-up in basis for capital gains.
  • Maintains interest deductibility as well as the property tax deduction for small businesses, farmers and ranchers.
  • Increases the tax deduction to 20% for qualified pass-through income, which reduces the tax burden for small businesses set up as partnerships or pass-through entities.
  • Reduces the tax rate for C corps from 35% to 21%, making the U.S. tax system more competitive globally and bringing more capital and investment back to the U.S. 
  • Maintains the IC-DISC program, which enables small and medium businesses, including manufacturers, to reduce taxes on portions of their export income. 
  • Provides greater flexibility for implement and auto dealers to expense interest on inventory. The legislation includes a Hoeven amendment that exempts businesses with floor plan financing from the interest expense limitation, subject to further rules. 

Tax relief, combined with regulatory relief, will empower economic growth leading to greater government revenues. While some have claimed the legislation will lead to cuts under pay-go rules, these rules have never been enforced. Additionally, both Senate and House leadership have said the pay-go rule will be waived, if necessary. Over time the tax relief bill will help grow the economy and will generate more revenue not less. Congress will also continue to work to make the individual rate reductions permanent after 2025, but will need bipartisan support. 

Throughout the process, Hoeven worked to ensure the best possible tax relief package for North Dakota families and businesses. In November, the senator held roundtables in Bismarck and Fargo to gather input from North Dakotans. Hoeven has repeatedly spoken on the Senate floor to outline tax reform priorities. Additionally, earlier this fall, the senator held a series of roundtable discussions in Minot, Grand Forks and Bismarck with the North Dakota small businesses and farmers and ranchers to gather input.