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Fighting Fire with the Tax Code

Despite a reputation for slow movement, the 115th Congress may have achieved a legislative feat that eluded Congress for more than three decades. On Thursday, November 16, the House passed the Tax Cuts and Jobs Act (H.R. 1). Just weeks later on December 2, the Senate passed a revised version of H.R. 1. While the House and Senate approaches have differences, they both bring a potential for big impacts on the fire and emergency service. Here’s a breakdown on how the two bills could change policies for fire and EMS departments across the nation:

  •  State and Local Tax (SALT) Deduction: This is probably the issue you’ve most heard in the news. Current tax laws allow individuals to deduct the amount they pay in state and local taxes such as income and property tax. These taxes help fund public services like fire departments. The deduction protects individuals from being taxed twice. Both the House and Senate approaches to tax reform eliminate the deduction for state income taxes and limit the local property tax deduction to $10,000. The IAFC encourages Congress to preserve the SALT deduction and reject this proposal.
  • Fire Sprinklers: While the House didn’t address this issue, the Senate proposal allows business owners to deduct the cost of “fire protection and alarm systems” as a business-related expense. The IAFC supports this provision as it will help business owners retrofit their buildings with fire sprinkler systems.
  • Volunteers: The House bill doesn’t address tax issues for volunteer and combination fire departments.  The Senate proposal would increase the maximum contribution to a volunteer’s Length of Service Award Program from $3,000 to $6,000 per year. The IAFC supports the Senate’s action on this issue.
  • Uninsured Property Loss: The current tax code allows individuals to deduct uninsured property losses from fires, floods, and other incidents. The House bill would eliminate this deduction. The Senate proposal would limit this deduction only to losses arising from a Presidentially-declared disaster from 2017 to 2026.
  • Cadillac Tax: Though Congress previously delayed implantation of the “Cadillac Tax,” an excise tax on high-value health insurance policies, neither the House nor Senate included a Cadillac Tax repeal as part of their tax reform legislation. The IAFC encourages Congress to fully repeal the Cadillac Tax.

All eyes are now on a select group of House and Senate members, also known as a Conference Committee, as they work to hash out the differences between the two bills. President Trump and Congress have given themselves a self-imposed deadline of December 25 to produce and approve a final package. The IAFC will continue monitor the Conference Committee and work to encourage Congressional adoption of policies that assist the fire and emergency service.

Evan Davis is the IAFC's government relations manager and liaison to the EMS Section.

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