House OKs tax incentives for savings, new businesses

Two votes mostly follow party lines

WASHINGTON — Proposals to expand the new tax law by adding incentives for savings and startup businesses have passed the House as Republicans push legislation forward ahead of the approaching midterm elections.

The votes Thursday were 240-177 and 260-156, mostly along party lines, to approve a pair of Republican-written measures. The action was a prelude to an expected vote Friday on broader legislation to make permanent the individual tax cuts now set to expire in 2026 under the tax law.

One of the measures cleared by the House Thursday would create a “universal savings account” for families that could be used for a range of purposes and would allow the tax-free earnings to be more easily withdrawn than is the case with existing retirement accounts. In addition, it would allow the popular, tax-free 529 college savings accounts to also be used to pay for apprenticeship fees and home schooling expenses, as well as to pay off student debt. Workers would be able to tap their retirement savings accounts without tax penalty to cover expenses from the birth of a child or an adoption.

A second measure would allow startup businesses to write off more of their initial costs against their federal taxes. New businesses would be permitted to deduct more of their expenses for setting up in the first year — up to $20,000, double the current maximum level.

The proposal “will allow more businesses to move from their kitchen table to their first office,” said Rep. Kevin Brady, R-Texas, chairman of the tax-writing House Ways and Means Committee.

Democrats said there were some positive elements in the legislation, but that overall they would not help average Americans.