House approves GOP tax measures for savings, startups

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 260156, 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.

Prospects for the legislation are unclear in the Senate.

Democrats unanimously opposed the $1.5 trillion tax law signed into law in December by President Donald Trump, and they similarly oppose the new legislation.

With the midterm elections looming in less than two months, polls have shown only lukewarm support among voters for the package of individual and corporate tax cuts that became Trump’s signature legislative achievement. House Republican leaders are portraying the second crack at tax cuts as championing the middle class and small businesses.

But support for the legislation has been diminished by election pressures faced by GOP lawmakers from high-tax states where residents are hurt by the tax law’s limits on state and local tax deductions. Residents in those states could see substantial increases in their federal tax bills next spring because of the $10,000 cap on state and local deductions in the tax law.

The legislation to be voted on Friday would make the cap permanent.

One of the measures cleared by the House on Thursday would create a “universal savings account” for families that would allow the tax-free earnings to be more easily withdrawn than is the case with existing retirement accounts.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.