Independent Banker - April 2018 - 33

law largely maintains the mortgage
interest deduction. While earlier
versions of the legislation would
have dramatically reduced
the deduction, lawmakers
ultimately agreed to limit
it to interest paid on the
first $750,000 of acquisition
debt on a first or a
second home. The law also
suspends the deduction for
interest on home equity
lines of credit until 2026.
Following ICBA
advocacy, the
tax law largely
maintains
the mortgage
interest
deduction.
Other provisions
Estate tax: While the law
does not repeal the tax, as advocated
by ICBA, it doubles the estate tax
exemption. The higher exemption
level is indexed to inflation but will
expire at year-end 2025.
Interest on private activity and
municipal bonds: As requested by
ICBA, the tax law preserves the tax
exemption for newly issued private
activity bonds.
New markets tax credit: ICBA
also supported keeping the new
markets tax credit, a critical tool
for ensuring that economic growth
reaches low-income urban and rural
communities. As advocated by ICBA,
it was preserved.
Community bank impact
Some tax-policy challenges remain
following the passage of the Tax
Cuts and Jobs Act, such as the effect
of the lower corporate tax rate on
deferred tax assets (DTA) and the
inability of Congress to curtail the
taxpayer subsidies given to credit
unions and Farm Credit System
lenders. However, the Financial
Accounting Standards Board and
federal regulators have taken steps
to address the DTA impact, while
Senate Finance Committee chairman
Orrin Hatch (R-Utah) has begun
speaking out against the credit union
tax exemption.
Overall, community banks have
benefited greatly from the reform,
and many have already begun passing
on the savings. For instance, First
Financial Northwest Inc. in Renton,
Wash., started off the new year with
a special $1,000 after-tax bonus to
all non-executive
employees. " The
expected tax savings
give us an
opportunity to
invest even more
in our team, "
president and
CEO Joseph Kiley
III said in a news
release announcing
the surprise
bonuses.
Likewise, OceanFirst Financial
Corp. in Toms River, N.J., announced
that it was increasing its hourly
minimum wage within 30 days
of enactment of the law, giving a
raise to more than 135 OceanFirst
Bank employees. Other community
John Hand (john.hand@icba.org)
is ICBA first vice president of
congressional relations.
Alan Keller (alan.keller@icba.
org) is ICBA first vice president of
legislative policy.
banks used the tax savings to boost
their charitable giving, with Gulf
Coast Bank & Trust Co. in New
Orleans announcing a 50 percent
increase in funds for its Community
Rewards Program.
ICBA thanks the nation's community
bankers for their persistent
grassroots outreach on tax reform,
which had a dramatic impact on the
debate. Community bankers have
truly made a difference that will benefit
the community banking industry
and provide needed relief to local
communities nationwide for years
to come.
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FEATURING
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Q2
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Independent Banker - April 2018

Table of Contents for the Digital Edition of Independent Banker - April 2018
