Orphan Drug Tax Credit:
The House version of the bill repeals the Orphan Drug Tax Credit entirely, and the Senate version of the bill weakens the provision significantly – essentially cutting it in half and limiting those who would qualify for it. To support life saving innovation and the patients who need it, it is essential to maintain the Orphan Drug Tax Credit in any tax reform legislation.
Impact on Patients
Currently, for people who itemize deductions, they can deduct qualifying medical expenses which exceed 10% of their adjusted gross income (AGI). Under the House bill, the medical expense deduction would be eliminated. Under the Senate bill, the medical expense deduction would remain in place with a lower floor of 7.5% for tax years 2017 and 2018.
Patients experiencing significant medical challenges need our support as they face these challenges. If the standard deduction is not sufficient to address this situation, patients need the ability to itemize these expenses.
Impact on Universities:
Both the House and Senate versions have provisions that have serious implications for universities and students. The House bill would count graduate students’ tuition waivers as taxable income. The Senate bill does not include this provision, but would levy a 1.4 percent investment income tax on college and university endowments exceeding $500,000 per student at universities with more than 500 students. Read more…
Corporate Alternative Minimum Tax (AMT) and the R&D Tax Credit
While the House repealed the AMT, the Senate version maintains it. If the AMT continues and is set at 20% while the AMT remains at 20%, I could negate the benefit of the R&D Tax Credit. This is an identified challenge that is expected to be addressed in some way as it could have a negative impact on innovation investments.
Medical Device Tax Repeal:
Neither the House version of the bill or the Senate version addresses the fact that the suspension of the Medical Device Tax ends this year. AZBio and our partners around the country are working to address this challenge as part of another vehicle before year end.