Agreement Reached on Tax Cuts; Charity Reforms Not Included

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May 16, 2006

Late last week, Congress passed the final compromise on the $70 billion tax reconciliation package (H.R. 4297), combining a two-year extension of the reduced tax rates on capital gains and dividends with a one-year extension of alternative minimum tax relief. President Bush is scheduled to sign the bill into law May 17.

A package of charitable giving incentives and reforms affecting colleges and universities, included in the original Senate version of the bill, was not included in the final measure. However, some aspects of the charitable package could be included in a second tax package that might be added to the pension reform legislation currently in conference (H.R. 2830).

Senate Finance Committee Chair Charles Grassley (R-IA) hopes to complete action on the pension reform legislation by May 28. However, both the timing and the state of negotiations related to the charitable provisions remain unclear.

Senate Finance Committee summary of H.R. 4297