Health Care Provisions in the Tax Cuts and Jobs Act (H.R. 1)

December 8, 2017

Buttons decorated like the American flag, with "Tax Cuts and Jobs Act" written on them.The Tax Cuts and Jobs Act passed the U.S. House of Representatives on November 16, 2017, and an amended version passed the U.S. Senate on December 2, 2017. Congress reconciled the differences between the two bills in a compromise conference report.

While the purpose of the legislation is to reduce tax rates for businesses and individuals, it includes several major health care policy changes. 

For instance, the act repeals the tax penalty for those who choose not to enroll in health insurance. CBO estimates the impact of this will be that 13 million fewer individuals will have health insurance over 10 years and health insurance premiums for ACA Marketplace plans will increase an additional 10% per year.

The Tax Cuts and Jobs Act also lowers the threshold of health care tax deductions from 10% to 7.5% of income for 2017 and 2018. This means that more taxpayers and more expenses will be eligible for the deduction.

Finally, the act limits the tax credit amount for pharmaceutical companies that develop drugs to treat rare diseases from 50% to 25% of qualified clinical testing expenses.


Editor’s Note: CHRT updated this fact sheet Jan. 12, 2018 to include more recent Medicare beneficiary numbers, updated information on PAYGO, and reflect that the conference report is now law.