President Trump and Lawmakers reveal Tax Reform Plan

The Trump Administration and select members of Congress have released a “unified framework” for tax reform.

 

  • Increase the standard deduction to $24,000 for married taxpayers filing jointly, and $12,000 for single filers;
  • Eliminate the personal exemption and the additional standard deductions for older/blind taxpayers;
  • Reduce the number of tax brackets from seven to three: 12%, 25%, and 35%;
  • Increase the child tax credit;
  • Repeal the individual alternative minimum tax;
  • Largely eliminate itemized deductions, but retain the home mortgage interest and charitable contribution deductions; and
  • Repeal both the estate tax and the generation-skipping transfer tax.

Plan provisions affecting businesses would:

 

  • Provide a maximum 25% tax rate for “small” and family-owned businesses conducted as sole proprietorships, partnerships and S corporations.
  • Reduce the corporate tax rate to 20% (down from the current top rate of 35%);
  • Provide full expensing for five years;
  • Partially limit the deduction for net interest expense incurred by C corporations;
  • Repeal most deductions and credits, but retain the research and low-income housing credits;
  • Modernize special tax rules that apply to certain industries and sectors;
  • Provide a 100% exemption for dividends from foreign subsidiaries; and
  • To protect the U.S. tax base, tax the foreign profits of U.S. multinational corporations at a reduced rate and on a global basis.

 

If you have any questions on how these changes may affect your personal situation, please contact our office.