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.