The Trump Administration, the House Ways and Means Committee, and the Senate Finance Committee have released a Framework for Tax Reform. The unified framework is intended to be used as the foundation to craft tax legislation and to serve as the template for the various tax-writing committees that will develop the legislation to eventually be voted on by the House and Senate. The highlights are as follows:
Individual Tax Reform
- Individual brackets to 12%/25%/35% from 7 with 39.6% highest
- Standard deductions doubled
- Child Tax Credit kept and enhanced GOP
- ‘Loopholes’ eliminated – All but the following to go away
- Mortgage interest deduction kept
- Charitable contributions kept
- Benefits that encourage work, education & retirement security
- Alternative Minimum Tax (AMT) – Gone
- Estate Tax – Eliminated
Business Tax Reform
- Corporate Rate down to 20%
- Tax Rate on Small Business income 25% including
- Sole Proprietors
- Partnerships & S Corporations
- “Expensing” of Capital Investments for at least 5 years
- Interest Expense deduction limitations imposed for Corporations
- US move to a ‘territorial’ tax regime
- Repatriation of overseas earnings – Deemed to occur
- Spread of tax over several years
- Business Special Deductions and Credits mostly gone
- Research & Experimentation Credit retained
- Sec. 199 Manufacturing deduction gone
It is stressed that this document is still very early in the process, and nothing in the template is assured of inclusion in the final legislation.
