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Focus on Taxation: Tax Reform Proposal

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On September 27, President Trump and Republican leaders unveiled a framework for tax reform. The following are the highlights of the changes contained in the proposal for individual and business taxes.
September 27, 2017

On September 27, President Trump and Republican leaders unveiled a framework for tax reform. The following are the highlights of the changes contained in the proposal for individual and business taxes.

Individual Taxes
  • Standard Deduction increased to $24,000 for Married Filing Joint and $12,000 for Single filers
  • Consolidation of the current seven individual tax brackets into three brackets of 12%, 25% and 35%, with an unspecified additional top rate
  • Repeal of personal exemptions for dependents
  • Significant increase in the Child Tax Credit
  • A new tax credit of $500 for non-child dependents
  • Elimination of the alternative minimum tax
  • Elimination of most itemized deductions except for home mortgage interest and charitable contributions
  • Repeal of the estate and generation-skipping taxes

Business Taxes
  • Limits the maximum tax rate on business income of small and family-owned businesses conducted as sole proprietorships, partnerships and S corporations to 25%
  • Reduces the C corporation tax rate to 20%
  • Elimination of the alternative minimum tax
  • Allows immediate expensing of the cost of new investments in depreciable assets other than structures for at least five years
  • Partial limitation on the deduction for net interest expense by C corporations
  • Elimination of the domestic production activities deduction (section 199)
  • Elimination of most business tax credits except for the research and development and the low-income housing tax credits
  • Transformation from our existing worldwide to a territorial system of taxation of international profits
  • 100% exemption for dividends from certain foreign subsidiaries
  • Treats foreign earnings that have accumulated overseas under the current system as repatriated

 

Please contact one of RubinBrown's Tax Services Group professionals if you have questions on how this new law could impact you.

 

Any federal tax advice contained in this communication (including any attachments): (i) is intended for your use only; (ii) is based on the accuracy and completeness of the facts you have provided us; and (iii) may not be relied upon to avoid penalties.

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