The following is a summary of important tax developments that have occurred in the past three months that may affect you, your family, your investments, and your livelihood. Please call us for more information about any of these developments and what steps you should implement to take advantage of favorable developments and to minimize the impact of those that are unfavorable.
President Trump and key lawmakers reveal tax reform plan. The Trump Administration and select members of Congress have released a “unified framework” for tax reform. The document provides more detail than a number of other tax reform documents that have emerged from the Administration over the past few months, but it still leaves many specifics to be worked out by the tax-writing committees (i.e., the House Ways and Means Committee and the Senate Finance Committee).
Plan provisions affecting individuals would:
- 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.
The impact is still indeterminable but we will continue to monitor developments and proposed legislation as it is drafted and keep you informed. If you have any questions, please contact us.
Houldsworth, Russo & Company, P.C. is a public accounting firm providing assurance, tax, and consulting services to non-profit and government organizations, individuals and businesses. Since 1996 HRC has provided quality service to the Las Vegas and surrounding communities through the active involvement of experienced, committed professionals.
Material discussed in this blog is meant to provide general information and should not be acted upon without first obtaining professional advice appropriately tailored to your individual circumstances.