There is now a ton of media chatter about the recently introduced federal tax reform package being passed around in Washington, D.C. While it’s still early in the process, here are some of the key elements of the current proposal.
- Individual tax rate brackets trimmed to three rates of 12, 25 and 35 percent, down from the current seven brackets.
- Nearly doubling the standard deduction, to $12,000 for individuals and $24,000 for joint filers.
- Eliminating all but two itemized deductions: home mortgage interest and charitable deductions.
- Eliminating personal exemptions for dependents, but increasing the Child Tax Credit.
- Repealing the estate tax.
- Repealing the Alternative Minimum Tax (AMT).
- Cutting the top corporate tax rate to 20 percent from 38 percent.
- Capping at 25 percent the tax rate for pass-through corporations including sole proprietorships, partnerships and S corporations (down from the current 39.6 percent max).
- Shifting international taxation to a territorial system, encouraging U.S. corporations to repatriate earnings from foreign subsidiaries.
- Allowing full expensing of business investments, rather than the standard depreciation model.
Nothing is official yet and there is still a long way to go. Stay tuned for further developments.
Tags: tax reform
Written by: Doug Rodrigues