News & Events

President Trump’s Tax Reform Framework Summary

The following is a summary of the key points of the proposed tax reform framework; future changes can be expected. We will keep you informed of any significant legislation that would affect you, and/or your business.

Tax Reform FrameworkBusiness

  • 20% corporate tax rate
  • 25% maximum tax rate applied to business income of small and family owned businesses conducted as sole proprietorships, partnerships, LLCs taxed as partnerships, and S corporations
  • Eliminates Corporate Alternative Minimum Tax
  • Limits deduction for net interest expense incurred by C corporations
  • Removes special tax treatment of certain unspecified industries and sectors.
  • Eliminates Section 199 Domestic Production Deduction and state and local tax deductions.
  • Immediate 100% expensing of the cost of depreciable assets (except for buildings made after September 27, 2017) for at least five years
  • Retains Research and Development and Low-Income Housing Credits
  • Eliminates taxation of U.S. companies’ worldwide income
  • Provides one-time tax on accumulated offshore earnings, which would be taxed at two rates (TBD): one rate for cash and cash equivalents; and a lower rate for other assets.
  • Provides for 100% dividend-received deduction for foreign subsidiaries owned at least 10% by a U.S. parent.
  • Taxes at a reduced rate and global basis the foreign profits of US multinational corporations

Individuals

  • Creates three brackets (reduced from seven) of 12%, 25% and 35% – congress has the option of creating an additional higher bracket for higher income taxpayers
  • Taxes pass-through income at a maximum rate of 25%. Tax-writing committees would be given the task of developing rules to ensure that high-income taxpayers do not use this provision to avoid the 35% bracket. This would exclude any peronsal service pass-through, such as attorney and accountant firms.
  • Repeals personal exemptions for dependents
  • Increases the Child Tax Credit (amount unknown) and provides a $500 credit for care of nonchild dependents.
  • Increases income levels at which the Child Tax Credit begins phase out
  • Makes the first $1,000 of the Child Tax Credit Refundable
  • Creates “Zero Tax Bracket” by increasing the standard deduction for married taxpayers to $24,000 (filing jointly) and $12,000 for single filers.
  • Repeals the alternative minimum tax
  • Eliminates most itemized deductions, including the deduction for state and local taxes, but retain tax incentives for home mortgage interest and charitable contributions
  • Maintains tax incentives for work, higher education and retirement savings
  • Repeals the estate tax and the generation-skipping transfer tax