PROPOSED TAX REFORM HIGHLIGHTS
It appears with Healthcare Reform now on the “back-burner” the Administration is pressing forward with its much anticipated tax reform. Below are some of the major highlights that are being proposed.
1. Corporate Tax Rate – Corporate maximum tax rate of 20%.
2. Tax Rate on Flow-Through Business Income – Flow through entity tax rate of 25% on business income after reasonable compensation income.
3. Individual Tax Rate – Individual maximum tax rate of 35% and elimination of the 3.8% Medicare surtax on Investment Income.
4. AMT – Repeal of the Corporate and the Individual Alternative Minimum Tax (AMT).
5. Itemized Deductions – Elimination of most itemized deductions except for Mortgage interest and Charitable Contributions (but doubling of the standard deduction).
6. Capital Expensing – Immediate expensing of new investments in depreciable assets (other than structures), made after 9/27/17, for at least five years.
7. Interest Expense – Partial limitation of interest expense incurred by a C corporation (no detail here) and consideration of appropriate treatment of non-corporate taxpayers.
8. Domestic Production (Manufacturing) Deduction – Elimination of the Section 199 domestic production (manufacturing) deduction due to the lower tax rate incentive.
9. R&D Tax Credit – Continued ability to claim the R&D tax credit.
10. Estate Tax – The Estate tax and Generation Skipping Tax (GST) will be repealed but there is no mention of the gift tax.
Based on the current tax reform proposals, year-end tax planning can yield significant tax savings. RRHC attorneys have the business and tax expertise to assist you with your estate planning and business planning. Please contact Bob Cohen at firstname.lastname@example.org if you would like to discuss your individual or business situation and gain a better understanding of how these proposals may affect you.