Trump Proposes Major Tax Overhaul
Published on by Scott Cress in Tax Services
Like anything that appears too simple, the “devil is in the details” on the proposed tax overhaul, and at this point, we have more questions than answers. However, the Barnes Dennig tax team provides a summary of the framework as follows:
Proposed changes within the Corporate Tax Framework
- Reduce the C corporation income tax rate from 35% to 20%
- Reduce the tax rates on pass-through businesses from a maximum 39.6% to 25%
- Immediate write off of assets, with exception to buildings, for the next 5 years
- Limit the deduction for net interest expense for C corporations
- Eliminate the Section 199 Domestic Production Activities Deduction (“DPAD”) popular with manufactures and construction companies
- Repatriate foreign earnings and tax profits at reduced rates for US multinational corporations
- Retain the Research and Development and Low-Income Housing tax credits
Proposed changes within Individual Tax Framework
- Adjust the tax rates to 12%, 25% and 35% with a potential to add an additional 4th higher rate
- Repeal the Alternative Minimum Tax, Estate Tax, and Generation Skipping Transfer Tax
- Double the standard deduction for both single and married filers
- Increase the child tax credit and qualifying income levels (amounts to be determined)
- Add a $500 credit for non-child dependents
- Repeal personal exemption for any dependents
- Eliminate most itemized deductions except for home mortgage interest and charitable contributions
As expected, details on who will bear the brunt of the cost needed to offset the proposed lower rates have yet to be released. Although the President wants quick passage of this overhaul, we do not expect the House of Representatives to potentially vote on a package until December. This means that the Senate may wait until 2018 to vote on any changes to the tax code.
The Barnes Dennig Tax Team will keep you informed of any updates and changes as they occur, please reach out if you have any questions about the proposed changes above, and a member of the tax team will contact you.
