GOP Releases 2017 Tax Reform Framework

The long-awaited tax reform outline has been released by Republican lawmakers. Their goal is to cut tax rates for individuals and businesses as well as encourage businesses to be competitive and simplify the Internal Revenue Code.

Individual Tax Reform

Individual tax reform would be fairly extensive and is outlined below:

  • Only Three Tax Brackets: 12%, 25%, and 35%. Currently, there are 7 Tax Brackets ranging from 10% to 39.6%. There is also language in the tax-writing to allow a fourth higher tax bracket
  • Repeal the Alternative Minimum Tax
  • Repeal the Estate Tax and the Generation-Skipping Transfer Tax
  • Pass-through income will be taxed at a maximum rate of 25%
  • Increase the Standard Deduction to $12,000 for individuals, and $24,000 for married filing jointly
  • Eliminate most itemized deductions, including state and local tax deductions
  • Increase the Child Tax Credit and provide a $500 credit for non-child dependents

Corporate Tax Reform

The outline for businesses includes the reduction and elimination of taxes and deductions including:

  • End to taxation on US companies’ worldwide income and move to a territorial system
  • One-time tax on accumulated offshore earnings
  • Limit deductibility of interest
  • Eliminate deductions, yet to be defined, but retain the research and low-income housing credits
  • Expense 100% of depreciable assets (except buildings) for 5 years

Congress is hoping to turn the framework into legislation to be passed by the end of the year.  However, we should expect a lot of debate and changes to the framework if it is to pass.  Anders will continue to monitor and keep you updated. Contact an Anders advisor to discuss how these changes could affect you or your business.

Co-written by Mike Evans, CPA and Abby Tonkin, CPA.