Republican lawmakers released on Wednesday a “unified framework” for tax reform designed to cut tax rates, simplify the Internal Revenue Code, and provide a more competitive environment for business. The key changes are as follows:
- Current tax rates: Seven brackets from 10% to 39.6%.
- Proposed tax rates: Three brackets at 12%, 25% and 35%.
- Current standard deduction: $6,350 individuals and $12,700 married filing joint.
- Proposed standard deduction: $12,000 individuals and $24,000 married filing joint.
- Elimination of personal exemptions, worth $4,050 per person.
- Repeal of the alternative minimum tax.
- Repeal of the estate and generation-skipping transfer tax.
- Eliminate most itemized deductions, including state and local tax deductions (will keep mortgage interest and charitable contributions deduction).
- Small and family-owned business and flow through entity tax rate reduction (Sole Proprietorships, Partnerships and S Corporations).
- Current maximum tax rate 39.6%.
- Proposed maximum tax rate 25%.
- Current C Corporation tax rate 35%
- Proposed C Corporation tax rate 20%.
- Tax U.S. companies only on U.S. income instead of worldwide income.
There is tremendous opportunity this year to plan ahead and create permanent tax saving benefits by structuring a year-end tax plan that fits your situation.
Contact us at email@example.com to discuss how to maximize your 2017 tax benefits from the proposed upcoming changes to the tax law.