On December 2, 2017 the U.S. Senate passed the Tax Cuts and Jobs Act with 51 against 49 votes.

 

For businesses the bill a.o.:

-    reduces the corporate tax rate from a maximum of 35% to a flat 20% rate (25% for personal services corporations);

-    allows increased expensing of the costs of certain property;

-    limits the deductibility of net interest expenses to 30% of the business's adjusted taxable income;

-    repeals the work opportunity tax credit;

-    terminates the exclusion for interest on private activity bonds;

-    modifies or repeals various energy-related deductions and credits;

-    modifies the taxation of foreign income; and

-    imposes an excise tax on certain payments from domestic corporations to related foreign corporations.

 

With respect to individuals, the bill a.o.:

-    replaces the seven existing tax brackets (10%, 15%, 25%, 28%, 33%, 35%, and 39.6%) with four brackets (12%, 25%, 35%, and 39.6%);

-    increases the standard deduction;

-    repeals the deduction for personal exemptions;

-    establishes a 25% maximum rate on the business income of individuals;

-    increases the child tax credit and establishes a new family tax credit;

-    repeals the overall limitation on certain itemized deductions;

-    limits the mortgage interest deduction for debt incurred after November 2, 2017, to mortgages of up to $500,000 (currently $1 million);

-    repeals the deduction for state and local income or sales taxes not paid or accrued in a trade or business;

-    repeals the deduction for medical expenses;

-    consolidates and repeals several education-related deductions and credits;

-    repeals the alternative minimum tax; and

-    repeals the estate and generation-skipping transfer taxes in six years.

 

The next step in the legislation process is to send legislation to the President Trump.

 

The text of the bill can be found here.

 

 

Copyright – internationaltaxplaza.info

 

 

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