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.



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