Last week, the Trump administration and select members of Congress released a “Unified Framework for Fixing Our Broken Tax Code,” outlining proposed tax reform targets. We wanted to highlight just a few of the proposed changes that could have particular relevance for our clients.
• The number of tax brackets would be reduced from seven to three (12%, 25%, and 35%) with a possible additional top rate for the highest-income taxpayers.
• With the goal of simplifying the tax code, the framework proposes eliminating many itemized deductions, but retains tax incentives for home mortgage interest and charitable contributions.
• The framework would repeal the death tax and the generation-skipping transfer tax.
• The framework would limit the maximum tax rate for small and family-owned businesses to 25%.
• For at least five years, businesses would be able to immediately write off or expense the cost of new investments in depreciable assets other than structures.
For an overview of the tax reforms included in the framework, please read the one-page summary on the Department of the Treasury website. You can also access the entire Unified Framework.
While there is not a definitive timeframe of when the tax reform proposals would go into effect, it may be as soon as 2018.
If you have any questions about how these proposed changes would impact you or your business, or about tax planning, please contact your engagement team here at tonneson + co.