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White House Proposed Tax Changes Announced

05.03.17

In an announcement last week, the White House proposed individual and business tax reform. The Trump Administration provided very broad outlines and few specifics.

The proposed individual tax provisions include:

  • Three tax rates - 10%, 25%, and a top rate of 35%. Down from the current seven tax rates, with a top rate of 39.6%.
  • Repeal of the 3.8% tax on net investment income.
  • Elimination of itemized deductions other than charitable contributions and mortgage interest.
  • Repeal of the Alternative Minimum Tax (AMT).
  • Elimination of the Estate Tax.
  • Doubling of the standard deduction for individual and married couples.
  • Unspecified tax relief for families with child and dependent care expenses.

The proposed business tax provisions include:

  • Reducing the top corporate tax rate to 15%. The current top tax rate is 35%.
  • Applying the 15% tax rate to business income of pass-through entities such as partnerships, S corporations, and limited liability companies. Administration officials have stated that this provision will contain measures to prevent business owners from converting their compensation income into lower-taxed business income.
  • Implementation of a territorial tax system in place of the current worldwide tax regime.
  • A one-time tax on business profits in foreign countries repatriated to the United States at an unspecified tax rate.

Please take this opportunity to initiate a conversation with your BPM Tax Advisor regarding your tax goals and objectives. As tax reform legislation becomes more focused, having a good understanding of your plans for the near term and the longer term will allow us to provide you with more proactive tax planning.