With a new Administration running the country, there are a lot of new proposals being considered. Tax Reform has now become the new focus of the President and several key lawmakers. The last monumental tax reform act was in 1986.   

Here is the timing as we know it today.  Treasury Secretary Steven Mnuchin and Speaker Paul Ryan have both indicated that they'd like to see a tax reform bill released publicly by the end of April or early May and pass the House before Congress takes its traditional August recess.

The Senate will have its own separate process. Since passing tax reform in the Senate will likely involve the budget reconciliation process, tax reform isn't likely to go into effect until the government’s next fiscal year, which begins October 1, 2017.

 Tax Reform Plan Promised During Presidential Campaign

The most likely tax reform changes are still the ones promised during the Presidential Campaign:

 Campaign Ideas for Individual Taxes

1.            Only three individual tax brackets, with a maximum rate of 33% (now 39.6%).

2.            Eliminating alternative minimum tax.

3.            Keeping preferential 15%/20% capital gains rates.

4.            Ending the 3.8% net investment income tax.

5.            Increasing childcare tax breaks.

6.            Taxing private equity partners ("Mitt Romney") at 33% instead of 20%.

7.            In  exchange  for  lower  tax  brackets,  itemized  deductions  are  capped  at $100K/$200K.

 Estate and Gift Tax Proposed Changes

1.            Trump wants to end the 40% tax on estates over $5.49 Million/$10.98 Million.

2.            And replace it with a 20% capital gains tax on untaxed gains at death over $10 million.

 Business Taxation Ideas in Campaign

1.            Corporations will have a maximum corporate tax rate of 15%.

2.            Partnerships and Sub ­S Corp income left in businesses will only be taxed at 15%.

3.            The Section 179 deduction on property purchases would increase from $500K to $1 million.

4.            Businesses would get a new Childcare Credit.

5.            Existing R&D Credits will continue.

6.            Businesses could deduct all new manufacturing investments.

7.            Some business expenses would disappear in exchange for lower rates.

 At this point in time, the changes mentioned in this article are the most current proposals and many of them are likely to happen, but nothing is certain. We hope we have answered your questions. Please feel free to contact our partners or tax department with any questions that you might have.