Legislative Watch: How Bills in 2017 Could Impact YOUR Taxes

Recently in Congress, Republicans released an updated installment of a blueprint comprised of numerous tax reform proposals.The document is expected to reach the House Floor in 2017 and contains income tax changes that affect individuals, businesses, and the IRS. President-Elect Trump already endorsed many of these proposals, so several of these initiatives stand a good chance of becoming law.Proposals for Individuals and Families:

• Reducing tax rates to three brackets; people in the top income bracket would pay 33%.
• Implementing reduced and progressive tax rates on capital gains, dividends and interest income.
• Eliminating the alternative minimum tax (AMT).
• Consolidating several family tax benefits into a larger standard deduction and increasing the child and dependent tax credit.
• Continuing, and also looking for ways to improve, the earned income tax credit (EITC).
• Simplifying tax benefits for higher education.
• Eliminating all itemized deductions except the mortgage interest and charitable contribution deductions.
• Continuing current tax incentives for retirement savings.
• Repealing the estate and generation-skipping transfer taxes.

Proposals for Businesses:

• Creating a new business rate for small businesses that are organized as sole proprietorships or pass-through entities instead of taxing them at individual rates.
• Reducing the corporate tax rate to 20%.
• Providing for immediate expensing of the cost of business investments.
• Allowing interest expense to be deducted only against interest income, with any net interest expense carried forward and allowed as a deduction against net income in future years (with special rules that apply for financial services companies).
• Allowing net operating losses (NOLs) to be carried forward indefinitely and increased by an interest factor, and eliminating NOL carrybacks.
• Continuing, and looking for ways to improve, the research credit.
• Generally eliminating unspecified special interest deductions and credits.
• Shifting to a territorial tax system.
• Moving towards a “consumption-based tax approach”
• Providing 100% exemption for dividends from foreign subsidiaries.
• Generally simplifying international tax rules, including the elimination of most subpart F rules.

Proposals for the IRS:

• Streamlining the agency into 3 major units: one for individuals and families, one for business, and one for a “small claims court,” meant to expedite the resolutions of routine disputes.
• Reforming IRS leadership so it’s led by an Administrator, appointed by the President with the advice and consent of the Senate, for a single three-year term, instead of a Commissioner who serves for a five-year term.
• Instilling a stronger commitment to taxpayer assistance and a new singular “Service First” mission.
• Improving the efficiency and effectiveness of the IRS.

If parts of this blueprint are enacted over the next few years, as now seems likely, they could result in significant tax savings for you and your businesses!Should you need advice on how to maximize your tax deductions, the tax accountant team at Patrick & Robinson CPAs can help.Contact us at 904-396-5400 or Office@CPAsite.com.