GST & Gift Tax
1
2 Topic
Current Law
House Bill
Senate Plan
Rates
Seven Brackets: 10% | 15% | 25% | 28% | 33% | 35% | 39.6%
Four Brackets: 12% | 25% | 35% | 39.6%
Seven Brackets: 10% | 12% | 22% | 24% | 32% | 35% | 38.5%
AMT
Enacted
Eliminate
Retained with higher exemption amount
Standard Deduction
$6,350 Single/$12,700 Joint Personal Exemption: $4,050
$12,200 Single/$24,400 Joint Eliminate personal exemptions
$12,000 Single/$24,000 Joint Eliminate personal exemptions
Interest, Dividends & Cap Gains
Interest: Ordinary income tax rate plus 3.8% NIIT Dividends & Cap Gains: 15%/20% plus 3.8% NIIT
Maintain current rate structure and 3.8% NIIT
Maintain current rate structure and 3.8% NIIT
Child & Dependent Care
Child Credit: $1,000 up to age 16 Child & Dependent Care Credit
Child Credit: $1,600 up to age 16 Non-child Dependent Credit: $300 Family Flexibly Credit: $300
Child Credit: $2,000 up to age 17 Non-child Dependent Credit: $500
Itemized Deductions
Alternative to standard deduction Phase-out for high income individuals up to 80% of total deductions
Medical Expenses: Eliminated Mortgage Interest: Retained for interest on home acquisition indebtedness only up to $500K State & Local Taxes: Income/sales tax eliminated. Property taxes limited to $10,000. Charitable Contributions: Retained Eliminate overall itemized limitation
Medical Expenses: Retained with lower threshold Mortgage Interest: Retained for interest on home acquisition indebtedness only up to $1M State & Local Taxes: Income/sales tax eliminated. Property taxes limited to $10,000 Charitable Contributions: Retained Eliminate overall itemized limitation
Education Incentives & Credits
American Opportunity Tax Credit: $2,500 max for first four years Hope Scholarship Credit and Lifetime Learning Credit Student loan interest deduction
Consolidated American Opportunity Tax Credit: $2,500 max for first four years and $1,250 for fifth year Other education provisions repealed
Maintain existing incentives and credits
Gain on Sale of Principal Residence Exclusion
Exclusion: $250K Single/$500K Joint Principal Residence Test: Two out of Five Years
Exclusion: $250K Single/$500K Joint Principal Residence Test: Five out of Eight Years AGI Phase-out
Exclusion: $250K Single/$500K Joint Principal Residence Test: Five out of Eight Years
Alimony Payments
Above-the-line deduction for payor and included in income for payee
No longer deductible for payor or included in income of the payee for divorce decrees entered into after 2017.
Not addressed
Estate/GST & Gift Tax
Unified Credit: $5.49M Top Rate: 40% Stepped-Up Basis
Unified Credit: $10M Top Rate: 40% Stepped-Up Basis After 2024 the Estate/GST fully repealed and Gift Tax rate lowered to 35%
Unified Credit: $10M Top Rate: 38.5% Stepped-Up Basis
Affordable Care Act
Tax imposed for not maintaining minimum essential coverage
Not addressed
No tax imposed for not maintaining minimum essential coverage
3 Topic
Current Law
House Bill
Senate Plan
Corporate Rates
General: Top rate of 35% Personal Service Corporations: Flat 35%
General: Flat rate of 20% Personal Service Corporations: Flat 25%
General: Flat rate of 20% Personal Service Corporations: Flat 20%
Pass-through Rates
Individual ordinary rates
Top rate of 25% on business income Active Business Ratio Methods: (1) Default 30% business income and 70% wages (2) Actual capital ratio of business Personal service businesses not eligible Passive Business: 100% business income
Individual ordinary rates 23% deduction for pass-through entities domestic qualified business income with wage limitations Personal service businesses would phase-out of deduction after $250K Single/$500 Joint
AMT
Enacted
Eliminate
Retained
Bonus Depreciation
50% immediate first-year deduction Original use of the property required Expires after 2019
100% immediate first-year deduction Taxpayer first use of property required Expires after 2022
100% immediate first-year deduction Original use of the property required Expires after 2022
Section 179 Expensing
$500K Limitation $2M Phase-out for property placed in-service
$5M Limitation $20M Phase-out for property placed in-service
$1M Limitation $2.5M Phase-out for property placed in-service
Interest Expense Deduction
Generally 100% deductible in year paid or accrued
Deduction limited for net interest expense in excess of 30% of adjusted business income Excess carried forward five years
Deduction limited for net interest expense in excess of 30% of adjusted business income Excess carried forward indefinitely
Domestic Producers Activities Deduction
Deduction for 9% of qualified production activities income
Eliminate
Eliminate
NOL Deduction
Carryforward: 20 years Carryback: 2 years Up to 100% of taxable income
Carryforward: Indefinitely Carryback: Generally disallowed Up to 90% of taxable income
Carryforward: Indefinitely Carryback: Generally disallowed Up to 90% of taxable income
Like-Kind Exchanges
No gain/loss recognized on business or investment property exchanged for property of a like-kind Applies to real or tangible property
Applies only to real property
Applies only to real property
Business Credits
Various special deductions and credits available for certain businesses
Numerous eliminated or modified except for R&D
Numerous eliminated or modified except for R&D
International
Worldwide system with foreign tax credits and deferral on income kept overseas
Territorial tax system with 100% deduction for foreign-source dividends paid to 10% US corporate shareholders Deemed Repatriation of accumulated foreign profits (deferred foreign income) Cash or cash equivalents: 14% rate Other assets: 7% rate
Territorial tax system with 100% deduction for foreign-source dividends paid to 10% US corporate shareholders Deemed Repatriation of accumulated foreign profits (deferred foreign income) Cash or cash equivalents: 14.5% rate Other assets: 7.5% rate
2 Topic
Current Law
House Bill
Senate Plan
Rates
Seven Brackets: 10% | 15% | 25% | 28% | 33% | 35% | 39.6%
Four Brackets: 12% | 25% | 35% | 39.6%
Seven Brackets: 10% | 12% | 22% | 24% | 32% | 35% | 38.5%
AMT
Enacted
Eliminate
Retained with higher exemption amount
Standard Deduction
$6,350 Single/$12,700 Joint Personal Exemption: $4,050
$12,200 Single/$24,400 Joint Eliminate personal exemptions
$12,000 Single/$24,000 Joint Eliminate personal exemptions
Interest, Dividends & Cap Gains
Interest: Ordinary income tax rate plus 3.8% NIIT Dividends & Cap Gains: 15%/20% plus 3.8% NIIT
Maintain current rate structure and 3.8% NIIT
Maintain current rate structure and 3.8% NIIT
Child & Dependent Care
Child Credit: $1,000 up to age 16 Child & Dependent Care Credit
Child Credit: $1,600 up to age 16 Non-child Dependent Credit: $300 Family Flexibly Credit: $300
Child Credit: $2,000 up to age 17 Non-child Dependent Credit: $500
Itemized Deductions
Alternative to standard deduction Phase-out for high income individuals up to 80% of total deductions
Medical Expenses: Eliminated Mortgage Interest: Retained for interest on home acquisition indebtedness only up to $500K State & Local Taxes: Income/sales tax eliminated. Property taxes limited to $10,000. Charitable Contributions: Retained Eliminate overall itemized limitation
Medical Expenses: Retained with lower threshold Mortgage Interest: Retained for interest on home acquisition indebtedness only up to $1M State & Local Taxes: Income/sales tax eliminated. Property taxes limited to $10,000 Charitable Contributions: Retained Eliminate overall itemized limitation
Education Incentives & Credits
American Opportunity Tax Credit: $2,500 max for first four years Hope Scholarship Credit and Lifetime Learning Credit Student loan interest deduction
Consolidated American Opportunity Tax Credit: $2,500 max for first four years and $1,250 for fifth year Other education provisions repealed
Maintain existing incentives and credits
Gain on Sale of Principal Residence Exclusion
Exclusion: $250K Single/$500K Joint Principal Residence Test: Two out of Five Years
Exclusion: $250K Single/$500K Joint Principal Residence Test: Five out of Eight Years AGI Phase-out
Exclusion: $250K Single/$500K Joint Principal Residence Test: Five out of Eight Years
Alimony Payments
Above-the-line deduction for payor and included in income for payee
No longer deductible for payor or included in income of the payee for divorce decrees entered into after 2017.
Not addressed
Estate/GST & Gift Tax
Unified Credit: $5.49M Top Rate: 40% Stepped-Up Basis
Unified Credit: $10M Top Rate: 40% Stepped-Up Basis After 2024 the Estate/GST fully repealed and Gift Tax rate lowered to 35%
Unified Credit: $10M Top Rate: 38.5% Stepped-Up Basis
Affordable Care Act
Tax imposed for not maintaining minimum essential coverage
Not addressed
No tax imposed for not maintaining minimum essential coverage
3 Topic
Current Law
House Bill
Senate Plan
Corporate Rates
General: Top rate of 35% Personal Service Corporations: Flat 35%
General: Flat rate of 20% Personal Service Corporations: Flat 25%
General: Flat rate of 20% Personal Service Corporations: Flat 20%
Pass-through Rates
Individual ordinary rates
Top rate of 25% on business income Active Business Ratio Methods: (1) Default 30% business income and 70% wages (2) Actual capital ratio of business Personal service businesses not eligible Passive Business: 100% business income
Individual ordinary rates 23% deduction for pass-through entities domestic qualified business income with wage limitations Personal service businesses would phase-out of deduction after $250K Single/$500 Joint
AMT
Enacted
Eliminate
Retained
Bonus Depreciation
50% immediate first-year deduction Original use of the property required Expires after 2019
100% immediate first-year deduction Taxpayer first use of property required Expires after 2022
100% immediate first-year deduction Original use of the property required Expires after 2022
Section 179 Expensing
$500K Limitation $2M Phase-out for property placed in-service
$5M Limitation $20M Phase-out for property placed in-service
$1M Limitation $2.5M Phase-out for property placed in-service
Interest Expense Deduction
Generally 100% deductible in year paid or accrued
Deduction limited for net interest expense in excess of 30% of adjusted business income Excess carried forward five years
Deduction limited for net interest expense in excess of 30% of adjusted business income Excess carried forward indefinitely
Domestic Producers Activities Deduction
Deduction for 9% of qualified production activities income
Eliminate
Eliminate
NOL Deduction
Carryforward: 20 years Carryback: 2 years Up to 100% of taxable income
Carryforward: Indefinitely Carryback: Generally disallowed Up to 90% of taxable income
Carryforward: Indefinitely Carryback: Generally disallowed Up to 90% of taxable income
Like-Kind Exchanges
No gain/loss recognized on business or investment property exchanged for property of a like-kind Applies to real or tangible property
Applies only to real property
Applies only to real property
Business Credits
Various special deductions and credits available for certain businesses
Numerous eliminated or modified except for R&D
Numerous eliminated or modified except for R&D
International
Worldwide system with foreign tax credits and deferral on income kept overseas
Territorial tax system with 100% deduction for foreign-source dividends paid to 10% US corporate shareholders Deemed Repatriation of accumulated foreign profits (deferred foreign income) Cash or cash equivalents: 14% rate Other assets: 7% rate
Territorial tax system with 100% deduction for foreign-source dividends paid to 10% US corporate shareholders Deemed Repatriation of accumulated foreign profits (deferred foreign income) Cash or cash equivalents: 14.5% rate Other assets: 7.5% rate
