President Trump’s just-unveiled his “United Framework for Fixing Our Broken Tax Code” plan, and it claims to offer some very big tax benefits to businesses and individuals alike. It’s starting to gain some momentum, but can it actually deliver?
The plan still has to get through committees on both the House and Senate sides and answer some large lingering questions – like how are we gonna pay for all of this?
But it’s smart to take a look at what’s being proposed to see what’s in store for your company.
Check out seven key provisions in the plan.
What you’d gain
Not surprisingly, the biggest headlines are the most dramatic. Here’s what you and your peers should be getting in this overhaul:
1. A lower corporate tax rate. Well, we knew it wasn’t going to be the 15% originally promised! But a cut in the corporate tax rate down to 20% was bigger than many economists predicted.
2. A lower rate for pass-through businesses. While pass-through businesses had been promised the same treatment as standard corporations, it looks like anyone who falls into this category (an estimated 95% of all U.S. businesses) will be subject to a straight 25% tax rate.
Note: There has been talk of a narrowing of the definition of “pass-through business,” but no official word came in the proposal.
3. A five-year write-off of business expenses. Get those growth initiatives going! Trump’s plan will let you write off the full price of your capital expenditures for the next half a decade, at the least.
4. A one-time repatriation tax. Bringing back your profits from overseas? You’ll get dinged with a tax that should land in the area of 10%.
What you’d lose
Everyone knows you can’t get something for nothing, which means obviously businesses will have to accept some trade-offs in exchange for the dramatically dropped tax rate. Here are two of the biggies:
5. The end of the business interest deduction … to some extent. You can kiss this popular – and lucrative – deduction goodbye.
6. The end of a host of other business tax breaks … TBD. You’re in for a bit of a waiting game here to see which breaks get the ax.
What (probably) isn’t going anywhere
One of the biggest criticisms of Trump’s tax plan is that it’s light on details. And while many business tax perks are facing the chopping block to balance out the drop in corporate and individual tax rates, experts predict a few things will go untouched, such as:
7. The R&D tax credit. While the writing committees have been charged with sorting out the details on which deductions will get the heave-ho, they’ve been told to leave this one intact. So go ahead and make plans for 2018 – this key new-endeavor starter isn’t going anywhere.
When will we know for certain? The president is pushing for the plan to be passed by year’s end.
Info: You can read the full tax plan here: