text: Proposed Tax Plan from House Republicans | VonLehman
  Proposed Tax Plan from House Republicans
  11/09/2017 Curt Wenzler
  Contributing author – Jill Kruetzkamp
  On Thursday, November 2, 2017, House Republicans released a bill which, if passed, would make major changes to the current tax code impacting virtually every individual and business. The proposed plan has a long way to go before any of the provisions are passed and made effective. The Senate Finance Committee is also working on a tax reform bill. If passed into law, the majority changes in the proposed bill would not take effect until in 2018.
  Some of the key elements in the bill are:
  Tax Brackets – The bill would reduce the current 7 tax brackets to 4 tax brackets. The top rate would stay the same at 39.6% but would apply to married couples with income of greater than $1 million from the current income of greater than $480,050. The chart below shows the current and proposed rates for a married couple filing joint.
  Repeal the estate tax over six years
  Double the amount of exempt inherited wealth from $5.5 million to $11 million
  Standard Deduction, Personal Exemption & Child Tax Credit
  Repeal casualty loss deduction
  Repeal alimony deduction
  Repeal student loan interest deduction
  Repeal medical expense deduction
  Repeal state and local income tax and sales taxes deduction
  Repeal Deduction for tax preparation
  State and local property taxes remain deductible up to $10,000
  Mortgage interest remains deductible with the cap on newly purchased homes decreasing from $1 million to $500,000
  Charitable contributions retained
  Adoption credit repealed
  Elderly and totally and permanently disabled credits repealed
  Mortgage credit certificates repealed
  Plug-in electric vehicles credit repealed
  Current education credits (American Opportunity, Hope and Lifetime) would be combined into one education credit. Proposed would be 100% credit on the first $2,000 and 25% of the next $2,000.
  Contributions to Coverdale education savings accounts would be prohibited. Existing Coverdale accounts can be rolled over into a 529 Plan.
  Income from Pass-Through Businesses
  Create a new 25% rate for some pass-through business income – Sole proprietorships 1040 Schedule C, Partnerships 1065 K-1, and S Corporations 1120S K-1. Currently the income is being taxed at the taxpayer's individual tax rate
  Certain Personal services businesses would not be eligible for the 25% rate: Law, accounting, health, engineering, performing arts, financial services, brokerage services and consulting
  Passive activities would be eligible for the 25% rate
  Non-passive pass-through business activities, including wages, would generally be 30% taxed at 25% and the other 70% at the taxpayer's individual tax rate
  A flat corporate rate of 20% (25% for personal service corporations), would replace the current four tier schedule (15%, 25%, 34% and 35%)
  Most business credits repealed except research and development and low-income housing
  REPEALED CREDITS/DEDUCTIONS
  Orphan Drug Credit (testing for rare diseases)
  Access for disabled Credit
  Oil and Gas Credits
  Social Security taxes on employee tips
  Electricity from certain renewable sources
  Investment tax Credit for eligible energy property
  Qualified property, newly acquired, and placed in service can be expensed at 100% (additional year for longer life property).
  Section 179 limitation would be raised to $5 million from $500, 000 and the phase-out threshold to $20 million from $2 million
  Like-kind (Sec. 1031) exchanges limited to real estate with the exception of pending exchanges
  Net Operating Losses limited to 90% of taxable income. Indefinite carry forward and no carry back
  Recreation and entertainment expenses limited to amounts included in employees' taxable compensation
  Cash Accounting method of accounting made available to corporations with gross receipts of $20 million or less from the current $5 Million
  Exemption for the percentage-of completion method for long term contracts would increase from $10 million to $25 million