On Thursday November 16, 2017 House of Representatives passed a monumental bill (the “Bill”) to cut taxes on businesses and individuals. The tax reform plan passed with 227 votes in favor and 205 against.
Senate Republicans hope to carry the Bill through the Senate the week after Thanksgiving, transforming into reality what is predicted to be the major tax reform since Ronald Reagan’s era.
The most significant changes include:
- A permanent cut to the corporate tax rate from 35% to 20%;
- Only three tax rates for individuals (instead of the existing seven), 12% for incomes between $ 24,000 – $ 90,000, 25% for income up to $ 250,000 and 35 % for income up to one million for married couples (and half a million for individuals). The existing maximum rate of 39.6% will be maintained for incomes above these thresholds;
- The foregoing will also apply to Limited Liability Companies and Partnerships (pass-through entities) for the purpose of taxation to individual members;
- An increase in the size of the child tax credit and, to avoid raising taxes on those currently in the 10% tax bracket, an increase in the standard deduction for all taxes to $12,000 for individuals (up from $6,350) and $24,000 for married couples (up from $12,700);
- The estate tax will only apply to estates exceeding 11 million, and will be definitively abolished in 2024.
It is now up to the Senate to work on the clenches for final approval; which approval will only require a simple majority. In other words, if the Republican front will stay compact for the Bill, we will soon have a new Internal Revenue Code.
Article edited by Cav. Piero Salussolia, Esq. and Federica Magni.