Here are key changes to U.S. tax law for individuals and businesses that have emerged from the final Republican bill that’s headed for votes in the House and Senate next week.
Individual Tax Rates
(Note: Individual rate cuts would begin in 2018 and expire after 2025.)
Seven rates, starting at 10% and reaching 39.6% for incomes above $418,401 for singles and $470,701 for married, joint filers.
Seven rates, starting at 10% and reaching 37% for incomes above $500,000 for singles and $600,000 for married, joint filers.For joint filers: 10%: $0 to $19,050 12%: $19,050 to $77,400 22%: $77,400 to $165,000 24%: $165,000 to $315,000 32%: $315,000 to $400,000 35%: $400,000 to $600,000 37%: $600,000 and above
For single filers:
10%: $0 to $9,525 12%: $9,525 to $38,700 22%: $38,700 to $82,500 24%: $82,500 to $157,500 32%: $157,500 to $200,000 35%: $200,000 to $500,000 37%: $500,000 and above
Corporate Tax Rate
Current law: 35%
Proposed: 21%, beginning in 2018.
Corporate Alternative Minimum Tax
Current law: Applies a 20% rate as part of a parallel tax system that limits tax benefits to prevent large-scale tax avoidance. Companies must calculate their ordinary tax and AMT tax, and pay whichever is higher.
Individual Alternative Minimum Tax
Current law: Individual AMT can apply after exemption level of $54,300 for singles and $84,500 for married, joint filers, and the exemptions phase out at higher incomes.
Proposed: Increase the exemption to $70,300 for singles and $109,400 for joint filers. Increase the phase-out threshold to $500,000 for singles and $1 million for joint filers. The higher limits would expire on Jan. 1, 2026.
Current law: Businesses must take depreciation, spreading the recognition of their equipment costs for tax purposes over several years.
Proposed: Businesses could fully and immediately deduct the cost of certain equipment purchased after Sept. 27, 2017 and before Jan. 1, 2023. After that, the percentage of cost that could be immediately deducted would gradually phase down.
Current law: The U.S. taxes multinationals on their global earnings at the corporate rate of 35%, but allows them to defer taxes on those foreign earnings until they bring them back to the U.S., or “repatriate” them.