Tax Reform Update: President Trump signs largest tax reform bill in over three decades to the tax code into law

On December 22, President Trump signed into law H.R. 1, the “Tax Cuts and Jobs Act,” a sweeping tax reform law that will entirely change the tax landscape for all taxpayers including individuals, small businesses and large public companies. The legislation reflects the largest major tax reform in over three decades.

The “Tax Cuts and Jobs Act” has largely taken shape at a breakneck speed over a two-month period, with the House passing its version of the bill on November 16 and the Senate passing its version on December 2. The two versions were then reconciled into a single piece of legislation which, due to a procedural complication, underwent a number of small revisions prior to final passage by the Senate and House. Among the few last-minute revisions to the bill was a new title: “An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018.” This article refers to the Act by its commonly used name: “Tax Cuts and Job Act” (or simply, the “Act”).

This comprehensive tax overhaul dramatically changes the rules governing the taxation of individual taxpayers for tax years beginning before 2026, providing new income tax rates and brackets, increasing the standard deduction, suspending personal deductions, increasing the child tax credit, limiting the state and local tax deduction, and temporarily reducing the medical expense threshold, among many other changes. The legislation also provides a new deduction for non-corporate taxpayers with qualified business income from pass-throughs.

For businesses, the legislation permanently reduces the corporate tax rate to 21%, repeals the corporate alternative minimum tax, imposes new limits on business interest deductions, and makes a number of changes involving expensing and depreciation. The legislation also makes significant changes to the tax treatment of foreign income and taxpayers, including the exemption from U.S. tax for certain foreign income and the deemed repatriation of off-shore income.

Caroprese & Company tax professionals are closely working with our clients to advise them regarding specific impacts of the Act.  Please contact us for more information or to engage directly with our tax professionals.

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