Senate Reveals Tax Bill

The Senate recently released their version of the tax bill. Keep in mind – the Senate bill and the House tax bill, have not been debated or voted on. There will be many iterations to go before a final bill is passed. Below are some highlights of the proposed bill:

Individual Provisions

  • Rates are slightly being lowered
    • The 35% bracket will start earlier and the top rate will be 38.5% starting at $500,000
  • Standard deduction would be doubled
  • Personal exemptions would be repealed
  • Pass-through income would be reduced by 17.4% and include service income if adjusted gross income (AGI) is under $150,000
  • Net-operating losses (NOLs) carryforward only and limited to 90% of income
  • Repeals state taxes deduction as well as the property tax deduction
  • Repeals the deduction for home equity interest
  • Limits casualty and theft losses to presidentially declared disasters
  • Repeals deduction for tax prep fees and all miscellaneous 2% expenses
  • Principal residence exclusion requires five years of living there
  • Alternative minimum tax (AMT) is repealed

Business Provisions

  • Corporate rate would be 20%
    • Includes personal service corps
  • Lowers the dividend received deduction
  • Section 179 limit is increased to $1 million
  • Eliminates the need to track inventory if receipts are under $15 million
  • Limits interest deduction to interest income plus 30% of taxable income
    • Disallowed portion carries forward
  • Bonus depreciation increased to 100% through 2022
  • NOLs limited to 90% of income
    • No carryover limit
  • Like-kind exchange only for real property
  • All buildings will now be depreciated over 25 years and improvements over 10 years
  • Entertainment expenses will be non-deductible and all meals will be subject to 50%
  • Non-qualified deferred compensation will be taxable when vesting occurs

Estate and Gift Tax

  • Lifetime exclusion will be doubled but estate tax is not repealed

If you have any questions or would like additional information please contact your trusted advisor.

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