The legislation includes substantial changes to the taxation of individuals, businesses in all industries, multi-national enterprises, and others. Highlights include:
- A permanent reduction in the statutory C corporation tax rate to 21%, repeal of the corporate alternative minimum tax (AMT), expensing of capital investment, limitation of the deduction for interest expense, and a multitude of other changes to the corporate tax rules.
- Fundamental changes to the taxation of multinational entities, including a shift from the current system of worldwide taxation with deferral to a hybrid territorial system, featuring a participation exemption regime with current taxation of certain foreign income, a minimum tax on low-taxed foreign earnings, and new measures to deter base erosion and promote U.S. production.
- Significant changes relevant to the taxation of tax-exempt organizations, insurance businesses, financial institutions, regulated investment companies (RICs), and real estate investment trusts (REITs).
- A temporary new deduction for certain individuals, trusts, and estates with respect to “domestic qualified business income” of passthrough entities and sole proprietorships.
- Temporary reductions in the individual income tax rates, accompanied by new limits on itemized deductions (such as the deduction for state and local taxes), other temporary changes to the individual income tax rules, and a more restrictive permanent cost-of-living bracket adjustment.
- Permanent repeal, in effect, of the individual mandate in the Patient Protection and Affordable Care Act. This report includes analysis and observations regarding the myriad of tax law changes in H.R. 1.
KPMG has prepared a 167-page report that examines the provisions in the new tax law and provides observations. KPMG Report is available at: New tax law (H.R. 1) – Initial observations [PDF 1.4 MB]
A brief document summarising the path of the US Tax Reform can also be found below.
For further information, please contact Dan Joe or Wade Wagatsuma.