by alliantgroup staff, Houston, TX (International Headquarters)
Jan. 11, 2018 | published in /PRNewswire/
Last month, Congress passed, and the president signed into law, the Tax Cuts and Jobs Act. This legislation represents the most comprehensive reform of the tax code in over three decades and implements a number of sweeping policy changes that are intended to provide tax relief for U.S. businesses and encourage long-term economic growth.
The highlights of the legislation include major reductions in individual, business and corporate tax rates as well as the removal (or reform) of a number of incentives to offset rate reductions. Most of the corporate provisions in the new law are permanent while those on the individual side (due to budgetary restraints) are set to expire by the end of 2025. However, it is the expectation of GOP lawmakers that a future Congress will make the changes for individuals and pass-throughs permanent.
On the corporate side, the new law lowers the corporate tax rate down to 21 percent and eliminates the corporate Alternative Minimum Tax (AMT). For businesses organized as pass-through entities, the legislation provides for a 20 percent deduction of qualified business income (although certain types of businesses will face a cap on the amount they can claim through their deduction).
With respect to individual tax rates, the new law maintains the seven tax bracket structure, but reduces the rates of several brackets while setting a new top rate of 37 percent. The bill nearly doubles the standard deduction to $12,000 for single filers and $24,000 for joint filers. The new law also curbs who is hit by AMT on the individual side by raising the income exemption levels – $70,300 for single filers and $109,400 for joint filers.
To pay for these cuts, the legislation removes many popular incentives, credits and deductions. However, alliantgroup applauds the decision by our elected officials to keep several important pro-growth tax incentives in place. Specifically, the bill preserves the Research and Development Tax Credit, a federal incentive that has already provided immense value to U.S. businesses and has helped to promote a more dynamic, innovative and competitive American economy. The loosening of AMT restrictions will only serve to make the credit more accessible to small and mid-size businesses.
Additionally, alliantgroup also applauds the retention of IC-DISC, a valuable export incentive that has benefited countless small and mid-size companies and the Work Opportunity Tax Credit (WOTC), a vital incentive that rewards businesses for bringing people from historically disadvantaged groups into employment.
“I commend our elected officials for looking for solutions that will strengthen U.S. businesses and expand economic opportunities for all Americans. I’m especially heartened to see that the bill keeps in place the R&D Tax Credit. We have seen first-hand at alliantgroup how critical the R&D Tax Credit has been in helping businesses grow, create jobs and remain competitive and innovative.”
About the Author
alliantgroup is a management consulting company with a mission to strengthen American businesses through reinvestment in innovation and job growth. We educate businesses, the industry groups that serve them and the accounting firms that advise them on federal and state credits and incentives that are legislated by our government to keep the U.S. competitive in the global landscape. We are proud to have helped over 20,000 businesses claim nearly $13 billion in credits and incentives. alliantgroup is headquartered in Houston, Texas with additional offices located in Austin, Boston, Chicago, Indianapolis, New York, Irvine, Sacramento, Washington, D.C.; and Bristol and London in the U.K. For more information, visit alliantgroup and engage with us on LinkedIn, Facebook, Twitter, and YouTube.