As many of you know, a Republican tax cut plan was recently unveiled to Congressional members. While the proposal lacked some details that give us some pause in providing a complete analysis of what it means for the business owners and families that we serve, there is one critical portion that we wanted to ensure our clients know about. Please be assured that as this plan continues to take shape our team at J.D. Frost and Company will continue to monitor the ongoing ramifications for our clients.
As you are aware, businesses are currently taxed at the owner’s individual income tax rate, which can be as high as 39.6% in the current tax law. While the current Republican plan would lower this top individual rate to 35%, the new proposal contains language about a “pass through rate” for businesses that would significantly lower their rate. The idea behind this proposal is that large corporations can receive large tax decreases to keep jobs in America and to provide growth incentive. These “pass through rates” would instead be capped at 25% for businesses, though President Trump has called 20% a “perfect number.”
This obviously has significant ramifications for business owners and the U.S. Treasury. While it would save a significant amount of money for many business owners, legislators on both sides of the political spectrum are concerned about loopholes and the lost revenue for the country. We will continue to monitor the progress of this new tax plan as it develops. For most of our business clients this would be significant tax reform.
If you have any questions or concerns for your business, please feel free to reach out to me at firstname.lastname@example.org. I’d be happy to be helpful.