Republican House Tax Bill

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Author:  Heather N. Harris, Day Pitney LLP

Yesterday, Republicans in the House of Representatives unveiled the “Tax Cuts and Jobs Act.” Notably, the tax reform bill:

  • Increases the basic exclusion amount for estate tax and generation-skipping transfer tax from $5,000,000 to $10,000,000 for decedent’s dying and generation-skipping transfers made after December 31, 2017 (adjusted for inflation after 2010).
  • Repeals the estate tax and generation-skipping transfer tax for decedent’s dying and generation-skipping transfers made after December 31, 2023.
  • Increases the basic exclusion amount for gift tax from $5,000,000 to $10,000,000 for gifts made after December 31, 2017 (adjusted for inflation after 2010).
  • Does not repeal the gift tax, but reduces the top rate for the gift tax to 35 percent from 40 percent for gifts made after December 31, 2023.
  • No change to the step-up in basis of an asset at death.
  • No change to treatment of retirement accounts.
  • Repeals the Alternative Minimum Tax.
  • Pass-through businesses pay a 25% tax rate, excluding some professional service partnerships such as lawyers and accountants.
  • Reduces the corporate tax rate to 20 percent from 35 percent