The GOP Tax bill, formerly known by the short title Tax Cuts and Jobs Act (“TCJA”), the most significant tax legislation since the Tax Reform Act of 1986, has passed both houses of Congress and awaits the President’s signature. The TCJA makes major changes to the taxation of individuals, modifying individual tax brackets and marginal tax rate, while limiting (eliminating) deductions and exemptions. However, the most significant changes are on the business side, where it fundamentally changes the taxation of corporations, pass-thru entities and multinational groups.
Late last week the IRS issued updated withholding tables to conform employee wage withholding to the new tax rates put in place by the Tax Cuts and Jobs Act (you can read more about the TCJA here). The new tables are designed to work with existing W-4s, although the IRS also announced that it is developing a new W-4 for use in future tax years. Employers are required to begin using the new wage withholding tables by February 15, 2018. You can view the new wage withholding tables here.
We have updated our TCJA Navigator to reflect the final official print of the tax bill signed by President Trump on December 22, 2017. You can view the updated TCJA Navigator here. The previous edition of the TCJA Navigator (which tracks the Conference Committee print) is still available here.
Just days after the bill popularly known as the Tax Cuts and Jobs Act (the “TCJA”) was signed into law on December 22, the Treasury Department issued Notice 2018-07, summarizing the regulations Treasury intends to issue on the manner in which taxpayers will determine amounts included in gross income by a United States shareholder under the deemed repatriation provisions of the TCJA. You can read the Notice here.
Among the many changes to the U.S. tax code that became law today when the President signed the legislation known as the Tax Cuts and Jobs Act (the “TCJA”) are the doubling of the Federal estate, gift and generation-skipping transfer (“GST”) tax exemption amounts from $5 million to $10 million per individual, with additional inflation adjustments as under prior law. The increased exemption amounts, however, are scheduled to expire on December 31, 2025.
We anticipate that estate planning in 2018 will be focused on reviewing Wills and other testamentary documents to make sure they continue to function appropriately in this new tax environment (particularly if they contain “formula dispositions” of the type described in this memorandum) and, where appropriate, on taking advantage of the increased exemption amounts through additional lifetime gifting.
President Trump signed the (previously titled) Tax Cuts and Jobs Act into law this morning, meeting congressional Republicans’ stated goal of enacting comprehensive tax reform before the end of the year.
On December 15, the Conference Committee reconciling the House and Senate tax reform bills released its full bill text to be voted on by both chambers of Congress and, if approved, presented to the President. The compensation provisions in the final bill are substantially the same as those in the Senate bill. The most important of these provisions are as follows:
Deduction Limit on Executive Compensation Paid by Public Companies.
The final bill makes the following changes to Section 162(m):
- The exceptions for performance-based compensation (including stock options) and commissions are repealed.
- The list of covered employees is expanded to include the CFO.
We are pleased to release our first “TCJA Navigator,” a hyperlinked version of the Conference Committee’s tax reform bill released on December 15th. This Navigator includes a table of contents organizing the tax bill by subject matter, with hyperlinked page numbers that will take you to the section at hand. We hope this proves a useful resource for your study of what may be the final version of the Tax Cuts and Jobs Act.
The Conference Committee has released its final legislative text of the Tax Cuts and Jobs Act of 2017. At the same time, the committee released its conference report (an explanation of the final text), together with the JCT’s preliminary revenue estimates. You can read the final legislative text here, conference report here and JCT revenue estimates here.
We also ran a comparison of the final legislative text against the final Senate Bill, which is available here.
The Joint Committee on Taxation (“JCT”) released two documents over the weekend comparing the House and Senate Bills – one describing the differences and similarities between the two bills, and a second focusing on the effect that those differences have on the revenue generated by each bill on a static basis. The JCT’s revenue comparison finds that both bills cost roughly the same amount before factoring in economic growth – with the House Bill clocking in at $1.4455 trillion over ten years with the Senate Bill at $1.4468 trillion.
The JCT also released its dynamic score of the final House Bill yesterday, estimating that the House Bill would increase the level of real GDP relative to the baseline forecast by 0.7% on average throughout the 10-year budget window.