Last week, Republicans in Congress and the White House officials released their plan to overhaul the current tax code the Unified Tax Reform proposal.
On Sept. 27, the GOP unveiled a tax reform framework that was negotiated behind closed door by key players from the House, Senate, and White House, or the “Big Six.”
The key points most affecting independent grocers include:
Individual
– The package is “completely designed with the middle class in mind” and “tax relief is focused on middle class families”
– Expands the zero-tax bracket
– Doubles the standard deduction to $12,000 for individuals and $24,000 for married couple and eliminating most itemized deductions (impacts 30 percent of taxpayers)
– Retains mortgage interest and charitable giving, and Committees are encouraged to retain tax incentives for higher education, retirement, and work
– Compresses the current seven brackets to three brackets – 12 percent, 25 percent, and 35 percent (Committees are given the flexibility to add fourth rate on the wealthiest taxpayers)
– Larger child tax credit – significantly increasing from $1000 per child under 17 (under current law) but not specifying an amount to allow the Committees to “adjust the dials” to help middle class, increasing family income limits so more families are eligible, and eliminating the “marriage tax penalty”
– Creates a $500 tax credit for taxpayers with non-child dependents
– Repeals the individual AMT
– Eliminates most itemized deductions, impacting 30 percent of taxpayers.
– Repeales the estate tax
Corporate
– Small Business – max tax rate will be 25 percent, and will be adopting measures to ensure personal income/wages are not recharacterized as profits
– Corporate Rates – Cap on rate will be 20 percent, eliminating AMT, allowing immediate expensing of new investments for at least five years, partially limiting interest deductibility
– Committees will be looking to eliminate many of the other business credits – exempting business R&D and low-income housing credits
The congressional tax-writing committees are expected to introduce tax reform legislation in the coming weeks, however it’s not clear just how closely lawmakers will follow the framework.
Tell your Members of Congress to support tax reform while maintaining crucial deductions and preserving the Last-In, First-Out (LIFO) method of accounting HERE.
Information courtesy of the National Grocers Association’s Blog.