![]() The Senate bill generally would have allowed a temporary deduction in an amount equal to 23 percent of qualified income of pass-through entities, subject to a number of limitations and qualifications. The House bill proposed a 25-percent tax rate for certain pass-through income after 2017, with a nine-percent rate for certain small businesses. Exceptions would exist for small businesses, including an exemption for businesses with average gross receipts of $25 million or less.Ĭurrently, owners of partnerships, S corporations, and sole proprietorships – as “pass-through” entities – pay tax at the individual rates, with the highest rate at 39.6 percent. The Conference bill generally caps the deduction for net interest expenses at 30 percent of adjusted taxable income, among other criteria. The Conference bill also creates a temporary credit for employers paying employees who are on family and medical leave. The Conference bill leaves the research and development credit in place, but requires five-year amortization of research and development expenditures. Additionally, the rules for business meals would be revised, as would the rules for the rehabilitation credit. 199 domestic production activities deduction, non-real property like-kind exchanges, and more. Numerous business tax preferences would be eliminated under the Conference version of H.R. 179 dollar limitation at $1 million and the investment limitation at $2.5 million. The Conference bill would also enhance Code Sec. The new, higher limits apply to vehicles placed in service after December 31, 2017, and for which additional first-year depreciation under Code Sec. The new caps would be $10,000 for the first year a vehicle is placed in service (up from a current level of $3,160) $16,000 for the second year (up from $5,100) $9,600 for the third year (up from $3,050) and $5,760 for each subsequent year (up from $1,875) until costs are fully recovered. The Conference bill would raise the cap placed on depreciation write-offs of business-use vehicles. It is often seen as a means to incentivize business growth and job creation. ![]() The bonus depreciation rate has fluctuated wildly over the last 15 years, from as low as zero percent to as high as 100 percent. It also removes the requirement that the original use of qualified property must commence with the taxpayer, thus allowing bonus depreciation on the purchase of used property. A 20-percent phase-down schedule would then kick in. The Conference bill increases the 50-percent “bonus depreciation” allowance to 100 percent for property placed in service after September 27, 2017, and before Janu(January 1, 2024, for longer production period property and certain aircraft). The maximum corporate tax rate currently tops out at 35 percent. The Conference bill makes the new rate permanent. 1 calls for a 21-percent corporate tax rate beginning in 2018.
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