US Tax Reform Plan main points, by Italian CPA

The long-awaited tax reform was quietly approved by the House and then signed by the US President on 22 December 2017.
It is, in fact, the most drastic change to US tax code of the last 30 years!
Here are the reform main points:
  • The corporate tax rate has been permanently cut from 35% to 21% for companies of all sizes and industry fields.
  • Top individual tax rate will drop to 37% from 39.6%
  • “Bonus depreciation” is increased to 100% (for machinery and equipment purchases it applies immediately and until 2022)
  • Multinationals and giant corporations will repatriate their capitals to the US with an 8% one-time tax on their earnings (15.5% in case of offshore cash) instead of the average 35% under current federal law (which will be terminated)
  • Meaningful advantages in the real estate industry
  • Business premises income deductibility
  • Tax reduction on individuals until 2025
  • Estate tax exemption (which lets heirs save on millions of dollars)
  • Student loan interest deduction
  • End of tax penalties for individuals who do not obtain health insurance coverage
What will be the medium to long-term results desired by the reform?
It is estimated that the federal budget will decrease of 1.5 billion $ over the next 10 years.
Since such great amount of money will remain in the business circle, US economic growth will literally boost and experience the following effects:
  • GDP growth up to 4%
  • The US stock-market could head a lot higher and grow dramatically
  • A medium-to-long term increase on banks and corporate earnings
  • Increase in jobs
  • The repatriation of foreign earnings and companies who had previously relocated (causing some understandable fears in Europe and China about possible economic losses in the coming years).
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