View what happened this month.
GOP DRAFT TAX REFORM (PART I)
House Republicans have released a portion of their initial draft tax legislation, which is expected to soon be marked up by the House Ways and Means Committee. For now, the draft legislation includes the following provisions:
- The standard deduction would be increased (until Jan. 1, 2029) by $2,000 for joint returns, $1,500 for heads of households, and $1,000 for individual filers, amounting to a tax cut for most American taxpayers for the duration of the Trump’s second term.
- The deduction under Section 199A for pass-through entities would be increased from 20% to 22%. The increased write-off is a possible offset for those who would face higher taxes if the rates on the highest income earners are increased as a revenue raiser.
- The overall child tax credit would grow from $2,000 to $2,500 through 2028 (although there is no mention of a change to the refundable portion).
- The Social Security Number requirement for the child tax credit would be extended to both the child and the parent.
- There would be a permanent increase in the threshold triggering the tax on a person’s estate upon their death to $15 million starting in 2026, which would float with inflation in the years after.
- The proposal also calls for extending the current effective tax rates on international provisions global intangible low-taxed income (GILTI) and foreign-derived intangible income (FDII), which are set to increase starting in 2026.
GOP tax writers are expected to amend the package with some of the thornier elements of Trump’s legislative agenda, including potential tax hikes on the wealthy and corporations.
By our next newsletter, we expect a more solidified tax bill to be at play. We will provide an update (Part II) on the finalized provisions of the tax bill, particularly those provisions that impact the U.S. expat community.