How could tax reform affect your business?

As tax reform moves through the legislative process, use this tool to estimate the effects on your tax liability of certain federal income tax reform proposals.

The House Republican's most recent written proposal, A Better Way, was released in June 2016. President Trump released a proposal during his campaign for office and a one page summary in April 2017, which reiterated most of his campaign proposal. The most recent official release was a joint press release on July 27,  which removed the border adjustment tax from the House’s earlier proposal.

  • Tax Reform Estimator

    RSM’s tax reform liability estimator does not address every potential issue in tax reform proposals*, and it does not attempt to apply current tax reform proposals to any specific set of facts. Accordingly, you should not rely upon this calculation to provide any level of certainty with respect to tax reform, as the exact effects will not be known until legislation has been passed.

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  • This estimator assumes interest expense on outstanding loans will continue to be deductible. This input should represent expected annual interest expense for newly incurred debt.

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    This estimator assumes prior asset purchases would continue to be depreciated over their remaining depreciable lives but that newly purchased assets may be immediately expensed. If the current year being used for inputs is not reflective of your typical level of annual capital asset purchases, the number should be more reflective of typical first year depreciation on annual capital asset purchases.

  • President Trump's campaign proposal had depreciation and interest provisions specific to manufacturers; the proposal released April 24, 2017 was silent on this issue. It is unknown whether the silence indicates this will no longer be specific to manufacturers or not.

  • Results

    Under the current proposal of the White House, your business's estimated annual tax liability would by .

    Under the current proposal by the House Republicans, your business's estimated annual tax liability would by .

    If implemented under the current proposals, your business's one-time repatriation tax may total between and .

    These calculations are solely an estimate. Contact your tax professional to fully understand all of the factors affecting your tax liability.

*While this estimator addresses the primary proposed changes, the current proposals contain very little detail. For example:

  • President Trump’s proposal is based on lowering corporate and flow-through tax rates to 15 percent, and allowing manufacturer’s an election to immediately expense capital asset purchases (except land) in lieu of deducting interest expense. While the White House press release in April was silent on this latter issue, the estimator incorporates it.
  • The House proposal changes corporate rates to 20 percent and flow-throughs to 25 percent after deducting compensation paid to flow-through owners. It also incorporates immediate expensing for capital asset purchases (except land) and disallows the net interest deduction for all taxpayers. The House version also removes the domestic production activities deduction. Both proposals contain provisions for a one-time repatriation tax on foreign earnings held overseas and a switch to a territorial tax system.
  • The estimator assumes the taxable income input does not contain foreign sales such that it would be the proper starting point in a territorial system.

The tax reform process is filled with uncertainty, and will continue to be, until final legislation is signed by the president. In light of this uncertainty, it is critical for you to monitor changes in the proposals for the possible effects on your business.  

Bookmark our tax reform resource center for continuing coverage as the process unfolds.


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