Capitol Report: Here’s a breakdown of how the new House tax bill impacts business taxes
Corrects the rate on repatriated cash and profits.
House Republicans on Thursday unveiled the Tax Cuts and Jobs Act, new legislation that would cut corporate taxes and repeal taxes paid by large estates. Though the bill now has a long journey into becoming law, here are the highlights on the impact on business taxes.
• The corporate tax rate will be 20%. The description of the bill suggests that the corporate tax rate will be permanent, not temporary. That’s the most expensive element of tax reform, costing $ 1.46 trillion over a decade, according to the Joint Committee on Taxation.
• Pass-through businesses will see their tax rate lowered to 25% — for what’s called an “active” business activity. Other income would still be taxed at individual rates, up to the top rate of 39.6%. So-called “personal service companies” — like law firms — won’t be able to benefit from that rate.
• The tax on repatriated cash will be 12% and the tax on repatriated profits will be 5%.
• Interest deductability for multinational companies will be limited in a bid to prevent excessive leverage.
• A deduction on domestic production is eliminated, raising nearly $ 100 billion over a decade.
Also read: A breakdown of how the new House tax bill impacts individual taxes