Business Tax Reform
Taxes & Business
Federal tax reform was most dramatic in the business arena, where the biggest change is a sharp drop in the top corporate income tax rate to a flat rate of 21% and a repeal of the corporate Alternative Minimum Tax (AMT).
As a sweetener for multinational companies to bring their cash back into the U.S., the new tax law will drop the repatriation tax rate from 35% to 15.5% on untaxed (by the U.S.) cash-equivalent profits and 8% on illiquid assets. Additionally, most U.S. companies no longer will pay taxes on the amount of income taxed by other countries.
Deductions Pared Back
In return, corporations will see interest deductions capped at 30% of adjusted gross income, although excess deductions may be carried forward. Business entertainment deductions will disappear, as well as those for providing employees with transportation benefits.
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