Changes to the Taxation of U.S. Corporations under the Tax Cuts and Jobs Act

By Howard Bakrins

2018 brings in sweeping reforms to U.S. taxation of corporations.  Among the many changes are lower corporate tax rates, changes to some corporate deductions, as well as changes to the taxation of foreign subsidiaries of U.S. corporations.

The new tax legislation (H.R. 1), provides for a flat 21% tax corporate income tax rate beginning in 2018, and it makes this new rate permanent.  This is a significant decrease from the maximum tax rate of 35% prior to 2018.  Under the new law, the 80% and 70% corporate dividends received deduction are reduced to 65% and 50% respectively.  In addition, the corporate Alternative Minimum Tax (AMT) is eliminated.

The new legislation also includes a deduction of up to 20% qualifying business income from pass-through entities, such as partnerships, LLC’s and S corporations.  Continue reading----