The most important considerations are the current tax income , estate, gift, and corporate tax provisions that are NOT in the House bill and will probably not be included in the subsequent Senate bill (but no guarantees on this):
- The 21% top corporate tax rate remains the law
- Stepped up basis at death for capital assets included in the gross estate remains the law
- The 12/31/2025 “sunset” of the current estate and gift tax exemptions remains the law (2022 exemption of $12.06 million single and $24.12 million married)
- Valuation discounts for transfers (lifetime exemption gifts) of minority ownership interests and lack of marketability remains in place under the guidelines of Rev. Rul. 93-12
- The “grantor trust” income and estate tax rules remain in place including “grantor ILITs”. Death benefits for “grantor ILITs” with future premiums due and death benefits for newly created “grantor ILITs” would remain estate tax free.
- The $15,000 per donee gift tax annual exclusion remains the law ($16,000 gift tax annual exclusion in 2022)
- The 40% top estate tax rate remains in place.
- The 20% top capital gains tax rate remains the law (plus the 3.8% NIIT surtax on capital gains and dividends for certain high earners)
- This was 25% last time. Rep. won the battle
- The 37% top income tax rate remains in place (plus the 3.8% NIIT surtax on capital gains and dividends for certain high earners)
- The 20% deduction for K-1 “pass-through” profits of certain S Corp and LLC owners remains in place. This 20% deduction can reduce the top marginal tax rate on K-1 profits from 37% to 29.6% for high income S Corp and LLC owners.
- Tax deferral of cash value growth, tax free withdrawals to basis (FIFO) and loans for non-MECs, and tax free death benefits for life insurance remains the law
- Tax deferred growth and LIFO taxation of withdrawals for annuities remains in place
- The indexed tax deductibility limits for IRAs and Qualified Retirement Plans (QRPs) remain in place.
- Tax free benefits for standalone LTC products and LTC riders remains the law.