![]() Overall, with other proposed changes, the effective GILTI rate would rise to 21%. In addition, the effective global intangible low-taxed income (GILTI) rate would increase to 14%. It would hike the tax rate for C corporations from 21% to 28% - still significantly less than the pre-TCJA rate of 35%. The proposal would trim back the large cut made to the corporate tax rate in the Tax Cuts and Jobs Act (TCJA). The proposed budget’s tax provisions target numerous issues of interest to businesses, including: Corporate tax rates Specifically, the changes would affect grantor-retained annuity trusts and charitable lead annuity trusts. The proposal would close loopholes related to certain trust arrangements. According to the White House, the tax would apply to only the top 0.01% of taxpayers. The proposal would impose a minimum 25% tax on total income, generally inclusive of unrealized capital gains, for all taxpayers whose assets exceed liabilities by more than $100 million. The rule prohibits the deduction of a loss when the taxpayer acquires “substantially identical” investments within 30 days before or after the sale date. ![]() The proposal would amend the “wash-sale” rule to cover digital assets. The proposed budget would make this expansion permanent. The Inflation Reduction Act (IRA) extended the expansion through 2025. It also reduced the applicable contribution percentage (the percentage of household income a taxpayer must contribute toward a healthcare insurance premium). The American Rescue Plan Act expanded eligibility for healthcare insurance subsidies to taxpayers with household incomes above 400% of the federal poverty line for 20. After a taxpayer establishes presumptive eligibility for a child, that child would be treated as a specified child of the taxpayer for each month during the period of the taxpayer’s presumptive eligibility. ![]() The proposal also would establish a “presumptive eligibility” for determining when a taxpayer is eligible to claim a monthly specified child allowance or receive a monthly advance child payment. For eligible parents, the credit would increase from $2,000 to $3,000 for children age six and older and $3,600 for children under age six. This proposal would expand the CTC and make it fully refundable and payable in advance on a monthly basis. For individuals with taxable income of more than $1 million, the budget proposes that capital gains be taxed at ordinary rates, with 37% (or 40.8% with the NIIT) generally being the highest rate - or 39.6% (or 43.4% with the NIIT) if the top tax rate is raised. The highest capital gains rate now is 20% (or 23.8% if the NIIT applies). Thus, the Medicare tax rate would be 5% for earnings above $400,000, and the NIIT rate would be 5% for investment income above $400,000. The budget also would increase both the additional Medicare tax rate and the NIIT rate by 1.2 percentage points. The NIIT on income over $400,000 would include all pass-through business income not otherwise covered by the NIIT or self-employment taxes. The proposal would reinstate the top individual tax rate of 39.6% for single filers earning more than $400,000 ($450,000 for married couples). In particular, it would make the following changes: Tax rates The proposed budget includes tax provisions that would affect taxpayers of various income levels. What’s Included: Individual Tax Provisions So, what is in the provisions and what is left out or unmentioned? Let’s first start with what’s in it starting with individuals.
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