Tax reform for both individuals and businesses has finally arrived – a culmination of many years of proposals and debate. On December 20, 2017, the final version of tax reform legislation (hereinafter the Bill) was approved by Congress and President Trump signed the Bill into law on December 22, 2017.
The new law will lower business and individual income tax rates and provide the most significant overhaul of the US tax code in more than 30 years. While individual tax rates may be lower, various other provisions have been changed significantly − some having the effect of lowering US tax liability (e.g., the increased standard deduction) while others are expected to increase it (e.g., the limitation on deducting state and local income and property tax.) Each mobile employee’s circumstances may yield a different result. As a general rule, those employees and executives who do not incur larger state and local property or income taxes are likely to obtain the most tax savings.
Most individual provisions have so-called ‘sunset’ rules − this means that the change is only applicable for a certain period, generally through December 31, 2025, after which the law reverts back to what it was previously unless legislative action occurs to extend the rule or benefit.
Please see the recently released Global Mobility Insight that describes actions that companies with mobile workforces should consider now, including various actions that should be evaluated before the end of 2017. This Insight was released before the details of the final Bill were made public but has now been updated to reflect the new law.
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