With the enactment of the first since the 1980s, both corporate and individuals will see major changes in the way they plan and file their taxes starting in 2018. These tax reforms were largely focused on reforming the corporate and business tax codes that over the past 30 years had become outdated as compared with other emerging and developed nations.
In fact, with numerous tax fixes over a three decade period, the tax code was filled with special provisions that often had to be extended every year or two. Moreover, the tax code had become very complicated for both individuals and corporations.
The result of the tax reforms is a new system that puts the United States in a very competitive position by modifying many important provisions such as capital expensing, lower marginal tax rates, and removing the Alternative Minimum Tax. Most of these tax reforms will have a profound impact on the scrap recycling industry. Below is a list of the major tax reforms that will impact the industry:
- Moves to Territorial System with Base Erosion Rules
- Lowers Corporate Tax Rate Permanently to 21% in 2018
- Establishes a 20% Deduction for Pass-Through Businesses
- Provides Full and Immediate Expensing of Capital Investments for Five Years
- Increases Section 179 Expensing Cap from $500,000 to $1 Million
- Retains Trade and Tax Incentives (IC-DISC)
- Enacts Repatriation of Foreign-Source Income at 15.5% and 8% (illiquid)
- Limits Net-Interest Expensing to 30% of Earnings Before for Four Years
- Interest, Taxes, Depreciation (EBIT) and Amortization (EBITA)
- Abolishes Corporate Alternative Minimum Tax
- Retains Interest Charge-Domestic International Sales Corporation (IC-DISC)
- Eliminates Domestic Production Tax Credit (Section 199) After 2018
For more information, please contact Billy Johnson