For individual taxpayers, the framework calls for:
- Three tax brackets: 12%, 25%, and 35% (currently there are seven brackets, with the lowest one being 10% and the top one being 39.6%). However, the framework allows congressional tax-writing committees to add a fourth, higher bracket for high-income individuals. The income levels at which the three brackets would apply were not specified.
- Repeal of the alternative minimum tax.
- Repeal of the estate tax and the generation-skipping transfer tax.
- Taxing passthrough income at a maximum rate of 25%. (The tax-writing committees would be given the task of developing rules to ensure that high-income taxpayers do not use this provision to avoid the 35% bracket.)
- Increase the standard deduction to $12,000 for individuals and to $24,000 for married couples filing jointly.
- Increase the child tax credit and provide a $500 credit for care of nonchild dependents.
- Eliminate most itemized deductions, including the deduction for state and local taxes, while preserving the deductibility of mortgage interest and charitable contributions. The framework directs Congress to maintain tax incentives for higher education, retirement savings, and employment.
For businesses, the framework calls for:
- An end to taxation of U.S. companies’ worldwide income and a move to a territorial system. The tax-writing committees would have discretion to write anti-base-erosion measures.
- A one-time tax on accumulated offshore earnings, which would be taxed at two unspecified rates: One rate for cash and cash equivalents and a lower rate for other assets.
- Limit the deductibility of interest.
- Eliminate deductions, at the tax-writing committees’ discretion, but the framework calls for the research and low-income housing credits to be retained.
- For five years (or more), allow 100% expensing of the cost of depreciable assets, except for buildings.