MONTGOMERY, Ala. – Alabama Commissioner of Agriculture & Industries John McMillan is encouraged by the recent unveiling of a proposed tax plan by the Trump Administration, the House Committee on Ways & Means, and the Senate Committee on Finance.
Notable provisions of the plan include elimination of the estate tax, reducing the number of individual tax brackets, lowering the corporate income tax and capping tax rates for small businesses.
Farmers in Alabama and across the nation face natural disasters, significant price fluctuations in the market, increased regulations and many other challenges. Without comprehensive tax reform, the American farmer may eventually be taxed out of business or at least taxed where he or she can no longer pass the farm on to the next generation. The elimination of the estate tax is just one of the revisions in the Tax Reform plan that provide farmers hope.
Other elements of the plan that are beneficial to farmers and small businesses alike are lower tax rates for individuals who own businesses and some business interest deductibility. The Tax Reform plan sets the maximum rate for partnerships, sole proprietorships and S corporations at 25%. Those businesses are currently taxed at individual rates, which range from 10% to 39.6%.
Other proposed provisions in the framework of this fiscally responsible tax reform include:
• Creating more jobs and higher wages for American workers, by lowering the corporate tax rate from 35% to 20% and capping the small business tax rate at 25%.
• Permitting businesses to fully and immediately write off business investments for five years, including machinery and buildings, allowing farmers to purchase much needed equipment and build new facilities for their operations.
• Seven tax brackets of taxable income will be consolidated into three –12%, 25%, and the maximum rate is being reduced from 39.6% to 35%.
• Essentially doubling the standard deduction from $12,000 for individuals and $24,000 for couples.
The full framework is available here, and a one-page overview is available here.