Details of the “Big Six” Tax Framework

September 27, 2017

Today, Republican leadership in the House, Senate, and White House released a framework for a tax proposal. The proposal would lower taxes on business investment and simplify a number of aspects of the federal tax code.

Today’s framework contains only the broad outlines of a potential tax bill, leaving a number of details to be determined by the tax-writing committees in Congress. Below are all of the details included in today’s framework:

Personal Income Taxes

Tax brackets

Consolidates the current seven tax brackets into three brackets, with rates of 12 percent, 25 percent, and 35 percent. Leaves room for lawmakers to add a higher fourth bracket rate, to apply to high-income taxpayers. Suggests that brackets should be indexed to “a more accurate measure of inflation,” which may refer to chained CPI.

Standard deduction

Increases the standard deduction to $12,000 for single filers and $24,000 for married filers (currently: $6,350 for single filers and $12,700 for married filers). Eliminates the additional standard deduction and the personal exemption for filers.

Itemized deductions

Calls for the elimination of several itemized deductions, without identifying specific provisions. Calls for preserving the mortgage interest deduction and charitable deduction.

Family tax credits

Replaces the personal exemption for dependents with an expanded nonrefundable portion of the child tax credit (amount not specified) and a new $500 nonrefundable credit for non-child dependents. Increases the phaseout thresholds for the child tax credit.

Other tax credits

Calls for preserving tax credits for work and higher education, which probably refers to the earned income tax credit and the American opportunity tax credit.

Capital gains and dividends

No proposal regarding the tax treatment of capital gains and dividends. Calls for preserving tax benefits for “retirement security,” which probably refers to the current tax treatment of 401(k), IRA, and defined benefit plans.

Alternative minimum tax

Eliminates the alternative minimum tax.

Business Income Taxes

Corporate tax rate

Lowers the corporate income tax rate from 35 percent to 20 percent. Eliminates the corporate alternative minimum tax.

Pass-through tax rate

Creates a new maximum tax rate on pass-through business income, of 25 percent. Calls for, but does not specify, rules for combating abuse of a top tax rate on pass-through business income that is lower than the top tax rate on wage income.

Capital investment

Allows full expensing for short-lived capital investment, such as equipment and machinery, for at least five years. Does not provide details about the tax treatment of long-lived capital investment, such as buildings and structures.

Tax treatment of interest

Calls for a partial limitation of the interest deduction for C corporations, with no additional details. Provides no details about the treatment of interest paid by pass-through businesses.

Business credits and deductions

Eliminates the section 199 manufacturing deduction. Calls for the elimination of other business credits and deductions, without identifying specific provisions. Calls for preserving the research and development credit and the low-income housing tax credit.

International income

Moves to a territorial tax system, in which foreign-source profits of U.S. companies are not generally subject to U.S. tax upon repatriation. Calls for, but does not specify, a global minimum tax intended to protect the U.S. tax base from cross-border income shifting.

Deemed repatriation

Enacts a one-time tax on previously accumulated foreign-source earnings. Calls for a lower tax rate on liquid foreign assets and a higher tax rate on illiquid foreign assets, but does not specify either rate.

Other Taxes

Estate tax

Eliminates the estate tax and generation-skipping taxes


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