Pub. 6 2017 Issue 7

l e a d i n g a d v o c a t e f o r t h e b a n k i n g i n d u s t r y i n k a n s a s 30 By Brian Mall & Dodge Docheff, BKD, LLP TAX REFORM UPDATE: TRUMP’S CURRENT PLAN & 2017 KANSAS LAW CHANGES F ederal tax reform continues to be a hot topic in the news and is high on President Trump’s agenda. Whether we’ll see any tax reform or tax rate cuts pass remains debatable, but most agree some form of change is needed. At the state level, tax policy changed in 2017. On June 6, the Kansas Legislature overturned Gov. Sam Brownback’s veto of Senate Bill (S.B.) 30, enacting into law several significant changes affecting bank shareholders. Below is an outline of Trump’s current tax reform proposal and the changes to Kansas state tax for 2017. To keep updated on tax changes, visit our thought center. Trump’s Most Recent Proposal On April 26, Trump released his plan for tax reform. Gary Cohn, Trump’s chief economic advisor, called the proposal “one of the biggest tax cuts in American history” and said it would “cut taxes for business to make them competitive, and … cut taxes for the American people— especially low- and middle-income families.” Proposals that affect the shareholders of S corporation banks include: • Collapse the seven current individual income tax brackets, which range from 10 percent to 39.6 percent, to the following brackets for married-joint filers*: ◦ Less than $75,000: 10 percent More than $75,000 but less than $225,000: 25 percent More than $225,000: 35 percent *Brackets for single filers are half these amounts • Retain the current preferential capital gain rates • Double the standard deduction • Repeal the estate tax (while not specifically addressed in the most recent proposal, during the campaign a tax on capital gains held until death was proposed) • Reduce the top tax rate on passthrough business income retained at the S corp level to 15 percent (while this proposal was not specifically addressed in Trump’s most recent guidelines, distributions