Today, the GOP Tax Bill, H.R. 1 was introduced in the House of Representatives.  The Bill is 429 pages long and covers many tax areas that we will cover in future blogs.

As promised, the Bill repeals estate and generation-skipping transfer taxes.  You must live at least six more years in order for your heirs to benefit from this full repeal, because the full repeal will only be effective for decedents dying after December 31, 2023.  For individuals dying after 2017 yet before 2024, the estate tax exemption will increase to $11.2 million in 2018 with cost of living adjustments thereafter.  Under current law, it is scheduled to be $5.6 million in 2018.

Many had feared that the Bill would eliminate stepped-up basis for assets received upon death.  The summary of the Bill prepared by the House Ways and Means Committee confirms that heirs will continue to receive stepped-up basis in inherited assets.

Gift taxes will be retained; however, the gift tax exemption will increase to $11.2 million for gifts made after December 31, 2017.  There will be an annual cost of living adjustment for the gift tax exemption.  After 2023, the maximum gift tax rate will decrease from 40% to 35%.

The estimated revenue decrease from the changes to the estate, gift, and GST taxes is $172.2 billion between 2018 and 2027.

The enunciated primary considerations for these changes are:  (i) to eliminate double or triple taxation of family businesses; and (ii) to incentivize small business owners to invest in their businesses and hire more employees.

Many political commentators are pessimistic about the chances of the Bill being passed in its current form.  Stay tuned.