President Donald Trump and the Republican leaders of congress have made tax reform a priority. Recently, the President’s proposal was unveiled. Many of the proposed changes should not be surprising.

The President’s plan reduces the individual income tax brackets from seven to three brackets. Those three brackets are 10%, 15% and 35%, though at what income levels those brackets will apply is not clear. The standard individual income tax deduction is doubled. For an individual, the deduction is $12,600 and for a married couple, it is $24,000. However the personal exemption, which is currently $4,050 for each person claimed on the tax return, is eliminated. Deductions for home mortgage interest and charitable donations remain; however, deductions for state and local taxes paid would be eliminated.

The individual alternative minimum tax, which has hit many unsuspecting stock option holders, would be eliminated. The estate tax and the Obamacare net investment income tax would also be eliminated. 

On the corporate front, the maximum corporate income tax rate would be significantly reduced from 35% to 15%. It is not clear, however, what, if any, tax credits and deductions would remain available to corporations. The interest deduction has been critical to corporate growth as corporations have taken advantage of that deduction to obtain cheap money with a tax advantage. The 15% tax rate will also apply to partnerships, real estate companies, and limited liability companies. 

The plan also provides for a special tax rate for the repatriation of overseas income by U.S. companies; however, the exact rate is not specified. This proposal has the potential to encourage billions of dollars to be repatriated. 

This column will provide updates as the plan is deliberated by Congress.

John Varella is an attorney with Lourie & Cutler, Boston, Mass.