This article is the first in a series of articles that will examine the progress of these negotiations, as well as the impact that proposed tax reform could have on both individual and small business clients.

Framework for individual taxpayers

The framework document both proposes consolidating the current seven-bracket tax rate system into three brackets (12%, 25% and 35%) and nearly doubling the standard deduction to $24,000 for married taxpayers filing jointly and $12,000 for single taxpayers.

It leaves open the possibility that an additional, higher tax rate for wealthy taxpayers could be included in order to ensure that the tax system remains progressive (the current top tax rate is 39.6% for the highest income taxpayers).

Related: Rothification: Reform taxes, crush retirement saving?

The personal exemption for dependents would be eliminated, but the child tax credit would be expanded by increasing the income levels at which the credit begins to phase out with the goal of making the credit available for more taxpayers.

Under the framework, most itemized deductions would be eliminated (details have not been provided, but the mortgage interest and charitable contributions deductions were mentioned as deductions that would not be eliminated).

The currently existing alternative minimum tax (AMT) would be repealed entirely.

Both the estate tax and the generation skipping transfer (GST) tax would be repealed under the framework.

While no details are provided, the framework directs the various committees that will be involved in negotiating a comprehensive bill to retain benefits that encourage work, higher education and retirement security in a more simplified manner.

Framework for small businesses

Under the framework legislation, the maximum tax rate for sole proprietorships, partnerships and S corporations (pass-through entities) would be 25%, and the maximum tax rate for C corporations would be reduced from 35% to 20% (the proposal also aims to eliminate the corporate AMT).

Generally, businesses in the new 25% tax bracket could see a reduction in taxes, as their income is currently taxed at the individual level where the highest rate is currently 39.6%.

Immediate expensing of new depreciable asset purchases would be allowed for at least five years under the framework, but the corporate interest expense deduction would be limited (no details are provided as to how).

The framework indicates that many business-related deductions and exclusions will be eliminated (including the Section 199 domestic production deduction), but the credits for research and development and low-income housing will remain.

Additionally, the framework proposes modifying certain industry-specific tax rules that currently apply, with the aim of reducing opportunities for tax avoidance.

Continue to monitor tax plan negotiations

While the tax reform framework provides few details as to how many of its goals would be accomplished, it is intended to provide the broad stroke details of what could eventually become a comprehensive tax reform bill.

Clients should continue to monitor the progress of negotiations in order to hopefully gain a clearer picture of how tax reform could impact their planning needs.