Ablean Saoud and Terry Hoban analyse the proposed US tax reform Bills, and their potential impact on employees moving to or from the US.
On 2 December 2017, the United States (US) Senate passed its version of the Tax Cuts and Jobs Act, H.R. 1. This Bill has differences from the tax reform bill passed by the House of Representatives in November. In order for any of the proposals to become law, the two chambers will need to pass identical text.
The proposed legislation addresses taxation of individuals, and if enacted, could impact assignees moving to and from the US. We have analysed some of the key elements, and differences, of the two Bills, and their potential impact on mobile employees.
Most of the Senate Bill’s proposals relating to individual income tax would expire after 2025.
Some of the proposed measures could increase the US federal income tax payable by mobile employees, and others could reduce it. Employers should therefore carefully review their mobile employee population in order to determine the likely overall cost impacts, particularly regarding employees who are covered by a tax equalisation or protection arrangement.
There is more of the US tax reform story to play out yet, but employers should be thinking now about possible impacts on budgeting for 2018 in respect of international assignment costs.