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The specifics of the Tax Cuts and Jobs Act were recently unveiled to mixed reviews. A provision sure to draw the eye of law firms excludes professional service firms from a capped 25% tax rate.
Under the proposed legislation, pass-through entities such as partnerships, LLCs or S corporations are eligible to pay the capped 25 percent tax rate on a portion of their revenue share — usually 30 percent — but professional services firms are called out directly in the bill as excluded from the provision. Instead, law firm partners must pay personal income taxes on their full share of revenue, which tops out at 39.6 percent. GOP Tax Cuts’ Law Firm Exclusion Could Bring Pushback, Law360, November 3, 2017
Read the full text of the tax bill, a section-by-section guide from the House Ways & Means Committee, and recent legal news covering the bill: