Brandon C. Ge, an Associate in the Health Care and Life Sciences practice, in the firm’s Washington, DC, office, authored an article for AccountingWEB titled “What Practitioners Should Know About the ‘Cadillac Tax’ Delay.”
Following is an excerpt:
While most of the media attention has focused on the two-year delay, there is another important provision in the bill that tax practitioners should know about. In one section of the bill, lawmakers included a provision that makes the Cadillac tax deductible. This is in contrast to the general rule that excise taxes are not deductible on income tax returns.
Given the current corporate income tax rate of 35 percent, making the Cadillac tax deductible effectively changes it from a 40 percent excise tax to a 26 percent excise tax for those businesses that pay corporate income taxes. Entities not subject to corporate income taxation, such as tax-exempt organizations, would continue to be subject to a 40 percent Cadillac tax.