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In this extended cut episode of PwC’s Financial Services audiocasts, Amy McAneny and Brian Rebhun break down the implications of the proposed H.R.1 —a legislative sequel to the 2017 Tax Cuts and Jobs Act (TCJA)—on the financial services sector. Dive into how H.R. 1 could shape the future for operating companies, funds, institutional investors, foreign capital flows, and high-net-worth individuals.
Key takeaways
- Business Tax Incentives Extended: The bill revives and enhances deductions for Section 199A (now 23%), bonus depreciation through 2029, domestic R&D, and interest deductions under EBITDA—all aimed at encouraging capital investment and economic growth.
- Carried Interest Survives—for Now: While President Trump hinted at reform, the House version preserves the carried interest loophole; future changes remain a possibility depending on Senate negotiations.
- Excise Tax Targets Endowments: A proposed tax of up to 21% on university endowments and private foundations could reduce capital allocations, driving shifts toward private markets and early liquidity events.
- Foreign Investors May Face New Friction: Section 899 introduces potential withholding on sovereign wealth funds, threatening U.S. capital inflows and creating uncertainty for credit and private equity funds.
- SALT Cap and Pass-through Entity Tax Changes Will Hit High-Earners: Repeal of SALT workarounds and deductibility losses (like NYC UBT) could raise effective tax rates above 50% in high-tax states, possibly prompting income acceleration and early transaction planning in 2025.
Segmented topics with timestamps:
- 0:00 – Introduction and overview
- 0:59 – Corporate tax Incentives
- 2:56 – Trump’s economic intent
- 3:47 - Carried interest provision
- 6:12 - Excise tax on endowments
- 9:12 - Section 899 and foreign investment
- 11:58 - SALT cap and high-net-worth planning
- 15:17 - Final thoughts and strategic preparation
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