Under the Republican Tax Cuts and Jobs Act, companies across all industries will see their average effective tax rate next year fall from 21 percent to 9 percent, a new analysis by the Penn Wharton Budget Model finds.
By 2027, though, the effective tax rate will climb back to 18 percent as a result of provisions set to expire.
“In the short run, the biggest winners of the TCJA are capital-intensive industries like utilities, real estate and transportation, which benefit the most from temporary expensing of equipment,” the report says.
Over time, the effective tax rate paid by several industries will rise above the new statutory rate of 21 percent largely as the result of a provision that limits net interest deductions.
