Goodbye 2017, Hello Tax Reform

H.R.1, known as the Tax Cuts and Jobs Act or the "Tax Act," was signed into law on December 22, 2017. Notably, while this much anticipated tax reform legislation contains a number of provisions of interest to the MLP community and our energy clients, the Tax Act preserves the "qualifying income exception" under the Internal Revenue Code that allows certain MLPs to be treated as partnerships for federal income tax purposes. Thus, MLPs retain their tax-advantaged status, and income earned by an MLP will continue to be passed through to its owners without being subject to an entity-level federal income tax.

Highlights for MLPs and Energy Clients

Individual Tax Rates and Pass-Through Deduction. Individual investors in traditional energy MLPs will benefit from a reduction in federal income taxes for taxable years through December 31, 2025.