On December 22, 2017, the President signed the Tax Cuts and Jobs Act of 2017, the most sweeping change to the tax code in 31 years. What effect might the new law have on the amount you pay?
The Act focuses most of its effort on corporate taxes, with a new flat rate of just 21% and various provisions designed to make American businesses more competitive globally. The law also makes several moves in the direction of true “tax reform,” which involves eliminating deductions in exchange for lowering rates. (The fraction of taxpayers who itemize may drop from about 1/3 to 1/10.) However, the new law gets us nowhere near the dream of filing taxes on a postcard.
Are you curious what might happen to your taxes under the new law? If you are curious, when you meet with us on your 2017 return, we will discuss how the new law would impact you. Also, be sure to join us for the Tax Webinar January 31st at noon. We’ll tell you where your opportunities are and work with you to take maximum advantage of any new law!
Cut brackets, cap at 37% top rate
Boost standard deductions to $12,000/$18,000/$24,000
Eliminate personal exemptions
Increase Child Tax Credit to $2,000
Limit state/local tax deduction to $10,000
Limit mortgage interest deduction to $750,000 of loan value
Increase AMT threshold
Boost Unified Credit to $10.98 million
New flat rate of 21% for corporations
New 20% deduction for “Qualified Business Income” (pass-through income from proprietorships, partnerships, and S corporations)
Limit deduction for net business interest paid by taxable corporations
Allow immediate expensing for non-real estate capital assets
Eliminate domestic production activity deduction
Impose repatriation tax to bring back profits of foreign subsidiaries
Move to “territorial system” (taxing companies on U.S. earnings only) to level the playing field for American companies