TAX CUTS AND JOBS ACT – A LOOK AT SOME PROVISIONS:

Following are some of the provisions of the Tax Cuts and Jobs Act. For a complete report of the Conference Committee final tax provisions click here.

• Corporate Tax Rate:  the Conference Committee settled on a corporate tax rate of 21%, considerably lower than the current maximum rate of 35%. The rate would take effect in 2018.
• Individual Tax Rates:  the highest rate would drop from the current 39.6% to 37%, however, they retained the seven tax brackets.
• Higher standard deduction but personal exemption eliminated: the bill would double the standard deduction from $6,350 (single) and $12,799 (joint) to $12,000 and $24,000 which is expected to lower the number of taxpayers who itemize. At the same time, the bill would eliminate the personal exemption, but some credits were also increased.
• State and local taxes: taxpayers would be able to deduct up to $10,000 of all taxes combined for state and local taxes, real estate taxes, and income and sales taxes.
• Mortgages indebtedness: interest can be deducted on loans up to $750,000.
• Resolution on pass-through entities: owners of pass-through entities such as S corporations and partnerships would be able to apply a 20% deduction to their business income, with limits starting at around $157,000 for single taxpayers and $315.000 for joint returns.
• Alternative minimum tax: the AMT was rescinded for businesses but remains for individuals. However, it would apply affect fewer taxpayers.
• Estate tax: the exclusion amount has been doubled to approximately $11 million but is scheduled to sunset in 2026.
• Child tax credit: the legislation increases the child tax credit to $2,000 per child (up from $1,000) and raised the phase out amounts. The refundable portion of the credit was raised from $1,100 to $1,400.
• Medical expense deduction: for 2017 and 2018 the threshold would drop back to 7.5% of AGI, increasing back to 10% in 2019 (yes, this provision is retroactive to 1/1/2017).
• Affordable Care Act: the bill rescinds the individual mandate for insurance
• Credits preserved include: Child and Dependent Care Credit and the Adoption Credit.
• Student Loan Interest: has been retained which had been eliminated under prior proposals.