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Tax Cuts and Jobs Act of 2017

Dec 12, 2017 | Larry | deductions, Taxes | No Comments

The Senate and House versions have been reconciled and are headed to the President’s desk for signature

Key aspects

reduction of the corporate tax rate from 35% to 21%

reduction of pass-through business income taxes. Allows a deduction of the first 20% of earnings

reduction of personal tax rates from maximum 39.6% to 37%

retained seven tax brackets. They are 10%, 12%, 22%, 24%, 32%, 35% and 37%

-slows inflation adjustment in tax code- use of the “chained CPI” will be used to measure inflation. Since this is a slower growth pattern than currently used, credits and deductions will be worth less in the future. More future income will be subject to higher tax rates

reduction of home mortgage interest deduction to $750,000, down from $1,000,000

increase– standard deduction increased to $12,000 from $6350 for singles; $12,000 to $24,000 for married couples

elimination of the $4050 per person personal exemption

increase of the child tax credit from $1000 to $2000. $14,000 is refundable

reduction and consolidation of state and local income tax and property tax with a max $10,000 deduction

elimination of moving costs for employment

elimination of the deduction for unreimbursed business expenses

elimination of deduction for home equity loan interest. Previously, a deduction was allowed up to $100,000

repeal of the individual insurance mandate starting in 2019

expiration- corporate tax cut is permanent; individual changes expire 2025

retains $250 teacher deduction

-retains student tuition waiver tax exemption

raises the alternative minimum tax (AMT) threshold for individuals to $109,000 for married couples and $70,300 for single filers. It is discontinued for corporations

raisesĀ  threshold for exclusion of inheritance tax to $22 million for couples, up from $10,980,000

The postcard that was promised for tax filing will have to be really, really large

There are many provisions in the tax bill that are unknown. Thus, many of the ramifications are also unclear

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