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
–raises 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