25.0%

37%

$315,001-$400,000

Other possible changes include changes to depreciation/Section 179, and taxation of international income. There is no change to education credits, capital gain rates, and exclusion of sale of primary residence. 

24%

33.0%

$400,001-$424,950

10.0%

Other Provisions:

  • Estate Tax: Currently, the first $5.49 Million in Estate assets are exempt from Federal Estate Tax. The provision increases the exemption to $11 million per individual.

Married Filing Jointly

25.0%

24%

$157,501-$195,450

Updated

22%

$82,501-$93,700

$424,951-$480,050

39.6%

$237,951-$315,000

35.0%

>$500,000

33.0%

35%

Provisions Retained (that were considered for repeal):

  • Student Loan Interest: Deduction retained
  • Educator Deduction: Retained
  • Adoption Credit: Retained
  • Graduate Student Tuition Waivers: Exclusion retained
  • Corporate Alternative Minimum Tax (AMT): Retained

Current Law

$165,001-$237,950

28.0%

$424,951-$426,700

With the new tax plan taking effect in 2018, we would like to provide you with accurate information regarding the changes, and tips on how to prepare before year-end. We encourage you to speak in more detail with your accountant regarding your specific situation and the best options for you.

28.0%

$0-$9,525

Provisions for Individuals/Families:

  • Tax Rates/Brackets: 7 brackets revised (see below), with a top individual tax rate of 37%
  • Standard Deduction: Revision includes increases to the Standard deduction from:
  • Single: $6,350 for 2017 to $12,000 for 2018;
  • Head of Household: $9,350 for 2017 to $18,000 for 2018;
  • Married filing jointly: $12,700 for 2017 to $24,000 for 2018
  • Personal Exemption: Eliminated
  • Child/Family Tax Credits: Increases Child Tax Credit to  $2,000 (phases out at $500,000 for Married Filing Jointly; previously phased out at $110,000 for those Married Filing Jointly ); $500 credit for non-minor dependents (new)
  • Medical Expense Deduction: Currently, if you are under the age of 65 and itemize deductions you can deduct medical expenses that exceed 10% (7.5% if 65 or over) of your Adjusted Gross Income (AGI). The change provides for a 7.5% of AGI floor for two years, then returns to a 10% floor thereafter.
  • State and Local Income Tax and Property Tax Deduction: Retained with a cap at $10,000 total
  • Mortgage Interest Deduction: Currently, you can itemize home mortgage interest paid during the year on any mortgage amount of $1,000,000 or less. The change limits the mortgage principal amount on future home purchases only to $750,000 or less. In addition, the deduction is only available on home acquisition debt and can no longer be used for home equity loan debt in years after 2017.
  • Charitable giving: Currently, you can deduct as much as 50% of your AGI for charitable contributions, with the excess carried over to future years. The change increases the potential deduction to 60% of AGI. It does, however, end the deduction for college athletic seating.
  • Other Miscellaneous Itemized Deductions: Eliminated, including deduction for income tax preparation, unreimbursed employee expenses, investment advisory fees, etc.
  • Alternative Minimum Tax (AMT): Retained with a larger exemption and phaseout threshold.
  • Individual Health Insurance Mandate Penalty: Repealed in 2019.

25.0%

$0-$19,050

33.0%

$93,701-$157,500

33.0%

>$600,000

12%

Below are key details of the new tax plan: 

35%

22%

35%

Income Level

35.0%

Provisions affecting Businesses:

  • Pass-Through Income: Agree to 20% business income deduction
  • Corporation Tax Rates: Agreed to 21% flat rate
  • Interest Deduction: Net interest expense limited to 30% of a business’s adjusted taxable income. (Adjusted taxable income = earnings before interest, taxes, depreciation and amortization). Excess carried to future years.
  • Net Operating Loss (NOL): Carryback period eliminated for most businesses.  NOLs can continue to be carried forward with a limit applied of 80% of taxable income. *Exception: Farmers can continue to carryback NOL up to 2 years back, then forward.

Income Level

$9,526-$38,700

$156,151-$165,000

10%

28.0%

22%

$77,401-$156,150

10%

Updated

Single

35%

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Ridge View Accounting & Tax, CPA, P.C.

32%

32%

$480,051-$600,000

33.0%

12%

39.6%

28.0%

$200,001-$424,950

Current Law

15.0%

$426,701-$500,000

37%

10.0%

39.6%

24%

$195,451-$200,000

15.0%

39.6%

$38,701-$82,500

$19,051-$77,400

35%

32%

35%

24%