Congressional Committee Agreement

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Reconciliation is complete!
On Friday, December 15th, the congressional conference committee
reached an agreement on The Tax Cuts and Jobs Act, H.R. 1 – the bill is
expected to be voted on this week by both houses of Congress.    Here is a summary of the bills major provisions for individuals.

Tax Brackets      

Rate          Single (Married Filing Joint)           

10%       0 – 9,525    (0
– 19,050)          

12%       9,525 – 38,700  (19,050 – 77,400)          

22%       38,700 – 82,500  (77,400 – 165,000)          

24%       82,500 – 157,500  (165,000 – 315,000)  

32%       157,500 – 200,000  (315,400 – 400,000)

35%       200,000 –
500,000  (400,000 – 600,000)  

37%       500,000+  (600,000+)                   

Standard
Deduction
doubles $12,000 for single filers and $24,000 for married filing
a joint tax return.

There are no more personal exemptions.

The state
and local tax
(SALT) itemized deduction is limited to $10,000.

Mortgage interest
deduction
remains but only on $750,000 of indebtedness.

The alternative
minimum tax
(AMT) remains for individuals but the exemption is increased to
$70,300 for singles and $109,400 for jointly filing taxpayers.

Child Tax
Credit
is doubled to $2,000 phase
out raised to $500,000

Medical
Expense Deduction
is available for expenses above 7.5% for 2017 & 2018,
and, 10% thereafter.

The shared
responsibility penalty
is repealed meaning there is no longer a penalty for
not having health coverage.

Pass through
entities
from partnerships, LLC’s, or S-Corporates are permitted to deduct
a percentage of business income, effectively reducing the income tax rate on
businesses for small-business owners.
There are many rules and caveats with this provision that will be
outlined in further detail.

I have been asked questions about whether individuals can
and/or should pay state taxes in calendar year 2017 for 2018.  The bill specifically prohibits the
pre-payment of income taxes, however, if you want to discuss the timing of real
estate taxes, please give me a call at 631-675-0967.  

Finally, stay tuned for what the states decide to adopt because there is speculation that many of the states will not adopt all of the new tax provisions.

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