Congressional Committee Agreement

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 $12,700 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 $109,100 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The shared responsibility penalty is repealed meaning there is no longer a penalty for not having health coverage.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.

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