Tax Reform – Is It A Middle Class Tax Cut?

 Business Provisions

• Repeal of the 20% corporate alternative minimum tax (AMT)
• New 20% qualified business income deduction for owners of pass-through entities (such as partnerships, limited liability companies and S corporations) and sole proprietorships — through 2025
• Doubling of bonus depreciation to 100% and expansion of qualified assets to include used assets — effective for assets acquired and placed in service after September 27, 2017, and before January 1, 2023
• Doubling of the Section 179 expensing limit to $1 million and an increase of the expensing phaseout threshold to $2.5 million
• Other enhancements to depreciation-related deductions
• New disallowance of deductions for net interest expense in excess of 30% of the business’s adjusted taxable income (exceptions apply)
• New limits on net operating loss (NOL) deductions
• Elimination of the Section 199 deduction, also commonly referred to as the domestic production activities deduction or manufacturers’ deduction — effective for tax years beginning after December 31, 2017, for noncorporate taxpayers and for tax years beginning after December 31, 2018, for C corporation taxpayers
• New rule limiting like-kind exchanges to real property that is not held primarily for sale
• New tax credit for employer-paid family and medical leave — through 2019
• New limitations on excessive employee compensation
• New limitations on deductions for employee fringe benefits, such as entertainment and, in certain circumstances, meals and transportation

Personal Provisions

• Raise the alternative minimum tax exemption and the exemption phaseout threshold
• Adjust individual income tax rates and thresholds, creating seven rates of 10%, 12%, 22%, 24%, 32%, 35%, and 37%.
• Increase the standard deduction to $12,000/$18,000/$24,000.
• Repeal personal exemptions
• Increase the child tax credit amount to $2,000. Initially, only the first $1,400 of the credit is refundable
• Decrease the phase-in threshold of the refundable portion of the credit to $2,500
• Increase the phaseout threshold of the credit to $400,000 for married filers and $200,000 for other filers
• Create a $500 nonrefundable credit for non-child dependents
• Cap the deduction for state and local taxes paid at $10,000
• Cap the mortgage interest deduction at $750,000 of acquisition debt
• Eliminate several other deductions
• Limit the casualty loss deduction
• Modify limits on the charitable deduction
• Repeal the Pease limitation on itemized deductions
• Modify or repeal other personal deductions, credits, and exclusions
• Index bracket thresholds, the standard deduction amount, the refundable portion of the child tax credit, and other provisions to chained CPI

Keep in mind this list is not all inclusive. I am still sorting through this “post card filing” law. Contact us for more details and to discuss what your individual and business needs.