The House and Senate conferees did indeed agree on tax ‘reform’ legislation. The bill will make great bedtime reading as it’s only 1,097 pages. The Tax Foundation has a great summary of the legislation. Here are some highlights; note that these provisions are in effect for the 2018 tax year:
– Seven tax brackets for individuals, ranging from 10% to 37%. Mostly, this will result in a decrease in taxes. However, the 35% tax bracket will now begin at $200,000 (single/Head of Household (HOH))/$400,000 Married Filing Jointly (MFJ); the 37% tax bracket begins at $500,000 single/HOH and $600,000 MFJ
– The standard deduction increases to $12,000 single/$18,000 HOH/$24,000 MFJ. However, personal exemptions are eliminated.
– Mortgage interest on home purchases remains deductible, but up to a limit of $750,000 of mortgage debt; however, equity debt is no longer deductible.
– State and local taxes, sales tax, and property tax deduction is limited to $10,000.
– The personal AMT is retained, but the AMT exemption is raised significantly.
– A single corporate tax rate of 21%.
– Pass-through income will be taxed at lower rates via a deduction. This is one area where the specific details matter.
– The corporate AMT is repealed.
– Net Operating Losses can only be carried forward, not backward (limited to 80% of taxable income).
– The individual mandate penalty is repealed, but for 2019 (not 2018). There’s still a penalty, but it’s $0.
– The Mayo decision (allowing the deduction of business expenses for professional gamblers who have losing years) is repealed for tax years 2018 – 2025. There are no other provisions that directly impact gambling in this legislation.
After I read the 1,097 pages (503 pages of legislation and about 500 pages of analysis) I will have more on the legislation.
Tags: TaxReform2017