Yesterday, the long awaited tax reform legislation was introduced in Congress. While there is a long way to go before anything is passed, and everything mentioned below may change, here are some provisions that may impact many individuals:
- You will no longer be able to deduct local or state income taxes, medicals expenses and miscellaneous deductions.
- Any deduction for real property taxes (for your residence) will be limited to $10,000.
- If you buy a new residence, you will only be able to deduct the interest on the first $500,000 of a mortgage.
- You will continue to be able to deduct charitable contributions and eligible retirement plan contributions.
- If your income is less than $90,000 (married) or $45,000 (single), the rate will be 12%.
- If your income is greater than $1,000,000 (married) or $500,000 (single), the marginal rate will be 39.6%.
- You will no longer be able to deduct a personal exemption, but the standard deduction will double, from $12,700 to $24,000 for a married couple.
- The Federal estate tax and generation-skipping transfer tax exemption will increase to $11,000,000 per person. In 6 years, these taxes will be phased out.
- There will no longer be an alternative minimum tax.
- The Child Tax Credit increases to $1,600, and there will be a new $300 credit for non-child dependents.
- The corporate tax rate decreases to 20%, and there will be a 25% rate of income earned in a pass through entity (like an LLC) for most business, other than law, accounting and certain other professional services.
We will continually keep up todate on all tax changes and will post periodically on the progress of the tax reform legislation.