The 2017 Tax Cuts and Jobs Act passed by Congress and signed recently President Donald J. Trump encodes into law significant tax changes that apply to individuals, business, families and estates.
Below, we highlight some of the most important and impactful changes.
The provisions of the Tax Cuts and Jobs Act are so sweeping that existing clients should schedule a review with their attorney—and new clients should connect with a member of our highly experienced team of attorneys who focus on tax issues as they relate to individuals, businesses and estates.
Meanwhile, here are some highlights of the changes contained with the Tax Cuts and Jobs Act:
2017 Tax Cuts and Jobs Act
- 21% Corporate Tax Rate
- Permanently lowers the corporate tax rate to 21%
- Down from 35%
- Temporary Expensing
- Expands bonus depreciation for new short-lived capital investments to 100% or “full expensing” for five years and then phases out over the subsequent five years
- Raised Section 179 cap on eligible investment from $500,000 to $ 1 million
- 20% Pass-Through Deduction
- Newly-created deduction
- PTEs will be able to deduct 20% of certain types of non-salary business income
- Certain service providers in the field of health, law, consulting, athletics, financial and brokerage services are denied the deduction of their income is over a $315,000 threshold, where the deduction begins to phase-out.
- Lower Individual Tax Rates
- 10%, 12%, 22%, 24%, 32%, 35%, 37%
- Larger Standard Deduction
- Personal Exemptions are eliminated
- Standard deduction is almost doubled
- 9 out of 10 taxpayers will simply claim the standard deduction
- $2,000 Child Tax Credit
- Doubled from $1,000 to $2,000
- Phase out for Married filers with incomes of over $400,000
- Increase of $110,000
- Offsets the repeal of the personal exemptions
- Refundable credit
- $10,000 State and Local Tax Deduction
- Taxpayers who itemize deduction will be able to deduct up to $10,000 of state and local property and income taxes paid
- $750,000 Limit on Mortgage Interest Deduction
- Lowers the threshold from $1 million to $750,000 of debt for principal residences only
- Eliminates the ability to deduct mortgage interest on second homes
- Charitable Deduction Expanded
- Increased from 50% to 60%
- Denied for payments made in exchange for seats at college sports events
- 529 College Savings Accounts
- Expanded to allow parents to save for K-12 and homeschooling expenses
- Expands beyond the public schools
- Individual Mandate Repealed
- Obamacare’s individual mandate tax is repealed
- Estate Tax
- The exclusion from estate tax doubles from $5.6 million to $12 million
- AMT Exemption increased from $86,200 to $109,400 for married filers
Cramer & Anderson has offices in New Milford, Danbury, Litchfield, Kent, Washington Depot, and a new office in Ridgefield.
To learn more about the firm, see the website at crameranderson.com or call the New Milford office at (860) 355-2631.