This is valuable information that allows you to financially plan for both your personal, investment and business life. This is a cursory review of the December, 2017 Tax Act.
Corporate Tax Rates reduced from top bracket of 35% to 21%
Business income from pass through entities provides for a 20% deduction for individuals and trust and estates on domestic certain qualified business income from pass through entities. This area is still awaiting for the IRS to issue regulations and interpretations of how this will work. This effectively changes the top tax bracket from 37% to 29.6%. Sadly this does not benefits doctors, lawyers, accountants etc.
TEMPORARY: Disappear as of 1/1/2026
All individual income tax rate benefits of this bill (top bracket goes from 39.6% to 37%). Vast majority of taxpayers benefitting are those in the higher tax brackets
Standard deduction (non-itemizers)
Single individual increased from $6,500 to $12,000
Married filing jointly increased from $13,000 to $24,000
Personal exemption of $4,150 per household member is eliminated
If the household has two children $13,000 + $8,100
If the household has three children $13,000 + $12,150
State and Local Tax Deduction and Real Property Taxes are capped at $10,000
First Mortgages on primary residences taken out after 1/1/18 are only deductible up to a principal amount of $750,000 (decreased from $1,000,000).
Home Equity Loans (HELOC) interest is no longer deductible whether new or existing.
Charitable Contributions – cash contributions are limited to 60% of AGI
Alimony will no longer be deductible to the payer or included to the recipient
Unreimbursed employee expenses, investment advisory fees, tax preparation fees, etc are no longer deductible
Estate and Gift Tax
For 2018 thru 2025 the exemption amount is $11.2million per person
One 1/1/2026 the amount will go back to $5million as indexed for inflation from 2010 to 2026
What Doesn’t Change
Long Term Capital Gains and Qualified Dividends
Gain on sale of principal residence $250K and $500K
The Alternative Minimum Tax was not repealed