Will tax reform affect you?

Will tax reform affect you?

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As you are probably aware our government recently passed a 1,000 page tax reform package.  Because of the length and speed at which they passed the legislation it will probably take a bit of 2018 for all of the intricacies of the bill to come to light. In the mean time your probably wondering how it will affect you. For the 2017 tax year there is only one change I'm aware of but there are plenty of changes that go into effect in 2018 and a couple in 2019.

Below is a non-exhaustive list of changes the bill makes and what year they affect.

2017 Changes

  • Healthcare expenses decreased to 7.5%

2018 Changes

Individual Tax Changes

  • 7 Tax Brackets remain but the rates are decreased
  • Standard deduction is increased to $24,000
  • Personal Exemption have been eliminated
  • Repeals moving expense deduction (except for active duty military)
  • Caps state and local tax deduction at $10,000
  • Limits mortgage interest on new purchases to $750,000 of principle
  • Eliminates the deduction for equity interest
  • Increases the Child Tax Deduction to $2,000 of which, $1,400 is refundable
  • All dependents ineligible for the child tax credit are eligible for the new $500 per person family tax credit.
  • Doubles the estate tax exemption from $5.6 million to $11.2 million

Business Taxes

  • Corporate tax rate has been lowered by 21%
  • 20% income deduction for Pass-Through Businesses with several qualification
  • Allows 100 percent expensing of Short-lived capital investment
  • Eliminates Corporate AMT
  • Eliminates net operating loss carry-backs while providing indefinite net operating loss carry-forwards
  • Cash Accounting - Increases eligibility to businesses with up to $25 million
  • Moves to a territorial Income tax for international businesses.

2019 Changes

Individual Tax Changes

  • Eliminates the alimony deduction
  • Reduces the penalty for not having health insurance to zero effectively eliminating it.

Conclusion

With all of the above changes the new tax bill will definitely affect you and mostly in a positive way. But with more than 1,000 pages of new tax law it will take a bit for all of the intricacies of it to be ironed out and the true affect to be made clear. For now check out the below tax calculator to get an estimate of how the changes will affect you in 2018 and follow us on Facebook and Twitter for more updates about the tax laws impacts. 

Preparing Your Year End Payroll Taxes

Preparing Your Year End Payroll Taxes

2017 Tax Update

2017 Tax Update