Key Highlights of Proposed 2017 Tax Reform
By now you’ve probably heard that tax reform is the current priority of President Trump and the Republican Congress. While the proposed bill will have dramatic effects on both individuals and corporations, we expect it to have many changes and amendments before it ultimately comes up for a vote. Keep reading for some of the key highlights of the proposed tax reform.
- Create individual income tax brackets of 12%, 25%, and 35%, while maintaining a 39.6% bracket for incomes over $1,000,000 for joint filers and surviving spouses, or over $500,000 for other individuals
- Repeal the alternative minimum tax
- Reduce the C-Corporation tax rate from 35% to 20%
- Introduce a special pass-through tax rate of 25% for a portion of income generated inside S-Corporation’s, Partnership’s, and LLC’s
- Set the standard deduction at $24,400 for married couples, $18,300 for unmarried individuals with at least one qualifying child, and $12,200 for all other taxpayers, but repeal personal exemptions
- Increase the child credit to $1,600
- Repeal some nonrefundable credits, including the adoption credit and the plug-in electric drive motor vehicle credit
- Consolidate the existing education credits into one enhanced American Opportunity Tax Credit
- Repeal the deduction for state and local income taxes and state and local sales taxes as well as cap individual property/real estate tax deductions at $10,000
- Cap individual property/real estate tax deductions at $10,000
- Only allow mortgage interest deductions on the first $500,000 of indebtedness on a primary residence
- Repeal the medical expense, alimony, and moving expense deductions
- Repeal the overall limit on itemized deductions
While it is most likely the above items will be modified before the final bill is introduced for a Congressional vote, it is safe to assume that if the legislation eventually passes, it will impact nearly every American individual or business taxpayer. If you have any questions, please contact your Greenwalt CPAs tax professional.