Revised Tax Reform Information:
Updated to provide you with the most recent information available!

As we approach the Thanksgiving holiday, the Senate and House are desperately trying to agree on a tax reform compromise to present to the president for his signature by Christmas. There seems to be an
agreement by both parties on various tax changes.

Individuals

Both the House and the Senate are proposing an overall reduction in individual taxes and changes to the brackets and income thresholds.

House

  • Four tax brackets
  • Rates range between
    12%- 39.6%
  • Highest rate applies to taxable income over $500,000 for single filers, $1 million for joint filers
  

Senate

  • Seven tax brackets
  • Rates range between
    10%-38.5%
  • Highest rate applies to taxable income over $500,000 for single filers, $1 million for joint filers
Both the House and Senate bills would expand the standard deduction and eliminate the personal exemption.

House

  • $12,200 standard for single filers
  • $18,300 standard for head
    of household
  • $24,400 standard for joint filers
  

Senate

  • $12,000 standard for single filers
  • $18,000 standard for head of household
  • $24,000 standard for joint filers
Itemized deductions face changes under both bills.

House

  • Eliminates medical expense deduction
  • Eliminates state and local income tax deduction
  • Reduces mortgage interest to the first $500,000 of indebtedness
  • Eliminates Pease limitation for high income itemizers
  

Senate

  • Eliminates state and local income tax deduction
  • Eliminates state and local real estate tax deduction
  • Eliminates deduction of home equity interest
  • Eliminates Pease limitation for high income itemizers
Both bills repeal the Alternative Minimum Tax for individuals,
expand the child tax credit, and create a nonrefundable
“family” credit for qualifying non-child dependents.

Estate Tax

House

  • Doubles estate tax exemption between 2018 and 2023
  • Complete repeal of the estate tax after 2023
  

Senate

  • Doubles estate tax exemption

Businesses

Both bills reduce the corporate tax rate to a flat 20% rate. The difference between the bills lies in the effective date. The House would include this flat corporate tax in the laws effective for tax years after December 31, 2017. The Senate would delay implementation until 2019.

The most important change for the small business is the reduction of the pass-through entities (such as an LLC, S corporation or partnership) tax rate to a top marginal rate of 25% under the House Bill or a top effective rate of 33% under the Senate Bill. There will be strict guidelines to prevent abusing these rules.

The Section 179 deduction for the 100% expensing of qualified property is expanded under both plans.

House

  • $5 million limitation ceiling
  

Senate

  • $1 million limitation ceiling

Both the House and the Senate plans eliminate the Alternative Minimum Tax
for corporations.

Most changes will become effective for tax years ending after
December 31, 2017.

This is just a list of some of the changes by the House and the Senate; but there is no guarantee that these proposals will look the same when the tax bill is presented for signing.

We are monitoring the tax reform bill closely and when it becomes law,
we will contact you and share our tax planning ideas with you before
the end of the year.