Federal Spotlight – Tax Reform Details Revealed
November 2, 2017
The Tax Cuts and Jobs Act was unveiled on Thursday. The outline of this comprehensive tax reform plan was released last month with praise from manufacturers and small business owners. House GOP leadership and members of the Ways & Means Committee held a press conference Thursday morning to discuss the bill. Here are the highlights:
- Permanently cuts the corporate tax rate from 35% to 20%
- Cuts tax rate for pass-through entities from 35% to 25%
- Reduces the current number of individuals tax brackets from seven to four. The new brackets include rates of 12%, 25% and 35%. The top bracket of 39.6% would remain for the highest earners.
- Eliminates the alternative minimum tax
- Doubles the exemption for the death tax and then that tax is repealed after six years
- Doubles the standard deduction. Goes from $6,350 to $12,700 for individuals and $12,700 to $24,000 for married couples
- Keeps mortgage interest deduction for existing homeowners, but future purchases will be capped at $500,000
- Repeals deductions for state and local income and sales tax. The deduction for property taxes would remain, but that is capped at $10,000.
- Makes no changes to 401(k) or IRA plans
- Expands the child tax credit from $1,000 to $1,600
This is just the beginning in the push for once-in-a-generation tax reform. The House Ways & Means Committee plans to begin marking up the bill next week. The Senate will then unveil a plan as early as next week. Once bills pass both chambers, they will then go to conference committee to work out their differences. The Trump Administration and Senate and House leadership have said they would like to get tax reform signed into law by the end of this year.