Tax CutS and Jobs Act of 2017
President Trump signed the Tax Cuts and Jobs Act of 2017 on December 22, 2017. This is one of the most sweeping reforms of the tax code during the life of our practice. Most of the provisions take effect on January 1, 2018, with a few items retroactively effective. Here are the highlights of the new tax law.
- Flat corporate tax rate of 21%
- Generally lower individual tax rates
- Doubling (almost) of the “standard” deduction
- Elimination of the Personal and Dependent Exemptions
- Doubling of the Child Tax Credit to $2,000 ($1,400 of it "refundable")
- Qualified Business Deduction of 20% of business income
- Elimination of all entertainment deductions - including sports booster club donations
- Limitation of state and local tax deduction to $10,000
- Mortgage interest deduction limited to $375,000 for single taxpayers and $750,000 for married taxpayers on up to 2 homes - for mortgages acquired after Dec 15 2017; if you have mortgage loans from before then, the limits are "grandfathered" in at $500,000 for single taxpayers and $1,000,000 for married taxpayers.
Complete repeal of:
- Alimony deduction (for divorces finalized after 12/31/2018)
- All moving expenses (except military)
- Home Equity Mortgage Deduction (only acquisition and improvement debt is deductible) for mortgages after December 15, 2017
- Mortgage insurance premium deduction (re-instated with The Consolidated Appropriations Act - 2020)
- All “2%” miscellaneous deductions
- Employee business expenses (dues, uniforms, supplies, etc.) for all W2 employees
- Tax preparation and investment advisory fees
- Job search costs
- Continuing Education
If you are concerned about how the tax act will affect you or your business, please call our office to make an appointment to discuss these changes.
Summary of the Tax Cuts and Jobs Act
Complete Tax Cuts and Jobs Act