top of page

Tax Cuts and Jobs Act of 2017- How Does It Affect You?

Well, it’s finally here. The Tax Cuts and Jobs Act of 2017. I just want to clarify what some of the more relevant changes are for the average taxpayer.

Brackets - The 10% stayed the same. The 15% changed to 12%. The 25% changed to 22%. The 28% changed to 24% with a much expanded range. This covers taxable income up to $315,000 so let’s just stop there.

Standard Deduction and Exemptions - Doubled the Standard Deduction and took away exemptions. This will result in a washout for many which is the "simplification" that you've heard about.

State and Local Taxes–This deduction applies to a combination of state income taxes, sales taxes and property taxes. Under the new law it is going to be limited to $10,000. There are some planning techniques that can be utilized to maximize your deduction before the new law goes into effect.

Unreimbursed Employee Expenses – The new law does away with this deduction and will affect many taxpayers significantly.

Child Tax Credit – Doubles the credit from $1,000 to $2,000 and provides for a $500 credit for other dependents, which is new.

Healthcare – Removes the penalty of the ACA (Obamacare) for not having insurance and reduces the threshold for deducting medical back to 7.5% temporarily for 2 years. (No simplification there)

Education Credits – No changes.

Alimony Deduction – No longer deductible by payor or includable as income to the recipient. The new rule won’t affect anyone who divorces or signs a separation agreement before 2019.

Moving Expenses – Now no longer deductible.

Pass-through Businesses – Reduces business income of sole prop’s, partnerships and S-corporations by 20% that is subject to income tax, after which a lower rate of a maximum of 29.6% will be applied. (This can be quite confusing- let me know if you have specific questions).

Corporate Tax Cuts - Top rate reduced from 35% to 21%, which is significant! Remember , this applies to any C-corp regardless of size. So, there will be some benefit for small businesses that choose to be taxed as such.

There's a lot of changes and we're here to help you understand how this will impact your taxes. With questions, feel free to call our office.


Commenting has been turned off.
bottom of page