TAX REFORM BILL INTRODUCED - UPDATED

Two additional proposed changes were recently identified by one of my professional organizations - the deduction of student loan interest and the adoption credit are eliminated.

This morning, the House Committee on Ways and Means introduced the Tax Cuts and Jobs Act of 2017.  The bill is 429 pages long and contains many proposed changes to the tax code that, if passed, would mean substantial changes to the tax system beginning January 1, 2018.  There will be many changes as the bill moves through the legislative process but here are some of the key provisions based on information from several of my professional organizations-

• Tax brackets would be reduced from seven to four (12%, 25%, 35%, 39.6%).  For those filing jointly, the 12% bracket would apply to taxable income under $90,000, the 25% bracket would apply to taxable income between $90,001 and $260,000, the 35% tax bracket would apply to taxable income between $260,001 and $1,000,000 and the 39.6% bracket would apply to taxable income over $1,000,001.  The tax brackets for single filers would be half that for married filers EXCEPT the 25% tax bracket wouldn't kick in for singles until taxable income hit $200,000.  Different brackets apply to those filing as head of household or married taxpayers filing separately.
• Standard deductions are  increased  to $24,400 for married taxpayers filing jointly, $12,200 for those filing as single or married taxpayers filing , $18,300 for those filing as head of household
• Personal exemptions are eliminated
• The child tax credit is increased to $1600 and a credit of $300 for non-child dependents is added
• Many itemized deductions are eliminated: medical, state & local income taxes, personal casualty losses, employee business expenses not reimbursed by an employer
• Property tax remains an itemized deduction but is limited to $10,000
• Home mortgage interest deduction on a new home can be claimed on no more than $500,000 in mortgage debt, interest on home equity debt cannot be claimed and mortgage interest on a second home cannot be claimed
• Deductions for moving expenses and alimony are eliminated
• The ownership test to exclude profit on the sale of a principal residence increases to 5 out of the last 8 years and the amount that can be excluded is based on the taxpayers income
• Self-employment tax must be paid on rental income
• The estate tax applies to estate with over $10,000,000 in assets and is eliminated completely after six years
•  The Alternative Minimum Tax is eliminated
• The tax on corporations is reduced to a 20% flat tax
• Churches are permitted to engage in political activities without affecting their tax exempt status

Many of these proposed changes are extremely controversial and you can expect heated debate over them.  Turner's Tax Service will be monitoring the situation closely and as additional information becomes available it will be posted to this website and our Facebook account.