There was a good article going over the facts of the new tax plan that where announced this morning. I have attached the key points that would affect our clients and also removed any statement that seems biased. I just wanted to present the facts so here they are.
The House bill consolidates those into four brackets: There are seven federal income tax brackets in today’s code 12% (on the first $45,000 of taxable income for individuals; $90,000 for married couples filing jointly) 25% (starts at $45,000 for individuals; $90,000 for married couples) 35% (starts at $200,000 for individuals; $260,000 for married couples) 39.6% (starts at $500,000 for individuals; $1 million for married couples)
Nearly doubles the standard deduction: The bill raises today’s standard deduction for singles to $12,000 from $6,350 currently;
and it raises it for married couples filing jointly to $24,000 from $12,700. That would drastically reduce the number of people who
opt to itemize their deductions, since the only reason to do so is if your individual deductions combined exceed the standard deduction amount.
Eliminates personal exemptions: Today you’re allowed to claim a $4,050 personal exemption for yourself, your spouse and each of your dependents. The House bill eliminates that option.
Expands tax credits for families: The bill would increase the child tax credit to $1,600, up from $1,000, for any child under 17.
The bill would also create a new $300 tax credit for “each parent and non-child dependents,” according to a summary document from House Republicans. Together with the child tax credit, they will be called the Family Credit.
Repeals state and local tax deductions, but preserves property tax break: The original GOP proposal was to fully repeal the state and local tax deduction, which lets filers deduct their property taxes as well as their state and local income or sales taxes. But it was met with strong opposition from lawmakers in high-tax states and cities. The House bill restores an itemized property tax deduction for property taxes up to $10,000.
Limits deductible mortgage interest: The bill preserves the mortgage deduction as currently structured for existing mortgages. But it curbs it for mortgages on newly purchased homes going forward. You would only be able to claim a deduction for interest you pay on mortgage debt up to $500,000, down from $1 million today.
Although i could write pages and pages on each of these topics, i feel this is a good summary. If you would like to know how these particular changes can affect you directly please contact us and i would be happy to look at your return and let you know if you will be helped or hurt by this plan as it is stated.
Find original article @ money.cnn.com/2017/11/02/news/economy/house-tax-reform-bill-individuals/index.html