You’ve heard the expression, “too many fingers in the pie?” Well sometimes that can be a good thing and I think we just witnessed a very good case in point with this Trump Tax Bill.
I’m just getting to read this, but here are a few highlights that I think are very important to individuals. As I’ve said all along, the big winner is corporations that have more than $18.3 million of profits, because they will see their tax rate drop from 35% to 21%.
Individual Tax Rates
(Note: Individual rate cuts would expire after 2025.)
Current law: Seven rates, starting at 10 percent and reaching 39.6 percent for incomes above $418,401 for singles and $470,701 for married, joint filers.
Proposed: Seven rates, starting at 10 percent and reaching 37 percent for incomes above $500,000 for singles and $600,000 for married, joint filers.
For joint filers:
10 percent: $0 to $19,050
12 percent: $19,050 to $77,400
22 percent: $77,400 to $165,000
24 percent: $165,000 to $315,000
32 percent: $315,000 to $400,000
35 percent: $400,000 to $600,000
37 percent: $600,000 and above
For single filers:
10 percent: $0 to $9,525
12 percent: $9,525 to $38,700
22 percent: $38,700 to $70,000
24 percent: $70,000 to $160,000
32 percent: $160,000 to $200,000
35 percent: $200,000 to $500,000
37 percent: $500,000 and above
Pass-Through Deduction
Current law: Pass-through businesses, which include partnerships, limited liability companies, S corporations and sole proprietorships, pass their income to their owners, who pay tax at their individual rates.
Proposed: Owners could apply a 20 percent deduction to their business income, subject to limits that would begin at $315,000 for married couples (or half that for single taxpayers).
Individual State and Local Tax Deductions
Current law: Individuals can deduct the state and local taxes they pay, but the value is subject to certain limits for high earners.
Proposed: Individuals can deduct no more than $10,000 worth of the deductions, which could include a combination of property taxes and either sales or income taxes.
Mortgage Interest Deduction
Current law: Deductible mortgage interest is capped at loans of $1 million.
Proposed: Deductible mortgage interest for new purchases of first or second homes would be capped at loans of $750,000.
Medical Expense Deduction
Current law: Qualified medical expenses that exceed 10 percent of the taxpayer’s adjusted gross income are deductible.
Proposed: Reduce the threshold to 7.5 percent of AGI for 2018 and 2019.
Child Tax Credit
Current law: A $1,000 credit for each child under 17. The credit begins phasing out for couples earning more than $110,000. The credit is at least partially refundable to qualified taxpayers who earned more than $3,000.
Proposed: Double the credit to $2,000 and provide it for each child under 18 through 2024. Raise the phase-out amount to $500,000, and cap the refundable portion at $1,400 in 2018.
Obamacare Individual Mandate
Current law: An individual who fails to buy health insurance must pay penalties of $695 (higher for families) or 2.5 percent of their household income — whichever is higher, but capped at the national average cost of the most basic, low-premium, high-deductible plan.
Proposed: Repeal the penalties.
Facebook Comments