The proposed Tax Cuts and Jobs Act passed in the Senate by the narrowest margin on Friday. If passed and signed into law, it will create sweeping changes to the tax code. Along with a lower corporate tax rate, the bill makes significant tax changes for individuals. Here are some items which may affect you:
- It’s still a work-in-progress. There are still significant differences between the House and Senate versions of the bill. This will require reconciliation, and there is potential for many changes before the bill moves on to the White House for signature. Therefore, all of the following is subject to change.
- The standard deduction will nearly double—but the bill also eliminates the personal exemption, which could offset the higher deduction, particularly in the case of families with many dependents.
- Deductions for state and local income taxes (SALT) will be eliminated. Property taxes will still be deductible ($10,000) for taxpayers who itemize.
- Threshold for estate tax will double, making it applicable to even fewer individuals and couples.
- The individual healthcare mandate would be eliminated in order to help pay for some of the other tax cuts.
- There will be a new deduction for certain pass-through income of 23%.
- The alternative minimum tax will remain, both for corporations and for individuals.
Everyone’s tax situation is different. We are closely following the bill as it is refined by Congress, and will send updates on major changes. In the meantime, should you have any questions, please contact your trusted REM advisor.