The First Cuts are the Deepest
On December 22, 2017, after passage by both houses of the U.S. Congress, President Donald J. Trump signed Public Law No. 115-97, also known as the Tax Cuts and Jobs Act (TCJA).
The TCJA is first and foremost a one-time tax cut for corporations: rates have plunged from 35 to 21 percent. Those cuts are permanent. The rest of the tax cuts—for American individuals as well as for small business owners—expire after eight years.
There are a lot of changes to provisions like the Alternative Minimum Tax (AMT), mortgage interest reductions, and the individual health insurance mandate. For more information, read “The final GOP tax bill is complete. Here’s what is in it.”
Here are four things we believe you should be aware of:
- Most Americans will pay less in taxes until 2026. The final plan lowers the tax rates for each income level and nearly doubles the standard deduction (while also scrapping the personal exemption). The result is that the vast majority of Americans will see their tax bills drop in 2018.
- Big changes to the estate tax double the amount of money your clients can pass on to their heirs tax-free. Individuals can now pass on $11 million (as opposed to $5.5 million) and couples can pass on $22 million.
- Pass-through companies and their owners will get to deduct 20 percent of their income without paying taxes—that includes S-class corporations, LLCs, partnerships and sole proprietorships. However, doctors, lawyers and investment offices lose the deduction if their households bring in more than $315,000. Not only that, but this part of the rule expires in 2025.
- One important part of the bill is what’s not changing: taxes on contributions to retirement accounts like 401(k)s, IRAs and Roth IRAs will stay the same.
These are just four items we wanted to inform you about in the new tax bill. Read the final bill now. Additionally, consider consulting with a CPA or other tax professional for more details about the bill.
Contact us today at 800.992.2642 to see how you can take advantage of the new tax bill as part of your marketing efforts.
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