Today, House Ways and Means Committee Chairman Brady introduced the much anticipated House Tax Reform Bill – The Tax Cuts and Jobs Act. The bill is 429 pages, so it will take a little time to digest all the key provisions. In the meantime, here are a few of the key points:
For individuals:
- The individual tax rates are 0%, 12%, 25% and 35%, a reduction from the current maximum rate of 39.6%.
- The standard deductions is approximately doubled for individuals and married couples.
- Introduces a new family credit, which expands the existing child tax credit.
- Continues the charitable contribution deduction.
- Retains the home mortgage interest deduction, but for homes up to $500,000.
- Continues to allow deduction for state and local property taxes, but only up to $10,000.
- Retains 401(k) plans.
- Repeals the much disliked alternative minimum tax for individuals.
- Doubles the existing estate tax exemption immediately, with a repeal of the estate tax after 6 years.
For businesses:
- Lowers corporate tax rate to 20%.
- Lowers maximum tax rate for certain pass-through businesses to 25%.
- Allows businesses to immediately write-off the full cost of new equipment.
- Replaces the existing world-wide tax system imposed on corporations with operations overseas.
- Retains low-income housing tax credits.
Stay tuned for more in-depth discussion of the tax bill.
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