The Tax Cuts & Jobs Act significantly changes the landscape for individuals and businesses, both small and large. Many provisions included in the Act take effect January 1, 2018, and will affect virtually all U.S. taxpayers. To help you understand the impact, we have compiled resources that include information for both individuals and business owners.
Lower Individual Tax Rates
The legislation creates lower individual income tax brackets of 10%, 12%, 22%, 24%, 32%, 35%, and lowers the top rate from 39.6% to 37%, respectively. (The current rates would be restored in 2026, i.e., 10%, 15%, 25%, 28%, 33%, 35%, and 39.6%, respectively).
Modification of the Alternative Minimum Tax (AMT)
The legislation retains the AMT for individuals but increases the exemption amount and phaseout thresholds so fewer people will pay it. From 2018 through 2025, a higher AMT exemption will apply to income, beginning with $109,400 for joint filers and $70,300 for other taxpayers in 2018. The exemption will phase out at $1 million for joint filers and $500,000 for other taxpayers.
Increase in the Standard Deduction
The standard deduction increases significantly from $12,700 to $24,000 for joint filers, from $9,350 to $18,000 for heads of households, and from $6,350 to $12,000 for singles. Since you can claim… Click Here to Continue Reading All of the Individual Provisions.
Section 179 Expensing
The expensing limitation is increased to $1 million and the phase out beginning at $2.5 million assets placed in service.
100 percent expensing allowed through 2022 for qualified property placed in service after 9/27/2017; 80, 60, 40 & 20 percent bonus depreciation for property placed in service in 2023–2026, respectively.
Income Attributable to Domestic Production Activities Deductions (DPAD)
DPAD is repealed and no longer available. The repeal may have a great impact on manufacturing companies that previously enjoyed significant DPAD credits.
Entertainment Expense Deductions
No deduction is allowed generally for entertainment, amusement, or recreation; membership dues for a club organized for business, pleasure, recreation, or other social… Click Here to Continue Reading All of the Business Provisions.
If you have any questions, our tax professionals are always available to review the bill’s impact on your particular financial situation.
Thomas Jones is the lead tax partner at McConnell & Jones. With more than 40 years of experience in investment and financial management, Mr. Jones is responsible for providing the firm’s clientele with access to a complete range of personal and confidential financial services including tax planning, retirement and estate planning services. Additionally, Mr. Jones works directly with entrepreneurs and small business owners to provide financial solutions that promote long-term business success. Contact us for more information on these provisions of the new Tax Act to help prepare for the upcoming filing season.
Tene Thomas is a licensed CPA with more than 20 years of technical experience in tax compliance and accounting services. As partner of the tax and accounting practice, Tene serves a myriad of industries including entertainment, professional services, health care, real estate, and investment advisory services. Contact us for more information on these provisions of the new Tax Act to help prepare for the upcoming filing season.