It won't be a bill for much longer.
On December 15 a joint committee on taxation, with representatives from both the House and the Senate, agreed to legislation that will significantly affect taxation for at least the next several years. Here are some of the more significant provisions.
Tax Rates: There was talk at one point of moving to a four bracket system. Ultimately congress has agreed to keep seven brackets. The brackets are wider, and the rates are lower, so taxes should be lower.
Standard Deduction: Plan on an increase to $24,000 for married taxpayers filing jointly taking the standard deduction.
Personal Exemptions: The $4,000 per person deductions would be eliminated.
Child Tax Credit: The credit would increase to $2,000 per child, with up to $1,400 refundable, and a new $500 nonrefundable credit for dependents that are not qualifying children. The phaseout threshold would be increased to $400,000.
Medical Expenses: The threshold would again be reduced to 7.5% of adjusted gross income, down from 10%.
Mortgage Interest: The deduction would be limited to acquisition debt of less than $750,000, down from $1,000,000.
Home Equity Loans: Interest would no longer be deductible.
State Taxes: The deduction would be limited to $10,000. No deduction is allowed for 2018 taxes prepaid in 2017.
Charitable Contributions: Donations to charities would now be limited at 60% of income, up from 50%.
Miscellaneous Itemized Deductions: Anything previously allowed to be deducted in excess of 2% of adjusted gross income would now be disallowed.
Alimony: No longer deductible by payors, and no longer included in income by the recipient.
Moving Expenses: The deduction would be eliminated except for members of the armed forces.
Alternative Minimum Tax: The plan had been to scrap the AMT, but it survived. While the changes to the regular tax (increased standard deduction, no exemptions, reduced or eliminated itemizations) made regular tax virtually mirror AMT, the AMT will now have a $109,400 exemption on married returns. This bumps the AMT back up so it doesn't affect so many middle class taxpayers, as it has been doing for years.
Individual Mandate: Beginning 2019 there is no penalty for failure to to obtain minimum essential coverage.
To meet budget requirements many of these provisions are scheduled to sunset. Seeing how congress has operated in the past, however, it is likely many of these points will remain permanent, as congress continues to kick the can down the road.
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