Important Changes for Both Businesses and Individuals in the New House Tax Bill
On Thursday (11/2/17), House Republican leadership continued their efforts for tax reform, presenting a new tax bill containing a wide variety of changes for both business and individual tax rates, writes Anna Edgerton and Erik Wasson of Bloomberg News. The authors detail the following elements contained in the proposed legislation:
For businesses –
- A measure to cut the corporate tax rate to 20%
- A reduction of the top marginal tax rate on pass-through companies to 25%, but with limits on the kind of income that would qualify
- The ability to immediately write off the full cost of new equipment
For individuals –
- Preserves the home mortgage interest deduction for existing mortgages and maintains the home mortgage interest deduction for newly purchased homes up to $500,000
- A phasing out of the estate tax (over six years)
- A repeal of the alternative minimum tax
- A measure to cut individual tax rates for many Americans to zero, 12%, 25%, and 35% (however the top marginal rate remains at 39.6%)
- A significant increase to the standard deduction – from $6,350 to $12,000 for individuals and $12,700 to $24,000 for married couples
- An increase in the child tax credit from $1,000 to $1,600
- Preservation of a tax break for individuals which allows them to deduct the cost of their state and local property taxes (capped at $10,000)
No changes to 401(k) plans were included, and the bill does not contain a repeal of the Obamacare individual mandate, despite expectations that these might be included in the proposed tax legislation.
President Trump has called on Congress to pass the legislation for him to sign by Christmas. With a number of challenges on the horizon, this may or may not be possible. On Monday (11/6/17), the bill will be taken up by the House Ways and Means Committee.
For more details, read the article in full at Accounting Today.
What does this mean for you? Contact your Adams Brown advisor with questions. The Adams Brown team is here for you!