The Trump Tax Reform bill is another step closer to being law with the final bill out of committee and headed to the House and Senate for voting on the final version of the Tax Cuts and Jobs Act.
How Will the Tax Cuts and Jobs Act Impact Me
There will be a change in most of the seven tax brackets in 2018. The personal tax brackets will be as follows: 10%, 12%, 22%, 24%, 32%, 35% and 37%. Small business owners who are setup as S-Corporations or Limited Liability companies and receive pass-through income via a K-1 or form 1065, will be allowed to deduct 20% of their income prior to applying the personal income tax rates up to certain qualifying income limits, and the corporate rate will be cut from 35% to 21%.
Other features of H.R. 1, Tax Cuts and Jobs Act, will be to double the standard deduction to $12,000 for single filers and $24,000 for married filing jointly, but completely eliminate personal exemptions. State, local and property taxes deductions for those itemizing will be capped at $10,000. It also expands the medical expense deduction for two years for filers meeting that threshold from 10% AGI to 7.5% AGI. Mortgage interest will be deductible for mortgages up to $750,000. The child tax credit will increase from $1,000 to $2,000 per child under 17 years of age with $1,400 of the $2,000 potentially refundable. Filers with dependents who do not qualify for the child tax credit will be able to claim a $500 credit for each dependent. The bill also repeals the individual mandate to purchase health insurance.
Use this tax calculator tool to help estimate your potential 2018 tax liability under the new plan.
Once you run this calculator then you can run the current 2017 tax calculator to see if you will be paying more or less under the new plan. We will continually refine the calculator as more information becomes available.