The new tax reform law has brought the most sweeping legal changes regarding tax since 1986. While many long held, tried and true strategies to save tax are no longer relevant, there are however, several new opportunities to save tax. We are expecting more winners than losers as a result of these changes.
Here are a few highlights of the new law that will affect many taxpayers.
- New lower tax brackets for everyone
- Qualified business income gets a 20% deduction from taxable income
- Standard deduction is doubled and personal exemptions are gone
- The marriage "penalty" is almost completely gone away
- The child tax credit is doubled to $2,000 for children under age 17
- For children over age 17, there is a new $500 credit available
- Home equity loan interest is generally not deductible (certain allowances exist)
- The medical expense deduction AGI threshold is reduced to 7.5%
- The combined total of deductible state tax and property taxes is limited to $10,000
- Unreimbursed employee expenses are no longer deductible
- Moving expenses are generally no longer deductible
- Casualty and theft losses aren't deductible unless in a federal disaster area
- Obamacare individual mandate penalties are gone
- The alternative minimum tax will affect many less taxpayers
- The estate tax exemption is doubled
- Most of the tax breaks will expire after 2025
- The section 179 business asset expensing and bonus depreciation provisions are expanded
- Business entertainment expenses are no longer deductible
- The cash basis of accounting is now allowed for businesses up to $25 million in revenue
If you have any questions about how any of these provisions may affect you, please contact us for more information. We go to great lengths to legally minimize the tax liability for every client. Please don't take any action based upon the list above without talking to us first, as everyone's situation is unique.
