IPS Accounting Services LLC
The new tax reform law, commonly referred to as the “Tax and Employment Reduction Act” (TCJA), is the most important tax legislation in decades. Now companies and people are trying to digest the details and evaluate how the changes will affect their fiscal situation.
Here are the biggest changes:
There will still be seven levels of taxation, but the percentages and the range of income that fall in each group have changed.
For individuals: For married filing joint:
10%: up to -$ 9,525 10%: up to – $ 19,050
12%: $ 9,526 -$ 38,700 12%: $ 19,051 – $ 77,400
22%: $ 38,701 – $ 82,500 22%: $ 77,401 – $ 165,000
24%: $ 82,501 – $ 157,500 24%: $ 165,001 – $ 315,000
32%: $ 157,501 – $ 200,000 32%: $ 315,001 – $ 400,000
35%: $ 200,001 – $ 500,000 35%: $ 400,001 – $ 600,000
37%: more than- $ 500,000 37%: more than $ 600,000
The child tax credit is increased to $2.000.
The first $1.400 shall be refundable, and the elimination will increase to $200.000 for single parents and $400.000 for married couples.
The deduction for medical expenses is retained.
The corporate tax rate is reduced from 35% to 21%.
This is a permanent reduction.
In addition, corporations will pay a single tax on foreign earnings (up to 15.5%) and then, in the future, will not pay U.S. taxes on foreign income.
Taxes will also be reduced for passthrough companies like the LLC’s.
The Alternative Minimum Tax (AMT) is reduced for people.
The corporate Amt was repealed, but the individual AMT will be reduced. Instead of 5.2 million people who pay the AMT, now only 200.000 will.
There is a ceiling of $10.000 in state and local tax deductions.
The inheritance tax exemption is doubled to $11.2 million per
¿What does all this mean? The Real Facts.
Tax cuts will go into effect in January 2018 and withholding tax is reduced in February 2018.
Of American households, more than 80 percent will receive tax cuts at 2018 and five percent pay more in taxes.
These are the highlights:
20% of households will receive an average tax cut of $60.
20% of households will receive an average tax cut of $930.
20% of households will receive an average tax cut of $7.640.
The first percent of households will receive an average tax cut of $51.140.
However, 9% of that 1% higher will see a tax increase of $93.910 instead of a tax cut.
According to the Joint Committee on Taxation, the bill will produce modest growth and add nearly $1.5 trillion to the budget deficit over the next decade.