After months of fanfare about the tax reform, House GOPers have finally released a tax bill. Most noticeably, cutting rates for businesses and most individuals and nixing or paring back many popular tax breaks.
Let’s turn to the details of what is included in the House bill...
There would be four listed income tax brackets: 12%, 25%, 35%, and 39.6 %.
Standard deductions would nearly double to $24,000 for married filers and $12,000 for single individuals. Singles with children could claim $6,000 more. But personal exemptions for filers and their dependents would be nixed.
The mortgage interest deduction would be nicked. Under current law, taxpayers can deduct interest on as much as $1 million of mortgage on primary and second homes. The House would slash the $1 million cap to $500,000 and get rid of the write off for interest on home equity loans and second homes. This provision would generally be effective for loans incurred after November 2, 2017.
Several other big write offs would go away. Many education tax breaks would be repealed. The credits for adoption, plug-in vehicles and a few others would disappear. Gambling losses, tax preparation fees, moving expenses, and employee business expenses to name a few.
Corporations would pay tax at a flat 20% rate, down from 35% now. This lower rate would be permanent and would being in 2018. The corporate alternative minimum tax would be scrapped also.
Enhanced write offs for business asset purchases are included in the bill: 100% bonus depreciation for many assets put into use during the year.
Net operating losses could offset only 90% of taxable income, NOL carrybacks would be prohibited.
Don’t take the House proposals as gospel. They’re bound to change as lobbying groups pick apart each of the revenue raisers in the package. For more information on any of these changes, give us a call at BluePoint Financial. We’re happy to help with your individual and business needs.
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