Key Individual Tax Provisions

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On December 22, 2017, President Trump signed into law the 2017 Tax Cuts and Jobs Act. This is the most consequential tax change in over 30 years.

 

Below please find a very general overview of the main individual tax provisions of the law.

 

​​Proposal

​Prior Law

​New Law

​Individual tax rates
  • ​​Seven rate brackets (10%, 15%, 25%, 28%, 33%, 35%, and 39.6%)
  • Alternative Minimum Tax applies if greater than regular tax
  • 3.8% net investment income tax
  • ​​Retains the current seven rate brackets, although several rates, including the top rate, would be lowered slightly (new top rate of 37%)
  • Generally no change to capital gains or dividend tax rates
  • Alternative Minimum Tax rates are retained with increased exemption and phase out amounts
  • Retains the 3.8% net investment income tax
  • New rates and brackets expire at the end of 2025
​Enhance standard deduction
  • ​​$6,350 for single individuals; $12,700 for married individuals
  • ​​Increased the standard deduction to $12,000 for single individuals and $24,000 for married individuals
​Personal Exemption
  • ​​$4,050 for each personal exemption
  • ​​Eliminated
​Itemized deductions
  • ​​Limitation on itemized deductions
  • $1,000,000 limitation on acquisition debt for home mortgages
  • Deduction for state and local income and property taxes
  • Deduction for personal casualty losses
  • Deduction for losses and expenses from gambling activities; losses limited to winnings
  • Various deductions for charitable donations, subject to certain limitations 
  • Medical expenses are deductible to the extent they exceed 10% of AGI
  • Moving expenses deductible subject to certain limitations
  • ​​Overall limitation on itemized deductions suspended until January 1, 2026
  • Current mortgage interest deduction on existing mortgages is unchanged. Mortgage interest deduction on new debt is limited to $750,000 of acquisition indebtedness
  • Deductions for state and local taxes and property taxes combined are capped at $10,000
  • Deduction for casualty losses repealed, other than those incurred in a disaster area
  • All deductions for expenses incurred in carrying out wagering transactions are limited to wagering winnings
  • Charitable contribution deductions are modified to increase the AGI limitations on cash contributions from 50% to 60%
  • Deduction retained with the floor decreased to 7.5% of AGI
  • Moving expense deduction is eliminated except for certain U.S. Armed Forces
  • All miscellaneous itemized deductions subject to the 2% floor have been repealed
​Individual Mandate
  • ​​Individual responsibility payment
  • ​Reduced to zero for health care coverage status for months beginning after December 31, 2018
​Child tax credit
  • ​Individuals can claim a maximum child tax credit of $1,000 for each qualifying child under the age of 17
  • ​​Child tax credit is increased to $2,000 for a qualifying child
  • A $500 credit is available for dependents other than qualifying children
  • The phase-out for the credit is increased to $400,000 for joint returns
  • The refundable portion of the credit is lowered to $1,400. Taxpayers would be required to provide a work-eligible SSN to receive the credit
​Estate Tax
  • ​​40% tax levied on the net value (after exclusion of $5 million, subject to inflation adjustment) of the estate of a deceased person before distribution to the heirs
  • ​​Exclusion doubled to $10 million, indexed for inflation from 2011, effective for decedents dying and gifts made after 2017. 
  • No repeal of the estate tax is provided

 

 

This information is based on the statutes and guidance available as of the date of publication (January 2018) and is subject to change. 


Contact

Elisa Fay

CPA

Partner-in-Charge Rödl National Tax

+1 404 525 2600

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Matthias Amberg

StB, CPA

Partner, German Speaking

+1 312 857 1950

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