After months of discussions and anticipation, the legislation for tax reform was finalized. Here are some of the main features of the tax reform bill:
Businesses
- 21% flat Corporate tax rate (down from current max 35%)
- 20% income deduction for Pass through entities (LLC/S-Corps, limitations apply)
- Elimination of corporate AMT
- Like-kind exchange (1031) limited to Real property only
Individuals
- 7 Income tax brackets (10%, 12%, 22%, 24%, 32%, 35% and 37%); max tax rate dropped from
39.6% to 37%
- (Almost) doubling the standard deductions and repealing of Personal exemptions. Standard
deduction amount increased to $12K for individuals and $24K for Couple
- AMT (Alternative Minimum Tax) stays, but the exemption increased to $1 mm for couple and
$0.5 mm for individuals
- Deduction for State/local Income/sales tax and property tax deduction capped to $10K
- Lower threshold (reduced to 7.5% from 10%) for medical expense deductions (for two years)
- Limits the deduction to interest paid on $750K (instead of current $1.0 million) of mortgage
loans (Elimination of interest on Home Equity loans)
