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Nov 2017


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Senate Tax Cuts and Jobs Act

 On Thursday, 9 November, 2017 the Senate published itís version of the Tax Cuts and Jobs Act.  While there are some similarities to the House plan there are many differences


Personal Tax Brackets:  Personal tax brackets will range from 10% to 38.5%.  Those making under $9,525 will pay nothing.  Those making $500,000 or more will pay the high rate of 38.5%.

Single Head of Household Joint
10.0% > $0           10.0% > $0           10.0% > $0          
12.0% > $9,525 12.0% > $13,600 12.0% > $19,050
22.5% > $38,700 22.5% > $51,800 22.5% > $77,400
25.0% > $60,000 25.0% > $60,000 25.0% > $120,000
32.5% > $170,000               32.5% > $170,000    32.5% > $290,000    
35.0% > $200,000               35.0% > $200,000   35.0% > $390,000    
38.5% > $500,000 38.5% > $500,000 38.5% > $1,000,000



Deductions Kept:

-Charitable Deduction


Deductions Eliminated:

-Equity Debt Deduction

-State and Local Tax Deduction (except for businesses)

-Deductions for personal exemptions

-Deduction for taxes not paid or accrued in a trade or business

-Deduction for tax preparation expenses

-Deductions for bicycle commuting expenses

-Deductions for moving expenses

-Overall limitations on itemised deductions

-Mortgage Interest Deduction

-Eliminates the additional standard deduction and the personal exemption.


Standard Deductions:  The standard deductions match the House plan for Single and filing Jointly.


Single:  $12,000

Head of Household:$18,000

Filing Jointly:$24,000

Child Tax Credit:

The child tax credit was increased from $1,000 to $1,650.  The first $1,000 would be refundable, increasing with inflation up to the $1,650 base.  The phaseout threshold will  dramatically increase from $110,000 to $1 million for married filers.

The Alternative Minimum Tax (AMT):

The AMT is eliminated.

Estate Tax:

Raises the estate tax exemption to $11,200,000 from $5,600,000.



Corporate Tax Rate:

The Senate lowers the Corporate tax rate to 20%.  However, they want to delay it until 2019.


Permits the use of the cash method of accounting for businesses with gross receipts of up to $15 million.

Capital Investing:

Full expensing is allowed for short-lived capital investment on equipment and machinery for five years.  Increases Section 179 expensing from $500,000 to $1,000,000.  Increases the phaseout threshold from $2,000,000 to $2,500,000.  Reduces asset lives for residential and nonresidential real property to 25 years.


Temporary 100-percent expensing for certain business assets.  The proposal extends and modifies the additional first-year depreciation deduction through 2022.



Limits the deductibility of net interest expense on future loans to 30 percent of earnings before interest and taxes (EBIT).


-Domestic Production:

Eliminates the domestic production activities deduction (section 199) and modifies the rehabilitation credit and orphan drug credit.



Limits the deduction for FDIC premiums.  No deductions for taxpayers with total consolidated assets of $50 billion or more.

Net Operating Loss (NOL):

Eliminates Net Operating Loss (NOL) carrybacks and limits carryforwards to 90 percent of taxable income.

The Alternative Minimum Tax (AMT):

The AMT is eliminated.

International Income:

Moves to a territorial system.  This means that income earned overseas will not be double taxed.


Cuts repatriation to 10% for cash and cash-equivalent profits and 5% for reinvested foreign earnings.

The next step for this plan is for it to go to the floor for a vote by all members of the Senate.


Senate Tax Cuts and Jobs Act

By Bill Williams













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