Senate Tax
Cuts and Jobs Act |
|
On Thursday, 9
November, 2017 the Senate published it’s version of the Tax
Cuts and Jobs Act.
While there are some similarities to the House plan
there are many differences
|
PERSONAL
TAXES:
|
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:
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.
|
|
BUSINESS TAXES:
|
Corporate Tax Rate:
The Senate lowers the Corporate tax rate to 20%.
However, they want to delay it until 2019.
|
Accounting:
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.
|
Expensing:
Temporary 100-percent expensing for certain business assets.
The proposal extends and modifies the additional
first-year depreciation deduction through 2022.
|
Deductions:
-Interest:
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.
-FDIC:
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.
|
Repatriation:
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.
|
|
Sources:
Senate Tax Cuts and Jobs Act
By Bill
Williams
|