We are still waiting for the House and Senate to reconcile the differences between their two tax reform bills. It is possible that it won’t happen until right before Christmas so I am going to discuss some of the possible changes before then.
The Senate bill has seven tax brackets for individuals with rates ranging from 10% to 38.5%. The House bill has four tax brackets ranging from 12% to 39.6%, retaining the top rate under current law.
The House bill would repeal AMT for individuals. The Senate bill would keep the individual AMT, with increases to the exemption amounts.
Both bills would significantly increase the estate and gift tax exemption, but the House would also repeal the estate tax after December 31, 2024.
Both bills look to almost double the standard deduction and eliminate the personal exemption. This might result in some people who currently itemize deductions being better off claiming the standard deduction in 2018. It might also result in a benefit of prepaying some itemized deductions in 2017 instead of paying them in 2018. We will see what the final law looks like and let you know.
If Congress has not come to an agreement by next Tuesday, our blog then will focus on some proposed business provisions.
Disclaimer: The items included in the Tax Tip Tuesday Video Blog are informational only and are not meant as tax advice. Consult with your tax advisor to determine how any item applies to your situation. IRS Circular 230 disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advise contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein