Log Out

Tax Reform News

Overview of Changes

 

Current Law

New Law 

Personal rates

Seven brackets: 10%, 15%, 25%, 28%, 33%, 35%, 39.6%

Seven brackets: 10%, 12%, 22%, 24%, 32%, 35%, 37%

Personal long-term capital gains and qualified dividend rates

Up to 23.8%

Unchanged; rates tied to existing taxable income thresholds

Maximum pass-through tax rate

39.6%

Ordinary rates with deduction of 20% of qualifying domestic income; limited deduction for income from lower-income service businesses, excluding engineers and architects

Maximum corporate tax rate

35%

21%

Personal standard deduction

Married filing jointly: $12,700
Head of household: $9,350
Single: $6,350

Married filing jointly: $24,000
Head of household: $18,000
Single: $12,000

Child tax credit

$1,000 per child

$2,000 per child (refundable to $1,400 per child)
$500 for non-child dependents

Personal exemption

$4,050

Repealed

Personal state income, sales tax and property tax

Allowable as itemized deduction

Deduction for property tax and either income or sales tax limited to $10,000

Mortgage interest

Deductible on up to $1.1 million of debt; interest on second home deductible

Deductible on up to $750,000 of debt, including second home; no home equity interest deduction

Individual Alternative Minimum Tax (AMT)

Imposed when minimum tax exceeds regular income tax

Increases AMT exemption amounts and phase-out

Medical expenses

Deductible to the extent they exceed 10% of adjusted gross income (AGI)

Deductible to the extent they exceed 10% of AGI (7.5% of AGI for 2017 and 2018)

Alimony

Deductible to payor, taxable to recipient

Not deductible to payor, not taxable to recipient for decrees executed or modified after 2018

Individual health insurance mandate

Individuals penalized for failure to carry minimum essential health insurance coverage

Repealed

Depreciation

Fixed assets generally capitalized and depreciated; in some cases, Section 179 immediate expensing of up to $500,000 is available

Immediate expensing of most new and used property (excluding structures) through 2022; Section 179 limit increased to $1 million

Net operating losses (NOL)

Generally carried back two years and forward 20 years

Carryback repealed except for farms, which are left at two years; indefinite carryover deduction limited to 80% of pre-NOL income for losses generated after 2017

Excess business loss

No provision

Net business losses in excess of $500,000 ($250,000 single) not deductible and become an NOL carried over to the next year

Business interest

Generally deductible

Generally limited to the extent that interest exceeds 30% of income, unlimited carryover of excess. Determined at entity level, but spillover effects to owner. Limitations not applicable if average annual gross receipts do not exceed $25 million

Cash method of accounting

Generally limited to businesses with less than $1 million, $5 million or $10 million in receipts, depending on facts

Expanded to include businesses with less than $25 million in receipts with special rules for tracking inventory costs

Domestic production activities deduction

Domestic producers eligible for deduction equal to 9% of qualifying income

Repealed after 2017

Corporate AMT

20%

Repealed after 2017; AMT credits refundable from 2018-2021

Gift and estate tax

Tax of up to 40% imposed on gifts and estates, subject to $5.49 million lifetime exemption per spouse

Lifetime exemption doubled, estate tax remains in effect, step-up in basis retained

Tax Reform Events

199A FINAL REGULATIONS FINALLY DROP: CHOICES, CHOICES - WHICH WAY TO GO?

At long last, the (300 page) Final §199A Regs have dropped. What does it mean for 2018 tax returns? Everything. IRS (and Treasury) have thrown down a critical choice at our feet: Choose to apply (to 2018 returns) 08/16/18 proposed regs or 01/18/19 final regs. Which to choose? Take our all-new course

Employment Taxes for Human Resource Professionals - What Lurks Beneath?

So many dollars travel through payrolls. Any glitch in a company’s approach to employment taxes (and related obligations) can lead to unspeakable devastation for both the company and responsible individuals. Often, little, if any, thought, goes into structure, implementation and documentation of

Surgent's Section 199A: Applications and Challenges in 2019

Section 199A is easily the least understood topic of The Tax Cuts and Jobs Act. Your clients will look to you for explanations and best practices to maximize the 20% deduction. Pass-through entities and real estate investors stand to gain valuable tax cuts, and the average practitioner cannot afford

The Best Federal Tax Update Course by Surgent (BFTU)

In this course, tax advisors will be fully updated on the most important aspects of tax reform as well as major trends on the horizon with a view toward planning. Individual, partnership and corporate taxation, as altered by tax reform, will be included. As both formal and informal guidance is

2018 Federal Income Tax Update - Part 2

This course is essential for the tax practitioner who wants to update their knowledge of individual income taxation. This course will provide a comprehensive review of Form 1040 complexities. Updates for tax legislation passed in late 2017 (The Tax Cuts and Jobs Act) along with many important topics

Surgent's Fundamentals of Public Charity Taxation and Form 990 (F994)

If you work for or with not-for-profit entities and have questions about the IRS Form 990, Return of Organization Exempt From Income Tax, and the related schedules, this is the course for you! The program focuses on commonly encountered issues that professionals will encounter when they prepare the

Tax Reform News & Resources

SEC Issues Guidance on Opportunity Zone Investments

The U.S. Securities and Exchange Commission (SEC) teamed up with the North American Securities Administrators Association (NASAA) to explain the application of federal and state securities laws to opportunity zone investments. The Tax Cuts and Jobs Act (TCJA) set up the opportunity zone program as a

Why the TCJA Packs Even More Depreciation Punch

The Tax Cuts and Jobs Act (TCJA) combines powerful enhancements for the Section 179 “expensing” and “bonus” depreciation deductions. That’s an effective 1-2 punch that’s hard to beat. Given the TCJA's impact on deductions, there’s a good chance that your small business clients can immediately deduct

Virginia Taxpayers Must File By July 1 to Qualify for Relief Refund

Virginia taxpayers must file by midnight on Monday, July 1 to qualify for the Tax Relief Refund, the result of state legislation passed by the 2019 Virginia General Assembly in response to the federal Tax Cuts and Jobs Act (TCJA). An individual filer could receive up to $110 and a married couple

The Shifting Deduction Landscape Under the TCJA

Before the Tax Cuts and Jobs Act (TCJA), most moderate-to-high-income taxpayers itemized deductions on Schedule A, rather than claiming the standard deduction on their personal returns. Due to a few sizeable deductions, the amount often exceeded the standard deduction — sometimes by a lot. Since it

Tax on Nonprofits Could Also Snare Companies

Companies with affiliated tax-exempt entities could find themselves surprised to be on the hook for a new tax, in light of interim guidance recently released by the U.S. Internal Revenue Service (IRS). A controversial provision of the Tax Cuts and Jobs Act imposes a 21 percent excise tax on

Attempt to Ban SALT Weakened by Strong Data

It was always a long shot, but a quixotic lawsuit by four northeastern states to squelch the Trump tax law's cap on state and local tax deductions is being undermined by a repetitive drip of strong economic data. New York, Connecticut, Maryland and New Jersey will get their first hearing in June on

The Marriage Tax Penalty Post-TCJA

The U.S. federal tax system has featured some form of higher income taxes for dual-earner married couples than for two unmarried persons since 1913; this is commonly referred to as the marriage tax penalty. Similar to prior tax reforms, the law known as the Tax Cuts and Jobs Act (TCJA) preserved the

EY Survey: Corporate Tax Pros Turn to AI, Bots to Comply With TCJA

Nearly three-quarters (74 percent) of corporate tax professionals are dedicating extra time and technology resources, including artificial intelligence and bots, to help their companies comply with the Tax Cuts and Jobs Act, according to a new survey by Ernst & Young. Nearly two thirds of the

IRS Issues Guidance on Qualified Opportunity Zones Investment

The U.S. Internal Revenue Service (IRS) has issued guidance on investing in qualified opportunity zones (QOZ) based on a provision in the Tax Cuts and Jobs Act (TCJA) aimed at encouraging investments in low-income communities. Three tax incentives are offered to a taxpayer who invests in a business

Has the TCJA Actually Helped Companies?

One thing that became clear as 2018 progressed was that the initial elation over the new 21 percent corporate income tax rate provided by the Tax Cuts and Jobs Act had been a somewhat hasty reaction. Tempering the enthusiasm were realizations that other provisions of the law would, for most