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Repealed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Repealed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Carryback repealed except for farms, which are left at two years; indefinite carryover deduction limited to 80% of pre-NOL income for losses generated after 2017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

Health Care Reform Act: Critical Tax and Insurance Ramifications

The Affordable Care Act (ACA) (also known as Obamacare) continues to be in effect in the years to come, despite important changes as a result of the Tax Cuts and Jobs Act of 2017. Join this webcast to better understand the impact of the Act and the impact of the most recent legislation on the ACA.

Business & Industry Conference Simulcast

Enhance your conference experience with the VSCPA's new event app where you'll be able to select your sessions, keep track of your CPE credit, receive important event updates, connect with attendees and more. Click here to download the app. Can't make it to Williamsburg? Participate virtually

IRS Audits

Want to help your client save money and avoid potential trouble with the IRS? This webcast has been updated for the Tax Cuts and Jobs Act (TCJA) and explains what may trigger an IRS audit, how to negotiate, settle on appeal, qualify for an IRS collection program and evaluate your client's best

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
Business & Industry Conference

Business & Industry Conference

Enhance your conference experience with the VSCPA's new event app where you'll be able to select your sessions, keep track of your CPE credit, receive important event updates, connect with attendees and more. Click here to download the app. Learn through a corporate finance lens It’s not always easy

The Flow Through Entities Deduction: Review and Update

This program addresses the Section 199A deduction for flow-through entity income, including a review of the major provisions, forms reporting, and recent developments. This course qualifies for PTIN credit. This event may be a rebroadcast of a live event and the instructor will be available to

Surgent's Choosing the Right Business Entity Post-Tax Reform (CETA)

In terms of selecting an entity to do business in, the universe shifted with the Tax Cuts and Jobs Act enacted at the end of 2017. The tax rate for C corporations was lowered to 21% and the new Section 199A deduction offered pass-through entities the chance to significantly lower the rate at which

The Best Individual Income Tax Update Course by Surgent (BITU)

This highly informative course comprehensively covers all the latest tax law developments. The focus is on individual taxation and discussion of the planning opportunities practitioners need to understand to help clients respond effectively. You will come away from the course with the up-to-date

Tax Reform News & Resources

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

IRS Clarifies Treatment of State and Local Tax Refunds

In Rev. Rul. 2019-11 (PDF), the U.S. Internal Revenue Service (IRS) addressed how the longstanding tax benefit rule interacts with the new $10,000 limit on deductions of state and local taxes to determine the portion of any state or local tax refund that must be included on a taxpayer's federal

GAO Report: IRS Must Do a Better Job Managing Employees

According to a new report from the U.S. Government Accountability Office (GAO), the U.S. Internal Revenue Service (IRS) needs to do a better job of managing its employees in the wake of budget cuts that have forced the IRS to reduce tax audits. Fewer individual and corporate tax returns have been

FASB Proposes Further Changes to Income Tax Disclosures

The Financial Accounting Standards Board (FASB) issued proposed changes to the income tax disclosure requirements for companies to make them more relevant to users of financial statements. The proposed changes take into account changes contained in the Tax Cuts and Jobs Act (TCJA) and build on a

Treasury Repeals Hundreds of Outdated Tax Rules

The U.S. Treasury Department finalized the repeal of 296 obsolete or duplicative tax regulations in response to President Donald Trump’s executive orders early in his administration calling on the Treasury and other departments to get rid of unnecessary regulations. The proposed list last year

Is Tax Reform Spurring Companies to Use Robots?

More companies are finding more uses for robots, a broad trend that certainly will further expand. Many factors explain it — including a perhaps surprising one: the Tax Cuts and Jobs Act. A key provision of the tax reform law allows companies to deduct 100 percent of the cost of equipment in the

IRS Proposes Guidance on FDII, GILTI deductions

The U.S. Internal Revenue Service (IRS) issued guidance on determining the amount of the deduction for foreign-derived intangible income (FDII) and global intangible low-taxed income (GILTI) under Sec. 250. The’s proposed regulations also detail how taxpayers coordinate the FDII and GILTI provisions

Treasury Noncommital on Waiving Under-Withholding Penalties Further

The Treasury Department so far isn’t agreeing with requests from congressional Democrats and the American Institute of CPAs (AICPA) to go further in eliminating tax penalties for taxpayers who didn’t withhold enough taxes last year after passage of the Tax Cuts and Jobs Act (TCJA). Last month, the U

Do Tax Law Changes Affect IRA Deductibility?

Workers have until the last day of the tax-filing season to make 2018 contributions to their traditional IRAs. Although more taxpayers are expected to opt for the standard deduction, which increased under the new law, they can still claim the tax deduction for IRA contributions. That’s because the