On December 22, 2017, President Donald Trump signed into law the Tax Cuts and Jobs Act of 2017, which was first introduced in the 115th United States Congress on November 2, 2017, with the goal of further stimulating the economy by reducing the corporate tax rate, lowering individual tax rates, and scaling-back state and local deductions. The new law’s pro-growth strategy, bolstered by lower marginal tax rates and a reduction in the cost of capital, is projected to increase GDP, wages, and the number of full-time equivalent jobs in the United States.
The information below provides a synopsis of the relevant changes to United States’ income and corporate taxes structure associated with the Tax Cuts and Jobs Act of 2017.
Income Tax:
The Act lowers tax rates within the seven income tax brackets until 2026, to which they will revert back to 2017 rates.
The Act doubles the standard deduction for single filers, married filers and joint filers.
The Act eliminates personal exemptions no longer allowing taxpayers to subtract $4,150 from income for each person claimed.
The Act eliminates most itemized deductions, but keeps deductions for charitable contributions, student loan interest and retirement savings.
The Act limits the deduction on mortgage interest to the first $750,000 of the loan; current mortgage holders are not affected.
The Act allows taxpayers to deduct up to $10,000 in state and local taxes, but they must choose between property taxes and income or sales taxes.
The Act expands deductions for medical expenses for 2017 and 2018, allowing taxpayers to deduct medical expenses that are 7.5% or more of income.
The Act repeals the Obamacare tax on those without health insurance in 2019.
The Act doubles the estate tax exemption to $11.2 million for singles and $22.4 million for couples.
Corporate Tax:
The Act reduces the maximum corporate tax rate from 35% to 21%.
The Act raises the standard deduction to 20% for pass-through businesses until 2025; these businesses include sole proprietorships, partnerships, limited liabilities, and S corporations.
The Act limits businesses’ ability to deduct interest expenses to 30% of income.
The Act allows businesses to deduct the cost of depreciable assets in one year instead of amortizing them over several years.
The Act eliminates the corporate Alternative Minimum Tax (AMT).
The Act allows businesses to repatriate the $2.6 trillion held in foreign cash stockpiles paying a one-time rate of 15.5% on cash and 8% on equipment.
For further information regarding the Tax Cuts and Jobs Act of 2017, please visit