At Maddox Thomson, we are continuing to track anticipated federal tax law changes under The Tax Cuts and Jobs Act of 2017.  With the recent release of the Congressional conference committee report, we now have a better idea of how the new tax rules might affect individual and corporate taxpayers.

The following chart represents what 2018 rates would be under current law:

Single Filing Status, 2018        Married Filing Joint, 2018       Head of Household, 2018

Rate      Taxable Income                Rate      Taxable Income               Rate      Taxable Income

10%       $0 to $9,525                    10%       $0 to $19,050                 10%       $0 to $13,600

15%       $9,526 to $38,700           15%      $19,051 to $77,400          15%      $13,601 to $51,850

25%      $38,701 to $93,700          25%     $77,401 to $156,150         25%      $51,851 to $133,850

28%      $93,701 to $195,450        28%     $156,151 to $237,950       28%      $133,851 to $216,700

33%      $195,451 to $424,950      33%     $237,951 to $424,950      33%      $216,701 to $424,950

35%      $424,951 to $426,700      35%     $424,951 to $480,050      35%     $424,951 to $453,350

39.6%  $426,701+                       39.6%    $480,051+                        39.6%     $453,351+

The latest version of The Tax Cuts and Jobs Act keeps the number of tax brackets at seven; however, offers lower rates.  The following chart represents the proposed tax rates and income brackets:

Single Filing Status, 2018       Married Filing Joint, 2018       Head of Household, 2018

Rate      Taxable Income               Rate      Taxable Income                Rate      Taxable Income

10%       $0 to $9,525                   10%       $0 to $19,050                  10%       $0 to $13,600

12%       $9,526 to $38,700         12%      $19,051 to $77,400          12%       $13,601 to $51,800

22%      $38,701 to $82,500        22%       $77,401 to $165,000       22%       $51,801 to $82,500

24%      $82,501 to $157,500      24%      $165,001 to $315,000      24%       $82,501 to $157,500

32%      $157,501 to $200,000    32%      $315,001 to $400,000     32%       $157,501 to $200,000

35%      $200,001 to $500,000   35%      $400,001 to $600,000     35%        $200,001 to $500,000

37%      $500,001+                     37%         $600,001+                     37%       $500,001+

The Tax Cuts and Jobs Act would increase the standard deduction in 2018 from $6,500 to $12,000 for single filers, $13,000 to $24,000 for joint married filers, and $9,550 to $18,300 for heads of household filers.  Personal exemptions would be repealed, and deductions for state and local income and sales taxes, as well as property taxes will be capped at $10,000.  Charitable contributions, and mortgage interest deductions will be retained; however, new limitations on mortgage interest for loans after December 15, 2017 would be imposed.

The plan also includes a reduction in the corporate income tax rate from 35 percent to 21 percent, and proposes a special 20 percent tax deduction on certain pass-through business income (subject to anti-abuse rules).  The plan increases the Alternative Minimum Tax “AMT” exemption thresholds for individuals and eliminates AMT for corporate taxpayers.  Estate and gift tax exemptions are doubled under the latest version of The Tax Cuts and Jobs Act – from $5.6M to $11.2M for 2018.

Stay tuned for additional information as we continue to read and learn more about the upcoming changes.  If you would like to see how these might affect you, please contact one of our tax professionals.