Accounting Blog & News

The Senate and House reach a deal in new Tax Reform

It was announced on Friday evening that the Senate Republican leaders and House have both agreed to the new tax reforms bill ‘the tax Cuts and Jobs Act'. All of the differences that they had were left behind. Now, before becoming a law, a vote in the Congress is required. It was already expected that the final version of this bill will have a number of late additions and some compromises.  


By this week, we can expect a vote. Perhaps, President Trump will also sign the bill before Christmas arrives. 


The following are the tax reform provisions that were discussed in the conference: 


Individual tax cuts: a seven-rate structure was what the GOP leaders decided to settle on. This includes some revised brackets and lower rates. At the same time, the top rate was cut down to 37% from a current point of 39.6% as compared to the 38.5% in the Senate Bill. 


Standard deduction - personal exemptions: apart from the individual tax cuts, a standard deduction has been doubled to $24000 in the case of joint filers and $12000 for single filers. In this case, there are no personal exemptions. 


Child tax credit: at the current moment, the child tax credit exists at only $1000 for one child. However, based on the new law, it will increase up to $2000 out of which $1400 could be refunded. This, however, was a big sticking point according to Senator Marco Rubio. He insisted that some flexibility should be provided to families with a low income. Any good tax expert Sarasota Fl will be able to provide you help with more information once the law passes. 


Mortgage interest deduction: according to the later changes, the deduction for the mortgage interest has a limitation on the interest paid up to $750000 in acquisition debt. It went down from the $1 million current limits. The house proposed a threshold of $500000 while the Senate insisted on leaving it at $1 million.  


Corporate tax rates: The tax rate for corporations has dropped down to 21% from 35%. Both the Senate and the House seemed to have the same views regarding the corporate tax rates. In case you want more information, reach out to a qualified CPA Sarasota Fl for more information. 


Individual AMT: at the same time, the individual AMT (alternative minimum tax) remains pretty much the same. However, its threshold will be tweeted. Any taxpayer that has an income below $500000 or families with income below $1 million will be excluded. 


Corporate AMT: the corporate alternative minimum tax was preserved by the Senate is now repealed. This concession was very critically needed for businesses who were eligible for having some research credit. 

 

Miami Accountant Fajardo And Associates can help

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