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 Personal exemptions would be repealed, and deductions for state and local income and sales taxes, as well as property taxes will be capped at $10,000.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.