..


Bing News

  • Written by Bing

House and Senate Republicans unveiled their joint tax bill on Friday afternoon, which dramatically cuts corporate tax rates and overhauls the individual tax code. Released just days before expected votes on Tuesday and Wednesday, the bill looks on track to become law within days.

Here are some of the most notable features.

Individual taxes

The bill keeps the current seven brackets for income tax, but lowers the rates and changes the income thresholds. The top rate would be 37 percent versus 39.6 percent under current law, which is lower than the bills that previously passed the House and Senate. The individual tax cuts expire after 2025.

The standard deduction is almost doubled to $12,000 for individuals, $18,000 for head of household, and $24,000 for couples, meaning fewer people are likely to itemize their taxes. The bill eliminates the $4,050 personal exemption that taxpayers can currently claim for themselves and dependents.

Prior analyses of the House and Senate bills found that the largest benefits accrue to the richest Americans and nothing in the new bill "radically changes that takeaway," according to Ernie Tedeschi, an economist and former Treasury official.

Tax rates for single filers:

  • 10%: up to $9,525
  • 12%: $9,525 to $38,700
  • 22%: $38,700 to $82,500
  • 24%: $82,500 to $157,500
  • 32%: $157,5000 to $200,000
  • 35%: $200,000 to $500,000
  • 37%: $500,000 & up

Tax rates for joint filers:

  • 10%: up to $19,050
  • 12%: $19,050 to $77,400
  • 22%: $77,400 to $165,000
  • 24%: $165,000 to $315,000
  • 32%: $315,000 to $400,000
  • 35%: $400,000 to $600,000
  • 37%: $600,000 and above

Child tax credit

One of the big reasons analyses of the House and Senate bill found few gains for lower income taxpayers was that many don't make enough money to pay income taxes and benefit from the rate cuts. But some low-income families with children could see slightly bigger gains under the conference bill thanks to an expanded child tax credit pushed for by Senators Marco Rubio, R-Fla. and Mike Lee, R-Utah.

The new child tax credit will be $2,000, same as in the Senate bill, but a maximum of $1,400 will be refundable against payroll taxes versus $1,100 earlier. But not everyone is entitled to the full $1,400, which scales up with income.

"Ten million children in low-income working families will get nothing from the last-minute changes to the GOP tax bill's child tax credit increase — and as a result will get just a token increase of $75 or less per family," Chye-Ching Huang, director of federal tax policy at the left-leaning Center on Budget and Policy Priorities, said in an e-mail. "Another 14 million will continue to get less than the bill's full CTC increase."

Estate tax

The starting point for the estate tax would be doubled under the bill from the current $5.5 million for single filers.

This benefits wealthy heirs, but goes less far than the House bill, which would have eliminated the estate tax entirely. President Donald Trump's family might have saved over $1 billion on their own if that change had gone into effect.

Deductions

The bill gets rid of a variety of deductions while placing limits on others. The bill caps the mortgage interest deduction at $750,000 of principal. The state and local tax deduction is capped at $10,000 but allows taxpayers to count a mix of sale, income, and property taxes.

Some deductions eliminated in previous versions of House and Senate bills are preserved. The bill keeps an existing deduction for high medical expenses and lowers its income threshold for two years. The bill maintains a tax deduction on student loan interest payments and an adoption tax credit.

Graduate students keep an important benefit that allows them to avoid paying tax on tuition waivers. The House bill would have eliminated it.

Corporate tax cuts

The new tax bill cuts the corporate tax rate from 35 percent to 21 percent while taxing foreign earnings at lower rates of 15.5 percent on liquid assets and 8 percent on illiquid assets. This is a change from the current system in which companies can defer taxation on profits they keep abroad.

The bill also eliminates the corporate alternative minimum tax, which currently limits the amount of deductions a corporation can take.

Pass-through businesses

Certain business organized as pass-through can take a 20 percent deduction, with some additional rules for businesses that earn income over $157,500 for individuals and $315,000 for joint filers.

Whether you're eligible could depend on what kind of business you own: An architecture firm over the income threshold could take the deduction, for example, after being left out in the Senate bill. But a law firm would still be ineligible.

In general, tax experts have raised concerns that a pass-through deduction creates an incentive for individuals to avoid income taxes. The conference report notes that the restrictions on larger businesses are designed to discourage wealthy Americans from rejiggering their finances to qualify.

"The optimistic view is 'Wow, this will cause a lot of people to start a small business,'" Don Susswein, a principal at RSM's Washington National Tax, told NBC News. "The pessimistic view is it will cause a lot of people to convert their salary into business income by filing a piece of paper."

Health care

The bill eliminates the individual mandate, a key part of the Affordable Care Act that penalizes Americans who don't maintain health coverage.

The Congressional Budget Office estimates 13 million fewer people will have health insurance after a decade if the mandate is eliminated and premiums will rise by 10 percent on the individual market.

Nonprofits

The bill does not include a repeal of the Johnson Amendment, which prohibits charities and churches from engaging in partisan politics. The House would have eliminated that amendment, which would have potentially given people the ability to anonymously spend money on political ads using tax-deductible donations.

Authors: Bing

Read more http://www.bing.com/news/apiclick.aspx?ref=FexRss&aid=&tid=02679CDC522E4846A5BDC7D248DC6B10&url=https%3A%2F%2Fwww.nbcnews.com%2Fpolitics%2Fpolitics-news%2Fkey-features-republicans-final-tax-bill-n830346&c=16465295481313070142&mkt=en-us

Politics

Union demands paint a bleak future under Shorten

It’s time for Bill Shorten to come clean and rule out extreme changes to Australia’s industrial relations laws that would wind the clock back to the strike-torn Whitlam era.   As the ACTU prepares...

Doorstop at AKD Sawmill with Trevor Ruthenberg, LNP Candidate for Longman

MR TREVOR RUTHENBERG, LNP CANDIDATE FOR LONGMAN: Well morning folks. Welcome to Caboolture, welcome to Longman. This is a fantastic day for local jobs. This is a fantastic day for our community. ...

Australia’s resource and energy export figures are on track to set a new record

Resources and energy exports setting NEW records   Australia’s resource and energy export figures are on track to set a new record of $226 billion in 2017–18 – and go even higher this year – accor...

Business News

Top Tips if You’re Thinking About Quitting Your Day Job and Starting a Small Business

Are you fed up with working for another person and long to be your own boss? Do you think you’d like to take over a local business that’s up for sale? Would you like to make your hobby into somethin...

What is the best structure to use when starting up a business

Coco Hou, tax specialist and accountant, has shared her advice for people who are starting up their own businesses, setting up side gigs, or moving into consultancy work. The start of the new financ...

Leading Employment Firm in WA 2018

Only a certain few start their careers as the boss. For most of us, we get employed by companies and in most cases, we never really find the need to hire employment lawyers. But if we do, hiring an ...

Travel

Adina Apartment Hotel Brisbane

TFE Hotels has opened the doors of the spectacular new Adina Apartment Hotel Brisbane, which offers stunning views over the Brisbane River and awe-inspiring interiors that transport guests back to t...

Winter In Rotorua: Things To Do

While many travelers consider the summer months to be the prime traveling season, there are thousands and thousands of travelers who love to take to their campervan hire australia journeys when the ...

Discover Hong Kong Your Way With Ecruising

From July – November 2018, Ecruising in partnership with Hong Kong Tourism and Royal Caribbean, including Azamara and Celebrity Cruises are offering travellers new and exclusive cruising itinerari...

You might also like