The US Congress has passed the largest re-write of the U.S. tax code since the Tax Reform Act of 1986. Please find attached a brief report on US tax reforms.
We will be happy to assist you and your company for all your requirements as per the new US tax policies.
Major Highlights of the Tax Reforms:
- There is increase in standard deduction and repeal of the deduction for personal exemptions. Earlier it was $6,350 for single individuals and married individuals filing separately and $12,700 for married couple. Now it has increased to $18,000 for single filers with at least one qualifying child, $12,000 for all other taxpayers and $24,000 for married couples filing jointly and surviving spouses
- There is an increase in Child tax credit from $1000 to $2000
- Income based percentage limit is increased from 50% to 60% on charitable contributions
- 7.5% threshold set for deducting medical expenses
- Limitation is put on losses for taxpayers other than corporations
- The new provision would allow taxpayers to claim 100% bonus depreciation with respect to qualified property acquired and placed in service after September 27, 2017, and before January 1, 2023. Phase down rules apply as well
- Limitation on net interest expense deduction for every business, regardless of form, to 30% of adjusted taxable income
- The estate and gift tax exemption for estates of decedents dying and gifts made between January 1, 2018 and December 31, 2025 is increased from $5 million to $10 million
- Alimony payments would not be included in the payee’s income and would not be deductible by the payor for divorce decrees and separation agreements executed after 2018.
The cornerstone of the tax bill, the change that’s permanent and enduring and that even a future administration is unlikely to fully reverse, is its reduction of the corporate income tax rate from 35 percent to 20 percent. Over the long-term, the Tax Policy Center projects households in the 80th to 95th percentage of income are projected to see a tax increase, though the top 5% of earners would continue to gain the most.