US Tax Reform 2017: All You Need to Know in a Nutshell

More details about the US tax changes for individuals have recently been announced. The proposed tax reform 2017 is still seen as controversial. Our primary aim as experienced professional tax advisers is to keep you informed and up to date with everything that affects your personal wealth and finances. Here are the 5 main proposed tax changes that will affect individuals.

  1. Fewer tax brackets, but higher tax rates

Tax brackets 2018 would be:

  • 12% (Single: $12K to $45K. Married: $90K) 
  • 25% (Single: $45K to $200K. Married: $90K to $260K)
  • 35% (Single: $200K to $500K. Married: $260K to $1M)
  • 39.6% (Single: $500K. Married: $1M)

The highest tax bracket is triggered by annual income above:

  • $500,000 for individuals
  • $1,000,000 for married couples

There could be a surcharge of additional 6% on those who make over $1 million for every $200,000 above that number. This would mean that effectively, there will be a fifth bracket at 45.6%.

  1. Cuts in tax deductions

Tax deductions that would be abolished:

  • State and local income taxes
  • Medical expenses
  • Casualty/Disaster losses
  • Personal exemption(such as moving expenses)
  • Adoption costs
  • Alimony
  • Employee Achievement Awards
  • Classroom costs
  • College boosters used for games tickets and prime parking spots
  • Stadium bonds
  • Office nursery
  • Rare disease research contributions
  • Perks of the job
  • Tax preparation fees
  • Electric Vehicle Tax Credit

Tax deductions that would be kept:

  • Charitable donation
  • Current homeowners mortgage interest

Tax deductions to be doubled:

  • Standard Deduction
    • From $6,350 to $12,000 for individuals
    • From $12,700 to $24,000 for married couples

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  1. Real estate and housing deductions

The tax reform 2017 will reduce the following deductions on real estate properties:

  • Future homeowners will be allowed to deduct up to $500,000 mortgage interest
  • Property tax – up to $10,000
  • Capital gains deferral will be available to homeowners who have lived in the property for 5 of the last 8 years and earn less than $250,000 a year as an individual or $500,000 as a married couple. The current law for this deduction is 2 out 5 years.
  1. Tax benefits and credits

New tax benefits in the form of credits are planned:

  • Family tax credit:
    • $1,600 in child tax credit
    • $300 in tax credit for each parent or adult dependent
  • Earned income tax credit
  1. Favor for the rich

The richest US citizens, forming less than 1% of the population, may be favored by the tax reform 2017 due to the abolishment of:

  • Estate tax
  • Alternative minimum tax

If you are worried about personal or business tax planning, give us a call today or drop an email at support@fascpaconsultants.com 


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Fulton Abraham Sanchez, CPA

Fulton Abraham Sánchez, CPA is a Certified Public Accountant, specialized in Tax Planning for Real Estate, Hedge/Equity Funds, Fintech, Crypto, Expats, IRS Debt Resolution and Offshore Strategies. You can email him to fa@fascpaconsultants.com and follow us on Facebook : FAS CPA & Consultants.

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