Last week, President Trump announced his new tax plan called The Tax Cut and Jobs Act. This act will overhaul our nation’s tax code for the first time since President Reagan’s historic tax reform that was 31 years ago. The idea of the new tax plan is to help all families, individuals, and businesses with fairer taxes, more jobs, and in the end help you keep more of your hard earned money. Below are the policy highlights provided by the U.S. House of Representatives Committee on Ways and Means.
Individuals and Families
- Lowers individual tax rates for low- and middle-income Americans to Zero, 12%, 25%, and 35% so people can keep more of the money they earn throughout their lives, and continues to maintain 39.6% for high-income Americans.
- Significantly increases the standard deduction to protect roughly double the amount of what you earn each year from taxes – from $6,350 to $12,000 for individuals and $12,700 to $24,000 for married couples.
- Eliminates special-interest deductions that increase rates and complicate Americans’ taxes – so an individual or family can file their taxes on a form as simple as a postcard.
- Takes action to support American families by:
- Establishing a new Family Credit, which includes expanding the Child Tax Credit from $1,000 to $1,600 to help parents with the cost of raising children, and providing a credit of $300 for each parent and non-child dependent to help all families with their everyday expenses.
- Preserving the Child and Dependent Care Tax Credit to help families care for their children and older dependents such as a disabled grandparent who may need additional support.
- Preserves the Earned Income Tax Credit to provide important tax relief for low-income Americans working to build better lives for themselves.
- Streamline higher education benefits to help families save for and better afford college tuition and other education expenses.
- Continues the deduction for charitable contributions so people can continue to donate to their local church, charity, or community organization.
- Preserves the home mortgage interest deduction for existing mortgages and maintains the home mortgage interest deduction for newly purchased homes up to $500,000 – providing tax relief to current and aspiring homeowners.
- Continues to allow people to write off the cost of state and local property taxes up to $10,000.
- Retains popular retirement saving options such as 401(k)s and Individual Retirement Accounts so Americans can continue to save for their future.
- Repeals the Alternative Minimum Tax so millions of individuals and families will no longer have to worry about calculating their taxes twice each year and pay the higher amount.
- Provides immediate relief from the Death Tax by doubling the exemption and repealing the Death Tax after six years. Family-owned farms and businesses will no longer have to worry about double or triple taxation from Washington when they pass down their life’s work to the next generation.
Job Creators of All Sizes
- Lowers the corporate tax rate to 20% – down from 35%, which today is the highest in the industrialized world – the largest reduction in the U.S. corporate tax rate in our nation’s history.
- Reduce the tax rate on the hard-earned business income of Main Street job creators to no more than 25% – the lowest tax rare on small business income since World War II.
- Establishes strong safeguards to distinguish between individual wage income and “pass-through” business income so Main Street tax relief goes to the local job creators it was designed to help most.
- Allow businesses to immediately write off the full cost of new equipment to improve operations and enhance the skills of their workers – unleashing the growth of jobs, productivity, and paychecks.
- Protects the ability of small businesses to write off the interest on loans that help these Main Street entrepreneurs start or expand a business, hire workers, and increase paychecks.
- Retains the low-income housing tax credit that encourages businesses to invest in affordable housing so families, individuals, and seniors can find a safe and comfortable place to call home.
- Preserve the Research & Development Tax Credit – encouraging our businesses and workers to develop cutting-edge “Made in America” products and services.
- Strengthens accountability rules for tax-exempt organizations to ensure the churches, charities, foundations, and other organizations receiving tax-exempt status are focused on helping people and communities in need.
- Modernizes our international tax system so America’s global businesses will no longer be held back by an outdated “worldwide” tax system that results in double taxation for many of our nation’s job creators.
- Makes it easier and far less costly for American businesses to bring home foreign earnings to invest in creating jobs and increasing paychecks in our local communities.
- Prevents American jobs, headquarters, and research from moving overseas by eliminating incentives that now reward companies for shifting jobs, profits, and manufacturing plants abroad.
As you can see there are many benefits within the new tax plan. Should you have any questions on this new tax plan, don’t hesitate to give us at A Mazzo Accounting Service a call.
A Mazzo Accounting provides a variety of tax and accounting services to individuals and businesses in the Wyomissing, Reading, West Reading, Sinking Spring and Kenhorst areas, as well as towns and villages around the Greater Reading area. Our services for small to mid-size businesses include taxes, payroll services, accounting services, and bookkeeping services. We also provide a variety of services for individuals and they include tax return preparation as well as some accounting assistance. We keep up with recent tax changes and follow the development of acts that would effect your taxes, like the plan mentioned here and more.