As we all know tax codes and deductions change a bit each calendar year. Some changes are significant, but none more significant than the GOP Tax Plan that passed both chambers of the Congress this week—which is expected to be signed and ready for the 2018 tax year. This is the largest tax overhaul in over 30 years, and the bill passed at lightning speed in just 7 weeks. Here are just a few ways in which the new plan will affect your business and personal taxes.
Changes To Your Personal Taxes
Here are some of the most significant changes for individual filers. Many of these changes expire or change by 2025:
- The standard deduction increases from $6,350 for single filers, to $12,000.
- The standard deduction increases from $12,700 for joint filers, to $24,000.
- Lowers individual tax rates for most Americans by 1 to 4 percent. The minimum tax rate remains at 10%.
- Doubles the Child Tax Credit to $2,000 for qualified dependents under the age of 17, and makes the Child Tax Credit available to single parents who earn up to $200,000 and married parents who make up to $400,000.
- Provides a tax credit of $500 for non-dependents over the age of 17, such as children still living at home or elderly parents who live with you.
- Eliminates the penalty for not having healthcare insurance.
Changes To Your Business Taxes
Here are a few of the most significant changes that pertain to your business taxes:
- The pass-through tax burden for most S-Corporations, LLCs, and partnerships will be lowered to a 20% deduction.
- Corporate tax rates drop from 35% to 21%.
- New tax rates for U.S. companies who have businesses in foreign companies; 15.5% on cash assets and 8% on non-cash assets.
How Will The GOP Tax Plan Affect You?
The changes above are just a small handful of the ways in which the 2018 tax reform may affect you. When you come into NTRC Tax and Finance to file your 2017 taxes, we should set aside a few minutes to discuss any changes you need to make to your personal or company tax plan in 2018. This will ensure that you are ethically optimizing the tax breaks that will soon be available to you. Schedule your free consultation today!