The House of Representatives has released their version of a new tax bill. The new bill is a long way from passing as Democrats in the House won’t support it. The Senate is working on its own tax bill and the final version will be mix of ideas between the House and Senate. Here are some of the items being proposed at this early stage in the game related to individual taxpayers.
Individuals would have four tax brackets: 12% for taxable income up to $45,000 for single taxpayers and $90,000 for married taxpayers, 25% for up to $200,000 for singles and $260,000 for married couples, 35% for up to $500,000 for singles and $1 million and 39.6% for income above those levels.
Tax rates for capital gains and dividends are expected to remain the same as current rates.
Standard deductions would be almost double the current amounts. Single taxpayers will get a $12,000 standard deduction and married taxpayers will get $24,000. This compares to $6,350 and $12,700 respectively for 2017. Single taxpayers with a dependent child will get an additional $6,000 in standard deductions.
The child tax credit would increase to $1,600 per eligible dependent child under the age of 17.
The current personal exemption of $4,050 each for the tax filer and their dependents will be repealed. This change will affect filers who itemize as well as those who take the standard deduction so the increase in the standard deduction is not as favorable as it appears on the surface.
There is talk of permanently repealing the alternative minimum tax and estate tax although those changes may not be in effect for a few years.
For tax payers who itemize their deductions, state and local income taxes will no longer be deductible and the deduction for property tax will be capped at $10,000. There will be more restrictions on the deductibility of home mortgage interest. Gambling losses, moving expenses and alimony expenses will no longer be deductible.
We expect a many changes before the final version of this bill is passed but you can expect to see changes to individual tax law within the next year or so.