Tax Reform

Here are the things that are increased or eliminated from the current tax code:

Change the Seven Tax Rates

Though there are still 7 tax brackets, the rates will be 10%, 12%, 22%, 24%, 32%, 35%, and 37%. The rates would phase out in eight years.

Double the Standard Tax Deduction

The standard deduction amount is increased from $6,350 to $12,000 for single filers, $12,700 to $24,000 for married joint and widow filers, and $9,350 to $18,000 for Heads of Household.

Eliminate the Personal Tax Exemption

The Personal Tax Exemption will be replaced by the doubled standard deduction.

Increase the Child Tax Credit

The Child Tax Credit is increased from $1,000 to $2,000 per child (first $1,400 is refundable). The credit will start to phase out at $400,000. This increased amount would phase out in eight years.

Eliminate Most Itemized Tax Deductions

All itemized deductions will be eliminated except:

Home Mortgage Interest Tax Deductions for new loans up to $750,000 (current homeowners will be carried over to current tax code rules)
Investment Interest Expense Tax Deduction
Real Estate Tax Deduction up to $10,000

Reduce the State and Local Tax Deduction

State and local property taxes up to $10,000 can be deducted, in addition to income taxes or sales taxes.

Reduce the Medical Tax Deduction Over Time

The Medical Tax Deduction will decrease from 10% to 7.5% for 2018 and 2018. It will rise back to 10% in 2020.

Double the Estate or "Death" Tax

The Estate or "Death: Tax amount is doubled from $5.6 million to $11.2 million, which will increase with inflation. The doubled amount will be expired on December 31, 2025.

Eliminate the Individual Health Care Tax Penalty

The tax penalty for not having health insurance will be eliminated in 2019.

What is Not Changing in the Proposed Tax Reform?

Here are some items from the current tax code that will not change:

Earned Income Tax Credit
American Opportunity Tax Credit
Adoption Tax Credit
Alternative Minimum Tax
Tax Deductions for Charitable Contributions
Tax Deductions for 401K and IRA Retirement Savings Options
Capital Gains and Dividend Rates

Proposed Tax Reform Individual Tax Rate Schedule

Tax RateSingleMarried/Joint

& Widow(er)Married/SeparateHead of Household

10%

$1 to $9,525

$1 to $19,050

$1 to $9,525

$1 to $13,600

12%

$9,526 to $38,700

$19,051 to $77,400

$9,526 to $38,700

$13,601 to $51,800

22%

$38,701 to $82,500

$77,401 to $165,000

$38,701 to $82,000

$51,801 to $82,500

24%

$82,501 to $157,000

$165,001 to $315,000

$82,501 to $157,000

$82,501 to $157,500

32%

$157,001 to $200,000

$315,001 to $400,000

$157,001 to $200,000

$157,501 to $200,000

35%

$200,001 to $500,000

$400,001 to $600,000

$200,001 to $500,000

37%

over $500,000

over $600,000

over $500,000

Here are the things that are increased or eliminated from the current tax code:

Change the Seven Tax Rates

Though there are still 7 tax brackets, the rates will be 10%, 12%, 22%, 24%, 32%, 35%, and 37%. The rates would phase out in eight years.

Double the Standard Tax Deduction

The standard deduction amount is increased from $6,350 to $12,000 for single filers, $12,700 to $24,000 for married joint and widow filers, and $9,350 to $18,000 for Heads of Household.

Eliminate the Personal Tax Exemption

The Personal Tax Exemption will be replaced by the doubled standard deduction.

Increase the Child Tax Credit

The Child Tax Credit is increased from $1,000 to $2,000 per child (first $1,400 is refundable). The credit will start to phase out at $400,000. This increased amount would phase out in eight years.

Eliminate Most Itemized Tax Deductions

All itemized deductions will be eliminated except:

Home Mortgage Interest Tax Deductions for new loans up to $750,000 (current homeowners will be carried over to current tax code rules)
Investment Interest Expense Tax Deduction
Real Estate Tax Deduction up to $10,000

Reduce the State and Local Tax Deduction

State and local property taxes up to $10,000 can be deducted, in addition to income taxes or sales taxes.

Reduce the Medical Tax Deduction Over Time

The Medical Tax Deduction will decrease from 10% to 7.5% for 2018 and 2018. It will rise back to 10% in 2020.

Double the Estate or "Death" Tax

The Estate or "Death: Tax amount is doubled from $5.6 million to $11.2 million, which will increase with inflation. The doubled amount will be expired on December 31, 2025.

Eliminate the Individual Health Care Tax Penalty

The tax penalty for not having health insurance will be eliminated in 2019.

What is Not Changing in the Proposed Tax Reform?

Here are some items from the current tax code that will not change:

Earned Income Tax Credit
American Opportunity Tax Credit
Adoption Tax Credit
Alternative Minimum Tax
Tax Deductions for Charitable Contributions
Tax Deductions for 401K and IRA Retirement Savings Options
Capital Gains and Dividend Rates

Proposed Tax Reform Individual Tax Rate Schedule

Tax RateSingleMarried/Joint

& Widow(er)Married/SeparateHead of Household

10%

$1 to $9,525

$1 to $19,050

$1 to $9,525

$1 to $13,600

12%

$9,526 to $38,700

$19,051 to $77,400

$9,526 to $38,700

$13,601 to $51,800

22%

$38,701 to $82,500

$77,401 to $165,000

$38,701 to $82,000

$51,801 to $82,500

24%

$82,501 to $157,000

$165,001 to $315,000

$82,501 to $157,000

$82,501 to $157,500

32%

$157,001 to $200,000

$315,001 to $400,000

$157,001 to $200,000

$157,501 to $200,000

35%

$200,001 to $500,000

$400,001 to $600,000

$200,001 to $500,000

37%

over $500,000

over $600,000

over $500,000

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