Trying to understand just what GOP tax plans barreling through Congress means to businesses and individuals is a little like nailing jello to the wall. Which is why experts like Wilton Manors accountants Sterling Accounting are needed.
Things could still change before the tax package is approved by Congress and signed by President Donald Trump. Both the House and Senate have passed versions of tax code changes. But leaders will have to iron out differences between the two versions.
That leaves in doubt many of the details. But there are some broad outlines likely to survive Congressional horse trading. Here they are:
- The top individual tax rate is reduced to 38.5 percent from 39.6 percent. In lower brackets, there are reductions as well. The standard deduction is doubled; the child tax credit is increased; and personal exemptions are repealed. State and local income tax deductions are eliminated. The Senate bill calls for all individual changes to revert to current law in 2025.
- The top rate for income from “flow-through” businesses such as S Corporations and partnerships drops below 30 percent from 39.6 percent.
- The corporate tax rate falls to 20 percent fro 35 percent.
- Businesses will be able to expense asset purchases immediately.
- The estate tax exemption is doubled to $11 million for a single taxpayer and $22 million for a couple.
The centerpiece of the tax changes is arguably the reduction in the corporate rate. “Fundamentally the bill has been mislabeled. From a truth in advertising standpoint, it would have been a lot simpler if we just acknowledged reality on this bill, which is it’s fundamentally a corporate tax reduction and restructuring bill, period,” Rep. Mark Sanford, a South Carolina Republican, said.
Even so, there are plenty of individual and small business changes to be aware of. The Walton Manor accountants of Sterling Accounting stay abreast of the latest changes and can help you navigate them.