Before leaving for Christmas break, President Trump officially signed the Republican tax bill into law. The last time this country reformed it’s tax code, shoulder pads were in fashion, Mike Tyson became the youngest heavyweight champion in history, the Oprah Winfrey show had just debuted on television, and the movie “Wall Street” had not yet been released. Such sweeping reform obviously included many details and covered many issues. What follows is a highlight of the most significant changes.
- The top income tax rate went from 39.5% to 37%
- Corporate tax rate being cut from 35% to 21%
- Standard deductions went from:Married filing jointly- $13,000 to $24,000 (2018)
- Single- $6,500 to $12,000 (2018)
- Local, state, and property tax deductions are now limited to a total of $10,000 a year, this means most families will no longer be able to itemize deductions
- Tax rates on dividends, capital gains, tax lot selling rules, and rules regarding 401K plans remain unchanged
- Parents of school-age children can now use 529 plans for K-12 educations costs up to $10,000 per year
In summary, there will be winners and losers in the tax plan. It remains to be seen how much is already priced in the market, and how the tax plan will ultimately impact companies differently. Also, as a firm we remain committed to the continuous monitoring of market conditions, and ask that you contact us in the event your financial situations changes in any way.
Happy New Year and best wishes for 2018!