After a week in Conference, Congress has released a final Conference Agreement reconciling the House and Senate Tax Reform bills. The Conference Agreement is expected to be approved by the House and Senate early this week with President Trump signing the bill before 12/25/2017. The Tax Bill that came out of the conference committee, when approved, will be the largest set of tax law changes in 30 years.
Some of the key provisions to the bill include the lowering the corporate tax rate to 21 percent, repeal of corporate AMT, exclusion of some pass-through income and 100 percent asset expensing for businesses. For individuals, there are lower tax rates; with the top rate dropping to 37 percent. Many of the previous itemized deductions have been eliminated or modified. There have been significant changes to the deduction of mortgage interest, and miscellaneous itemized deduction have been eliminated. One adjustment that surprisingly survived is the limitation on the deduction for state taxes to $10,000. The bill also doubles the lifetime exemption to $10,000,000 per person.
The Conference Agreement does not change the taxation of education benefits which is a change from the House version. The agreement does allow distributions from 529 education plans to pay for K-12 private schools, in addition to college education.
Action Items to Consider:
- If possible, businesses and individuals should accelerate deductions into 2017 and defer revenue to 2018.
- If a business is considering purchasing assets early next year, consider purchasing them (and placing in service) before year end.
- Individuals should pay any remaining estimated state tax liability before year end (however, you cannot pre-pay 2018).
To find out more about the specifics of this bill, visit our Tax Reform page. If you want to know how this bill will affect you and your business, please contact your Warren Averett advisor.