As most of you know, Congress and the President worked to make changes to the tax code over Christmas. Overall, the changes look good, but there is still more information coming out on the details. We love serving our families and take seriously our mandate to help you and your business Prioritize Value, Minimize Taxes and Optimize Giving.
Over the next few months our team will be working to make sure we understand the nuances and opportunities available in the Tax Cuts and Jobs Act of 2017. However, I thought I would highlight just a few of the changes that we believe are worth noting and might be of interest to you:
- Reduced Income Tax Rates: The top individual tax rate was reduced from 39.6% down to 37%. Most families should see a 2.5% to 3% reduction in their average tax rate from 2017 to 2018.
- Increased Estate and Gift Tax Exclusion: The individual estate and gift tax exclusion doubles to $11.2 million. For married couples this means that there should not be any estate or gift tax issues for estates less than $22.4 million.
- Reduced Corporate Tax Rates: The corporate tax rate drops from 35% to 21%.
- Reduced Pass-Through Entities Rate: The bill provides a 20% deduction for taxpayers who have qualified business income from a partnership, S corporation or sole proprietorship. There are phase outs for specified professional service businesses.
- Increased Charitable Deductions: The AGI limitation for CASH contributions to public charities increases from 50% to 60%.
- Elimination of the Pease Limitation: The Pease Limitation was effectively a 1% to 1.2% surtax for upper income individuals, so the elimination effectively provides further reduction in marginal tax rates for upper-income individuals.
As I mentioned, these are highlights of just a few of the changes in the Tax Cuts and Jobs Act of 2017. We will continue to monitor the application of these and other opportunities as we construct and update your plans throughout the year. It is always in your best interest to work with your tax professional before implementing any specific tax strategy.
Please let us know if you have any questions. It is our honor to serve you.