The United States House of Representatives recently released proposed legislation entitled the “Tax Cuts and Jobs Act.” The proposal contains major changes to individual income taxation, which we summarize below. Note that this legislation is only proposed; it is not law.
Under this new legislation, the tax brackets would be restructured to the following:
New BracketsSingleHead of HouseholdMarried Filing Joint12%$12,200 – $45,000
$18,300 -$67,500$24,400 – $90,000
25%$45,001 – $200,000
$67,501 – $200,000$90,001 – $260,000
35%$200,001 – $500,000
$200,001 – $500,000$260,001 – $1,000,000
39.6%$500,000 and above
$500,000 and above$1,000,000 and above
Observation – The current 33% bracket is $191,650 – $416,700 for Single Filers and $233,350 – $416,700 for Married Filing Joint. Individuals in this zone may face a tax increase from the new 35% bracket.
Comment – The reduction in allowable itemized deductions coupled with increased standard deductions would affect New Yorkers more than other U.S. taxpayers.
Planning Opportunity – More than ever it may be advisable for taxpayers to pre-pay state income and property taxes by year-end. Consider paying your 2018 property taxes at the end of 2017 by making a payment based upon your 2017 property tax bills.
All itemized deductions such as charitable contributions, tax preparation fees, and unreimbursed business expenses could potentially be permanently lost under the proposed plan if not front-loaded into 2017.
RDHB CPAs provides its clients with personalized tax, business planning, accounting, auditing, and wealth management services. The items discussed in this report are just a few highlights of the individual changes in the new tax proposal. For more information on the new tax proposal, please contact David Feor, CPA at firstname.lastname@example.org or a member of your RDHB team.
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