Highly anticipated tax reform under the Trump administration has been kick-started. On November 16 a bill was passed by the House containing many changes to both individual and corporate taxation.
Increase in the standard deduction from $6,350 to $12,200 (single filers), from $12,700 to $24,400 (joint filers).
Removal of the personal exemption.
Removal of itemized deductions with the exception of charitable donations and disaster-related casualty losses. Mortgage interest deduction will be limited to $500,000 of acquisition debt from $1m. Interest on existing loans will be repealed. State and local tax deductions will be gone, save for state property taxes of up to $10,000.
Repeal of the Alternative Minimum Tax.
Increase in the child tax credit from $1,000 to $1,600.
A much-heralded permanent reduction in the top corporate tax rate from 35% to 20%.
A repatriation tax of 14% on existing foreign profits being held in offshore accounts.
Reduction in the top tax rate applicable to income from pass-through entities including S-corporations and partnerships, from 39.6% to 25%.
A graduated repeal of the federal estate tax, with the estate tax completely disappearing in 2024.