President Trump signed the U.S. largest tax cut since 1986 on the 22nd. The bill will be implemented in January 2018. (Graphic tax reduction plan >>>Trump signs 1.5 trillion US dollar tax reform bill)
Trump said at the signing ceremony that this is a bill that benefits the middle class and creates jobs.
U.S. Congress and Senate passed the bill on the 20th, but Democrats voted against it all. This bill is an important legislative achievement in the first year of the Trump administration.
According to this Act, the federal corporate income tax rate in the United States will be reduced from the current 35% to 21%. In terms of personal income tax, most tax rates have declined.
The initial forecast of the United States Senate and the House of Representatives Tax Committee shows that in the next 10 years, the bill will increase the U.S. federal budget deficit by 1.46 trillion U.S. dollars, and the average annual economic growth rate will increase by less than 0.08 percentage points.
American Republicans have achieved one of their most long-awaited goals: thorough reform of the tax code. At the same time, they believe that the measures in the bill are crucial for Republicans to maintain the support of the majority of the House and Senate in the mid-November election in November 2018. The bill will permanently reduce corporate taxes drastically and temporarily reduce the taxes that American wage earners must pay.
In 2018, the 39.6% tax rate will affect taxpayers with single income of more than $426,700 and taxpayers with married joint declaration income of more than $480,050, which is higher than the previous $418,400 and $470,700, respectively. Other rates are 10%, 15%, 25%, 28%, 33% and 35%.
How will it affect personal income tax?
The bill will retain seven grades but reduce the tax rate of five grades. The new tax rate starts at 10% and then rises to 12%, 22%, 34%, 32%, 35% and 37%. FX678 quoted foreign media reports, the highest tax rate of 37% applies to individuals with annual income of more than 500,000 US dollars. The starting point for joint tax return for couples is $600,000. The original tax rate for this grade was 39.6%. The reduction of personal income tax will begin in 2018 and will expire after 2025.
Does the company get a large area of tax cuts?
The answer is yes. The new bill will reduce the corporate tax rate from 35% to 21%.
Not long after the Senate passed the tax reform bill, the two Senate groups changed their minds and wanted to abolish the Alternative Minimum Tax (AMT). Because at the 20% AMT tax rate, the company cannot make a lot of deductions. When the conventional tax rate is also 20%, most companies will pay tax according to AMT. This may be contrary to the original intention of the tax reform. Industry experts suggest that AMT should be abolished, or AMT tax rates should be lowered accordingly.
In the 2017 tax year, the number of married joint declarations and surviving spouses is 84,500 U.S. dollars, and the number of other unmarried individuals is 54,300 U.S. dollars. The Senate program provides individuals with short-term tax cuts that will expire in 2026. In terms of tax deductions for housing mortgage loans, the Senate wants to retain the interest deduction ceiling for the $1 million loan, and the House of Representatives wants to reduce it to $500,000.
At the international level, the plan will use the "territorial tax system" to give up the United States' unique global taxation method, regardless of the country in which the company's profits are earned. However, it also includes provisions for the global taxation of foreign profits of U.S. multinational corporations in order to protect the U.S. tax base. The plan did not specify the reduced tax rate.
On February 15th, the U.S. Senate and the House of Representatives form a final royalty change plan. It is expected that this week will be voted again in both the House and Senate. After the vote is passed, it will be submitted to President Trump for signing and will finally be implemented in the United States. The contents of the tax reform are determined: corporate income tax will be reduced to 21%, individual income tax will be reduced to varying degrees, and multinational companies will also be given a tax-return opportunity (tax rate for cash and cash equivalents is 15.5%, non-cash equivalent rate is 8%).
One possible tax advantage for a U.S. company is the transfer tax. U.S. companies can choose to “through” tax by applying to IRS for status as a subsidiary company. On December 1, local time, the US Senate passed a tax reform bill of 51 to 49, which will be the first time in 31 years that Congress has amended the tax code. The bill will reduce corporate income tax from 35% to 20%, allowing business owners to deduct 20% from corporate income.
In 2016, each adult who did not purchase Medicare would have to pay a fine of $695 and a child of $347. The maximum fine for each family is $2085. The big price increase in 2017 will make some people who are currently involved in Obamacare reconsider whether they will renew the health insurance plan in 2018, or choose to pay a fine of 695 U.S. dollars or a 2.5% income to see which amount. Bigger.
In 2017, the standard deduction for a single taxpayer is US$6,350, plus personal tax allowance of US$4,050. The joint filer’s standard deduction is US$12,700, plus an allowance of US$8,100. The revised tax law standard deduction is US$12,000 for a single declarer, US$24,000 for a joint filer, and cancellation of personal allowances.
After the tax reform, which states are the "most disadvantaged"?
Limit the deductible tax of $ 10,000, if you live in high tax areas, such as: California, New York, Texas, will allow you to reduce a large part of the deductions. This motion will not change the existing homeowners' mortgage interest relief. However, for new homes, the amount of mortgage loans the taxpayer can reduce interest from $1 million to $750,000.
Paying medical bills
The government provides preferential tax treatment to encourage people to purchase long-term care insurance. Long-term care premiums are eligible medical expenses, and taxpayers can usually deduct one percent of the adjusted total income (AGI) (6.5% and above, 7.5%) in the deduction from the A sub-list of the federal tax table 1040. Self-employed persons may directly deduct all medical expenses paid on line 29 of Form 1040 (if the self-employed person's spouse is unable to deduct the long-term care group insurance provided by the employer), the excess will be counted in Table A for itemization. Deduction.
Estate tax: Cancellation!
Before the tax reform: Individuals with assets of more than 5.49 million U.S. dollars and 11 million U.S. dollars couples will be subject to a 40% inheritance tax. Under the new tax reform plan, individuals and couples with assets of $10.98 million and $22 million, respectively, do not have to pay inheritance tax.
After the tax reform: It is expected that it will be completely abolished in 2024, and it is expected that the Trump family will eventually save 10 billion US dollars of property. (Source: Huitong Network)
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(Original title: Trump signed the largest tax cut in 30 years)