The Republicans of the United States have achieved one of their long-awaited goals: a thorough reform of the tax code. They also believe that the measures in the bill are crucial for the Republican Party to maintain the support of the majority of the House and Senate in the mid-term elections in November 2018. The bill will permanently reduce corporate taxes and temporarily reduce the taxes payable by American wage earners.
In 2018, the 39.6% tax rate will affect taxpayers with single incomes exceeding $426,700, and taxpayers with a combined federal income of more than $480,050, which are higher than the previous $418,400 and $470,700, respectively. Other tax 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 for five of them. The new tax rate starts at 10% and then rises to 12%, 22%, 34%, 32%, 35% and 37%. FX678 quoted foreign media reports that the highest tax rate of 37% applies to individuals with annual incomes of more than $500,000. The starting point for the joint tax return of husband and wife to enter the highest tax rate is 600,000 US dollars. The original tax rate for this grade was 39.6%. The personal income tax reduction will begin in 2018 and will expire after 2025.
Does the company get a large tax cut?
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, two Senate officials changed their minds and wanted to abolish the Alternative Minimum Tax (AMT). Because of the 20% AMT tax rate, the company is unable to make many deductions. When the regular tax rate is also 20%, most companies will be taxed according to AMT. This may be contrary to the original intention of the tax reform. Industry experts suggest that AMT should be abolished or that the AMT tax rate should be lowered accordingly.
In the 2017 tax year, the married joint declaration and the living spouse’s allowance are $84,500, and the other unmarried individuals are $54,300. The Senate program only provides short-term tax cuts for individuals and will expire in 2026. In terms of home mortgage interest tax credits, the Senate hopes to retain the interest deduction ceiling for a $1 million loan, while the House of Representatives hopes to reduce it to $500,000.
At the international level, the plan will use the “territorial tax system” to abandon the unique global taxation method that the United States earns regardless of the country’s profits. But it also includes provisions to reduce the post tax rate on the global taxation of US multinationals' foreign profits to protect the US tax base. The plan did not specify the reduced tax rate.
On February 15th, the US Senate and House of Representatives formed a final royalty reform plan. It is expected to vote again in the Senate and House of Representatives this week. After the vote is passed, it will be submitted to President Trump for signature and will eventually be implemented throughout the United States. The contents of the tax reform are determined: the corporate income tax will be reduced to 21%, the personal income tax will be reduced to varying degrees, and the multinational company will also receive profit reduction opportunities (returns of cash and cash equivalents of 15.5%, non-cash equivalents of 8%)
One possible tax advantage of a US company is the transfer of taxes. US companies can choose to “direct” taxes by applying to the IRS as a subsidiary of the company S. On December 1, local time, the US Senate passed the tax reform bill at 51 to 49. This will be the first time in 31 years that the Congress has amended the tax law. 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 health insurance paid a fine of $695 and a child of $347. The maximum fine for each family is $2,085. The big price hike in 2017 will cause some people who are currently participating in Obama's medical insurance to reconsider whether they will renew the plan in 2018, or choose to pay a fine of 695 US dollars per person or 2.5% of income. Bigger.
In 2017, the standard deduction for a single taxpayer was $6,350, plus a personal allowance of $4,050, and the standard deductor’s standard deduction was $12,700, plus a tax allowance of $8,100. The revised tax law bill standard deduction is 12,000 US dollars for a single applicant and 24,000 US dollars for a joint applicant, and the personal allowance is cancelled.
After the tax reform, which states are “most disadvantaged”?
Limiting the $10,000 tax credit, if you live in high-tax areas such as California, New York, and Texas, you will be able to reduce a large portion of your deductions. The bill will not change the mortgage interest of existing homeowners. But for new homes, taxpayers can reduce the amount of mortgage loans from $1 million to $750,000.
Pay for medical bills
In order to encourage people to buy long-term care insurance, the government gives preferential taxation. Long-term care premiums are eligible for medical expenses. Taxpayers can usually deduct the medical expenses of 10% (65% and above) from the adjusted total income (AGI) on the A-side deduction of the Federal Tax Form 1040. Self-employed persons can deduct all medical expenses paid by themselves directly on the 29th line of Form 1040 (if the self-employed spouse has the long-term care group insurance provided by the employer, they cannot be deducted), and the excess is counted in the A-item item by item. Deduction.
Estate tax: Cancellation!
Before the tax reform: Individuals with more than $5.49 million in assets and $11 million in couples will be subject to a 40% estate tax. Under the new tax reform scheme, individuals and couples with assets of $10.98 million and $22 million, respectively, are not subject to estate tax.
After the tax reform: It is expected that the 2024 will be completely abolished. It is expected that the Trump family will eventually retain $10 billion in property.