The Tax Cuts and Jobs Act (the "Act") has been passed by both the House and Senate under a modified title and was signed into law by President Trump on December 22, 2017.
What does it mean now that the Act is law?
Lower income tax rates. Beginning in 2018, the Act reduces income tax rates for many individuals and businesses. Due to lower rates in 2018, it may be beneficial for some individuals to defer 2017 income into 2018. Some possible deferral opportunities might include:
Disappearing income tax deductions/large standard deduction. Beginning next year, many popular income tax deductions are repealed or reduced in exchange for a larger standard deduction. Some possible action steps might include:
Other year-end income tax strategies. Some other year-end income tax strategies to consider include:
Estate, gift, and generation-skipping transfer taxes. For estates of decedent's dying and gifts made after December 31, 2017, the Act doubles the estate, gift, and generation-skipping transfer tax exemptions to $11.2 million (2018) for individuals or $22.4 million (2018) for married couples. The exemption amounts continue to be adjusted for inflation in subsequent years. The increased exemption amounts expire at the end of 2025, after which such exemption amounts will revert to their pre-Act amounts ($5.6 million (indexed for inflation) for individuals or $11.2 million (indexed for inflation) for married couples). Estate planning considerations after the Act becomes law include:
Following are some of the provisions of the Act which take effect in 2018 (many of which sunset at the end of 2025): click to view the full report.