Here is a summary of the GOP Tax Plan, see what you lose and what you’ll be getting.
In almost all cases most of us will pay less taxes in 2018. All of this is of course subject to all sorts of changes. As of today here is a list of key items.
What you lose:
- All personal exemptions.
- All deductions are eliminated except for charitable contributions, mortgage interest (capped) and state and local taxes deduction (SALT) would be replaced by a property tax deduction with a $10,000 cap.
- Medical costs are no longer deductible.
- Adoption tax credit worth up to $13,750 per child.
- Tax preparation fees would no longer be deductible.
- Alimony would no longer be deductible by the payor for decrees issued after 2017. Anyone receiving alimony payments would still get it tax-free.
- Teachers can no longer write off the cost of supplies they buy.
- Sports fans would no longer be able to deduct 80% of the cost of donations to colleges if they are made only to become eligible to buy seats for games or get preferences such as prime parking spots.
- Moving expenses, moving 50 or more miles to take a new job is no longer deductible.
- Student loan interest is no longer deductible
- Repeal a rule that allows you to reverse or “recharacterize” Roth IRA conversions.
- Vacation or 2nd home mortgage interest deduction would eliminated.
- Tuition discounts for college workers would become taxable income.
What You Get, or Keep:
- $24,000 for standard deduction, married filing jointly.
- Lower tax brackets, married filing jointly, No tax on AGI $0-$24,000, 12% on AGI portion from $24,000 – $90,000, only 25% on AGI portion $90,000 – $260,000.
- Repeal the Alternative Minimum Tax.
- Maintain the “step-up” in basis, which allows heirs to receive stocks at the market value on the day the original owner died. For example, they sell immediately and pay NO taxes on gains.
- The American Opportunity Tax Credit (college costs) would be extended from four years to five, gives you another $1,250 credit for a fifth year.
- Same rules apply to dividends and capital gains.
- Small business “pass through” income maximum rate is 25%.
- 401K, IRA and HSA contributions can still be tax-advantaged.