By: David J. DelFiandra, Esq.
On November 2, 2017, House Republicans released the Tax Cuts and Jobs Act. Although still subject to modification by the Senate, the key points of the House Republican bill include the following:
Federal Estate and Gift Taxes
- Increases credit for Federal Estate Tax – In 2018, a married couple can shield $22.4 million from Federal Estate Tax.
- Federal Estate Tax rate remains 40%.
- Full repeal of the Federal Estate and Generation-skipping tax on January 1, 2024.
- Step-up in income tax basis at death remains.
- Federal Gift tax remains.
- Federal Gift tax credit increases to $10 million, beginning in 2024, adjusted for inflation.
- Federal Gift tax annual exclusion remains and rises to $15,000 in 2018.
- Federal Gift tax rate drops from 40% to 35% in 2024.
Other Tax Provisions Affecting Individuals
- Reduces seven (7) income tax brackets to four (4) at 12%, 25%, 35% and 39.6%.
- Top tax bracket set for married couples earning $1,000,000 or more per year and individuals earning $500,000 or more. Bottom tax bracket increases up to $90,000 for couples and $45,000 for individuals.
- The top tax rates on capital gains and dividend income remains unchanged.
- No deduction for state and local income or sales taxes.
- Itemized deduction for real-estate taxes capped at $10,000.
- Nearly doubles individual standard deduction to $24,400 for married couples and $12,200 for single taxpayers.
- Increases child tax credit from $1,000 in 2017 to $1,600 plus $300 for each taxpayer, spouse and non-child dependents.
- Repeals the personal exemption for dependents.
- Places new limit on home mortgage-interest deduction at loans up to $500,000, down from $1,000,000, but existing loans would be grandfathered.
- Charitable contributions deduction remains unchanged.
- 401(k) contributions limits remain unchanged.
- Repeals the alternative minimum tax (“AMT”).
- Repeals an itemized deduction for medical expenses.
- Repeals the tax credit for adoption.
- Repeals the deduction for student-loan interest.
If you have any questions regarding the Tax Cuts and Jobs Act, please contact David DelFiandra. David is a Partner in Leech Tishman’s Estates & Trusts Practice Group. David is based in the firm’s Pittsburgh office. He can be reached at 412.261.1600 or firstname.lastname@example.org.
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