{"id":4619,"date":"2017-12-26T00:00:00","date_gmt":"2017-12-26T04:00:00","guid":{"rendered":"https:\/\/www.whitcomb.com\/2017-tax-reform-checkpoint-special-study-on-individual-tax-changes-in-the-tax-cuts-and-jobs-act\/"},"modified":"2022-02-04T17:00:23","modified_gmt":"2022-02-04T21:00:23","slug":"2017-tax-reform-checkpoint-special-study-on-individual-tax-changes-in-the-tax-cuts-and-jobs-act","status":"publish","type":"post","link":"https:\/\/www.whitcomb.com\/blog\/2017\/12\/26\/2017-tax-reform-checkpoint-special-study-on-individual-tax-changes-in-the-tax-cuts-and-jobs-act\/","title":{"rendered":"2017 TAX REFORM: Checkpoint Special Study on Individual Tax Changes in the “Tax Cuts and Jobs Act”"},"content":{"rendered":"\n
On December 20, the House approved H.R. 1, the \u2018\u2018Tax Cuts and Jobs Act,\u2019\u2019 the sweeping tax reform measure. The Senate had passed the measure, as revised to address some procedural complications, the night before, and the bill will soon make its way to President Trump for his expected signature. While the revised version of the bill carries the title \u201cAn Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018,\u201d this special report refers to the Act by its former and commonly used name: The \u201cTax Cuts and Job Act.\u201d The last-minute revisions to the bill included one change that pertains to individual taxation. A provision which would have allowed Section 529 account funds to be used for home school expenses was struck from the bill prior to the Senate vote. This Special Report explains the changes that affect the taxation of individuals. In addition to providing a summary of the changes, it also clearly sets out the effective dates (which in many cases include an expiration date, or \u201csunset\u201d), the Code section(s) affected, the bill\u2019s section number, and a recitation of prior law to put the amendment into context.
RIA observation: One of the major distinctions between the House and Senate versions of the tax bill was that the Senate bill, in order to comply with certain budgetary constraints, contained a \u201csunset,\u201d or an expiration date, for many of its provisions-e.g. they apply for tax years beginning before Jan. 1, 2026. Accordingly, many of the individual tax provisions in the Act are temporary (as opposed to the business provisions, which generally are permanent).<\/p>\n\n\n\n
TAX RATES & KEY FIGURES<\/strong>
New Income Tax Rates & Brackets\u00a0\u00a0<\/strong>To determine regular tax liability, an individual uses the appropriate tax rate schedule (or IRS-issued income tax tables for taxable income of less than $100,000). The Code provides four tax rate schedules for individuals based on filing status-i.e., single, married filing jointly\/surviving spouse, married filing separately, and head of household \u2014 each of which is divided into income ranges which are taxed at progressively higher marginal tax rates as income increases. Under pre-Act law, individuals were subject to six tax rates: 10%, 15%, 25%, 28%, 33%, 35%, and 39.6%.
New law.<\/strong>\u00a0For tax years beginning after Dec. 31, 2017 and before Jan. 1, 2026, seven tax rates apply for individuals: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. The Act also provides four tax rates for estates and trusts: 10%, 24%, 35%, and 37%. (Code Sec. 1(i), as amended by Act Sec. 11001)<\/p>\n\n\n\n