Individual Tax Reform Comparison

Individual Tax Reform Comparison

***This blog has been updated on December 21, 2017 to reflect the tax bill passed by Congress***

 

Tax Topic Current Law CONFERENCE COMMITTEE House Bill Senate Bill
Individual tax rates 10%,15%,25%,28%, 33%,35%,39.6% Changes 7 brackets to: 10%, 12%, 22%, 24%, 32%, 35% and 37% Changes to 4 brackets: 12%, 25%, 35% and 39.6% Changes 7 brackets to: 10%, 12%, 22%, 24%, 32%, 35% and 38.5%
Standard Deduction Single: $6,500, Joint: 13,000, Head of Household: $9,550 Single: 12,000, Joint: $24,000, Head of Household: $18,000 Single: $12,200, Joint: $24,400, Head of Household: $18,300 Single: 12,000, Joint: $24,000, Head of Household: $18,000
Personal & dependent exemptions Indexed for inflation currently at $4,050 Repealed; reverts to current law starting 2026 Repealed Repealed; reverts to current law starting 2026
Gain on Principal Residence Gain excluded if lived in the house for at least two of the last five year.  Exclusion amount for singles: $250,000; Married: $500,000 The bill preserves current law Have to live in the house for at least five out of eight years.  Also limits the exclusion to one sale every five years Same as the house bill exclusion
Individual AMT Yes Exemption is raised through 2025 and then reverts back to current law The bill repeals it Exemption is raised through 2025 and then reverts back to current law
Investment Income Short term Capital Gain:  Taxed at same rate as your ordinary income; Long term Capital Gain: Taxed at special rates of 0%,15% & 20% Short term capital gain taxed at lower rates due to changes in brackets.  For example, people in previous 15% bracket would now pay tax at 12% (updated bracket) rate Short term capital gain taxed at lower rates due to changes in brackets.  For example, people in previous 15% bracket would now pay tax at 12% (updated bracket) rate Same as house bill
Medical Expense Deduction Out of pocket expenses in excess of 10% of AGI are deductible on Sch A Lowers AGI threshold to 7.5% for 2017 and 2018; reverts to current law in 2019 The bill eliminates this deduction Lowers AGI threshold to 7.5% for 2017 and 2018; reverts to current law in 2019
Charitable Contributions LImited to 50% of AGI and can carry over the next five years No change, but less people will itemize due to higher std. ded No change, but less people will itemize due to higher std. ded No change, but less people will itemize due to higher std. ded
Mortgage interest deduction Interest on debt up to $1.1 million is deductible; can take the deduction for principal and one other residence Interest on up to $750,000 acquisition debt deductible, still applicable to principal and one other residence.  Reverts to current law in 2026. Interest payment deduction on debt up to $500,000 and only for debt on principal residence Interest on up to $1 million acquisition debt deductible, still applicable to principal and one other residence.  Reverts to current law in 2026
State & Local Tax Deduction Allows state and local tax deduction Income tax and property tax limited to $10,000 State income tax eliminated; limited to $10,000 for property taxes State income tax eliminated; limited to $10,000 for property taxes
Alimony Payments Tax Deductible to get to AGI The bill eliminates it starting in 2019. The bill eliminates it The bill preserves current law
Child Tax Credit Child tax credit of of $1,000 available per child under 17 Increases credit to 2,000 with $1,400 refundable. Makes credit available to higher income families Increases it from $1,000 to $1,600.  The additional $600 is not refundable.  Makes it available to higher income families Increases it to 2,000 from $1,000.  Additional $1,000 not refundable.  Allows it for children under 18, up from 17 until 2025.  Makes it available to higher income families
Education Savings American Opportunity Credit; Lifetime learning Credit; Tuition and Fees Deduction The bill preserves current law American Opportunity available for fifth year at half, Lifetime Learning Credit: Repealed, Tuition and Fees Deduction: Repealed The bill preserves current law
Student Loans Deductible up to $2,500 to get to AGI The bill preserves current law Repeals it Preserves current law
Moving Expense Deduction Deduct moving expenses related to starting a new job or a transfer to a new location for your current employer.  Requirements have to be met in order to take the deduction Repealed Repealed Repealed

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