Deduction

Current Law

New Conference Bill

Standard Deductions & Personal Exemptions

SD: $6,500 / $13,000
PE: $4,150 pp

SD: $12,000 / $24,000
PE: $0 (until 2025)

Child Tax Credit

$1,000 per child
Phased out if AGI is greater than:
$110,000 (married filing joint)
$75,000 (single or head of household)

$2,000 per child
Phased out if AGI is greater than:
$400,000 (married filing joint)
$200,000 (single or head of household)

529 Plans

Allows a deduction for deposits to pay for college tuition and expenses.

Allows a deduction for deposits to pay for K-12 private schools, homeschooling costs, and college tuition

Alimony Payments

Included in income to the receiving party
Above the line deduction to the paying party

Alimony is tax-free to the recipient.
Eliminates the tax deduction to the paying party *applies to any divorce or separation instrument executed after December 31, 2018

Estate Tax

Lifetime exemption of $5.45M
Top tax rate of 40%

Lifetime exemption of $11M
Top tax rate of 40%

Gift Tax

Lifetime exemption of $5.45M
Top tax rate of 40%

Lifetime exemption of $11M
Top tax rate of 40% *the annual exemption remains unchanged

Alternative Minimum Tax (AMT) Exemptions

Personal exemption:
$84,500 (married filing joint)
$54,300 (single)

Personal exemption:
$109,400 (married filing joint)
$70,300 (single) *allows any AMT credit carryovers to offset regular tax- with 50% refundable

Alternative Minimum Tax (AMT) Phase-out

Phased out for AMTI exceeding:
$160,900 (married filing joint)
$120,700 (single)

Phased out for AMTI exceeding:
$1,000,000 (married filing joint)
$500,000 (single)

Deduction

Current Law

New Conference Bill

Mortgage Interest

Principal or second residence
Mortgage of up to $1,000,000
Includes home equity up to $100,000

Principal residence only
Mortgage of up to $750,000
No home equity debt *mortgages before December 15, 2017 are grandfathered in

Property / State and Local Tax

Allowed

Limited to a combined:
$10,000 (married filing joint)
$5,000 (married filing separate) *disallows the prepayment of state and local taxes in 2017; no limit if expense from a trade or business

Medical Expenses

Allowed subject to a 10% of AGI threshold

Allowed subject to a 7.5% of AGI threshold

Charitable Contributions

Allowed subject to an AGI limitation of 50%

Allowed subject to an AGI limitation of 60%

Tax Preparation and other Fiduciary Fees

Allowed- subject to 2% floor

No deduction unless fees relate to a trade or business

Other

Removes deductions for:
- personal casualty losses

- moving expenses
- removal of all other 2% misc fees

Itemized Deduction - Limitation

Phaseout starting with AGI of $261,500 (single) or $313,800 (joint)

Suspends the limitation until January 1, 2026.

Deduction

Current Law

New Conference Bill

Pass-through income rates

Taxed at partner's rates

Taxed at partner's rates

Pass-through deduction

None

20% of qualified business income, limited to the greater of:
50% of the W-2 wages paid, or
25% of the W-2 wages paid + 2.5% of the unadjusted basis of all qualified tangible property *limits (both caps and exclusions) do not apply for those with incomes

below $315,000 (joint) or $157,500 (single); phase-out over a $100,000 range

Pass-through losses

Allowed to the extent of basis

Losses in excess of $500K (married filing joint), or $250K (single) would not be deductible- but added as an NOL carryover

S Corporation election to become C Corp - 481 adjustment

Adjustments can be taken ratably over the 4 year period beginning with the year of the method change

Adjustments can be taken ratably over the 6 year period beginning with the year of the method change

S Corporation election to become C Corp- Post termination distributions

For 1 year post termination:
Distributions come first from AAA (reduces stock basis and is tax free)
Comes second from E&P and treated as a dividend (and taxed accordingly)

For 1 year post termination:
-Distributions come first from AAA (reduces stock basis and is tax free)
-Comes second from E&P and treated as a dividend (and taxed accordingly)
For period greater than 1 year after termination:
-Distributions are treated as coming from AAA or E&P in the same ratio as the amount of remaining AAA to accumulated E&P

*partially extends favorable distribution treatment

Deduction

Current Law

New Conference Bill

Corporate Tax Rates

Progressive rate structure
Highest rate of 35%

Flat tax of 21%

Bonus Depreciation

50% first year depreciation on qualified property

100% first year depreciation on qualified property *effective for property placed in service between September 27, 2017 and January 1, 2023; bonus allowed on used property

179 Depreciation

100% of depreciation for tangible, depreciable property used in a trade or business
Limited to $500K
Phased out if cost of qualified property >$2M

100% of depreciation for tangible, depreciable property used in a trade or business
Limited to $1M
Phased out if cost of qualified property >$2.5M

Cash Accounting

Allowed for businesses with <$5M in revenue

Allowed for businesses with <$25M in revenue

Net Operating Losses

2 year carryback, 20 year carryforward

No carryback, unlimited carryforward
Limited to 80% of AGI

Corporation Interest Expense Deduction

Unlimited

Limited to 30% of adjusted taxable income if average gross receipts > $25M

Family and Medical Leave Credit

None

12.5 percent of wages paid, increased (but not above 25 percent) by 0.25 percentage points for each percentage point by which the rate of payment (as described under subsection (c)(1)(B)) exceeds 50 percent

1031 Exchanges

Real and personal property used in a trade or business

Limited to only real property

Meals & Entertainment

50% deduction allowed for business meals
50% deduction for business entertainment

50% deduction allowed for business meals
0% deduction for business entertainment