Below is LFC review of the new tax law recently signed into law by the president. Some of the more significant aspects of the law are:
- Corporations will have their tax rate cut from 35% to 21%
- Top marginal income tax rate for individuals will be lowered from 39.6% to 37%
- State & local property taxes, income taxes, and sales taxes will be deductible up to $10,000. It will be some combination of these three taxes that will be allowed.
- A pass-through deduction on earnings - those businesses that are pass-through (LLCs, S-Corporations, partnerships, sole proprietorships) will be able to deduct 20% of operating income
- Medical expenses are now deductible above 7.5% of AGI. Current law was at 10% of AGI (this available for 2 years).
- Credit for children under 17 is raised to $2000 from $1000.
- Tax changed: 10%, 12%, 22%, 24%, 32%, 35%, & 37%. Brackets expanded to have more income taxed at the lower rates.
The IRS will be making adjustments to the tax tables they use for withholding taxes. This will occur in late January or early February. If you are a W2 employee, you should consider making changes to your W4 after the tables change to accommodate these new laws.
Please contact LFC for all of your 2018 tax planning needs (W4 assistance, estimated tax payment calculations).
www.lfconinc.com
