Tax Cuts and Jobs Act of 2017
The Tax Cuts and Jobs Act of 2017 is a congressional revenue act of the United States signed into law by President Donald Trump. The Act is based on tax reform advocated by congressional Republicans and the Trump administration. Major elements of the changes include reducing tax rates for businesses and individuals, increasing the standard deduction and family tax credits.
About Tax Cuts and Jobs Act of 2017 in brief
The Tax Cuts and Jobs Act of 2017 is a congressional revenue act of the United States signed into law by President Donald Trump. The Act is based on tax reform advocated by congressional Republicans and the Trump administration. Major elements of the changes include reducing tax rates for businesses and individuals, increasing the standard deduction and family tax credits. Some of the reforms passed by the Republicans have become controversial within key states, particularly the USD 10,000 cap on state and local tax deductibility, and were challenged in federal court before being upheld. Some critics in the media, think tanks, and academia assailed the law, mainly based on forecasts of its adverse impact higher trade deficit, greater income inequality, and lower healthcare coverage and higher healthcare costs. The CBO estimates that implementing the Act would add an estimated USD 2. 289 trillion to the national debt over ten years, or about USD 1. 891 trillions after taking into account macroeconomic feedback effects. Many tax cut provisions, especially income tax cuts, will expire in 2025, and starting in 2021 will increase over time; this, by 2027 would affect an estimated 65% of the population and in that same year the law’s provisions are set to be fully enacted, however, corporate tax cuts are permanent. The House passed the penultimate version of the bill on December 19, 2017, and the Senate passed the final bill, 51–48, on December 20, 2017.
The bill was signed intolaw by President Trump on December 22, 2017 and went into effect on January 1, 2018, and did not affect 2017 taxes. The number of income tax brackets remain at seven, but the income ranges in several brackets have been changed and each new bracket has lower rates. The lower income tax threshold for the Child Tax Credit is doubled from USD 1,000 to USD 2,000, which will be refunded to the child. There is also a USD 500 credit for the high-income dependents versus zero under current law. This has more impact on taxpayers with more than $1.1 million in income. The higher income taxpayer will have income taxed at several different rates. This is effectively a tax increase overtime, as people move more quickly into higher brackets as their income rises; this element is permanent. For single filers, the standard deductions will increase from USD 6,350 to USD 12,000. The personal exemption is eliminated—this was a deduction of USD 4,050 per taxpayer and dependent, unless it is in an estate or estate trust. The mortgage interest deduction for newly purchased homes was lowered fromUSD 1,500 to USD 750,000 under current Law. This could rise to over 84% if doubled. The tax credits for married filers will be capped at USD 110,000 for married couples, with the lower threshold for high- income taxpayers being USD 400,000 I AGI. This means that more taxpayers with high income will be taxed at higher rates, with more taxpayers paying more.