So the Tax Plan just passed about an hour ago and I myself am excited for myself and businesses all over. For how early it is ill discuss some things though will update as things go on!
Personal
new standard deductions:
$12000 (single) vs $6350
$18000 (head of household) vs $9350
$24000 (joint) vs $12700
so you subtract that from your income, and tax the rest according to the tax brackets. the first X is x%, the next X is y%, etc.
the new tax brackets have you paying 12% until you hit $90000 (so over 100k gross income)
the old tax brackets would tax singles making $90000 post-deductible a composite tax rate of ~20%, with the gap from $38700-$90000 at 25%
when you consider both of those changes, taxes drop off dramatically for anyone who files with the standard deduction, and still quite a bit for those who itemize
Child and Elder Care Deductions
The Senate plan increases the Child Tax Credit from $1,000 to $2,000. But more than a third of low-income families would qualify for less than the increase. It also increases the income level from $110,000 to $1 million. That helps high-income families, at a cost of $13 billion a year. The House plan raises the Credit to $1,600. Both plans preserve the adoption tax credit. The Senate plan allows parents to set aside money for an unborn child in a tax-advantaged account.
The House plan eliminates the marriage penalty as it relates to the Child Tax Credit. Under the current tax system, two single parents receive the full credit up to a combined income of $150,000. The credit shrinks for a married couple if they earn more than $110,000. Research shows that subsidizing child care encourages people to work, boosting income and economic growth.
The House plan allows a $300 credit for each non-child dependent. The tax credit helps pay families for caring for elderly parents. But the provision ends in five years. Trump's 2016 plan gave a permanent $5,000 deduction for elder care.
Business Taxes
Both plans lower the maximum corporate tax rate from 35 percent to 20 percent. The Senate plan delays the change until 2019 to save $100 billion in revenue loss. The United States has one of the highest corporate tax rates in the world. But most corporations don't pay more than 15 percent. They can afford tax attorneys who help them avoid paying more.
Both plans lower the maximum small business tax rate to 25 percent. The House plan reduces the rate to 9 percent on the first $75,000 in income on businesses that make $150,000 or less. The cut applies to sole proprietorships, partnerships, and S corporations. Many of those are real estate companies, hedge funds, and private equity funds.
Alcohol
For beer, which is currently taxed at $18 per barrel, the proposal would lower the tax rate to $16 per barrel for the first two million barrels produced or imported, and after that it would go back up to $18.
Small brewers would be taxed at $3.50 per barrel for the first 60,000 barrels produced in the U.S., and the rate would go back up to $16 after that. They are currently taxed $7 for barrel for the first 60,000 barrels.
Spirits are currently taxed at $13.50 per gallon. The proposal calls for lowering that to $2.70 per gallon for the first 100,000 gallons produced or imported by the industry. The tax rate would go up to $13.34 per gallon for anything between 100,000 gallons and 22,130,000 gallons. Anything larger than that would be taxed at $13.50 per gallon.
Wines are taxed in two ways: by volume and by alcohol percentage. Still wines are taxed differently from sparkling.
Wines with less than 14% alcohol are taxed at $1.07 per gallon, while stronger wines are taxed with rates that increase incrementally with the alcohol content -- wines above 24% alcohol, for example, are taxed like spirits at $13.50 per gallon. Sparkling wine is taxed at $3.40 per gallon.
The proposal aims to reduce the excise taxes to $1 per gallon for the first 30,000 gallons produced or imported, 90 cents per gallon on the next 100,000 gallons, and 53.5 cents per gallon on the next 620,000 gallons. It also raises the amount of alcohol for the lowest taxable increment of wine from 14% to 16%. Sparkling wine, under the proposal, would be taxed inline with still wines.
Key Changes
Put a five-year limit on letting businesses immediately write off the full value of new capital investments. That would phase out over four years starting in year six, rather than be permanent as initially proposed.
Under the bill, the corporate tax rate would be permanently slashed to 20 percent from 35 percent, while future foreign profits of U.S.-based firms would be largely exempted from tax -- both changes pursued by corporate lobbyists for years.
I obviously missed some as this just came out and its late so mixing sleeplessness and number crunching isnt the best though I am excited for this as more will come back to us and businesses will be booming especially the little guys!
Sources:
https://www.thebalance.com/trump-s-tax-plan-how-it-affects-you-4113968
http://money.cnn.com/2017/11/16/news/beer-wine-whiskey-tax/index.html
https://www.cassidy.senate.gov/imo/media/doc/LYN17709.pdf
https://waysandmeansforms.house.gov/uploadedfiles/tax_cuts_and_jobs_act_section_by_section_hr1.pdf