Question

List 6 tax law changes from the recent tax law passed that will effect individuals and explain those changes.

Answer 1

1) Standard deduction and personal exemption
The standard deduction has roughly doubled for all filers, but the valuable personal exemption has been eliminated. For example, a single filer would have been entitled to a $6,500 standard deduction and a $4,150 personal exemption in 2018, for a total of $10,650 in income exclusions. Under the new tax plan, they would just get a $12,000 standard deduction.

2) The estate tax exemption

The estate tax already applied to a small percentage of households. Essentially, the 40% estate tax rate applied only to the portion of an estate that was valued at $5.6 million or more per individual, or $11.2 million per married couple.The new tax law doubles these exemptions. Now, for 2018, individuals get a $11.2 million lifetime exemption and married couples get to exclude $22.4 million. As you can probably imagine, this won't leave too many families paying the estate tax.

3) A territorial tax system
The tax reform bill also changes the U.S. corporate tax system from a worldwide one to a territorial system. Currently, U.S. corporations have to pay U.S. taxes on their profits earned abroad, and the new system will end this effective double-taxing of foreign profits.

4) The SALT deduction
Perhaps the most controversial aspect of tax reform on the individual side was the fate of the SALT deduction. Early versions of the bill proposed eliminating the deduction (which stands for "state and local taxes"), which didn't sit well with some key Republicans in high-tax states.The final version of the bill keeps the deduction, but limits the total deductible amount to $10,000, including income, sales, and property taxes
5) Corporate tax rates

So far, we've discussed individual tax reform, but the most dramatic changes made by the bill are on the corporate side.For starters, the bill lowers the corporate tax rate to a flat 21% on all profits. This is not only a massive tax cut, but is a major simplification as compared to the 2017 corporate tax structure.

6) Changes to the alternative minimum tax (AMT)

The AMT was designed to prevent high-income individuals from avoiding income tax by piling up deductions. It is essentially a parallel method for calculating your income tax liability.The tax reform law makes changes designed to limit the impact of the tax. The law will raise the minimum income level at which the AMT could apply, from $50,600 to $70,300 for individuals and from $78,750 to $109,400 for couples married filing jointly.