Tax Reform Comparative Chart: Former vs New Law
| Summary of Changes | ||
| Individuals | ||
| Provision | Former 2018 Law | 2018 Enacted Law |
| Tax Brackets | Single Individuals | Single Individuals |
| Taxable Income from: Tax Rate | Taxable Income from: Tax Rate | |
| $0 to $9,525 10% | $0 to $9,525 10% | |
| $9,526 to $38,700 15% | $9,526 to $38,700 12% | |
| $38,701 to $93,700 25% | $38,701 to $82,500 22% | |
| $93,701 to $195,450 28% | $82,501 to $157,500 24% | |
| $195,451 to $424,950 33% | $157,501 to $200,000 32% | |
| $424,951 to $426,700 35% | $200,001 to $500,000 35% | |
| Over $426,700 39.6% | Over $500,000 37% | |
| Married Filing Joint (MFJ) | Married Filing Joint (MFJ) | |
| $0 to 19,050 10% | $0 to $19,050 10% | |
| $19,051 to $77,400 15% | $19,051 to $77,400 12% | |
| $77,401 to $156,150 25% | $77,401 to $165,000 22% | |
| $156,151 to $237,950 28% | $165,001 to $315,000 24% | |
| $237,951 to $424,950 33% | $315,001 to $400,000 32% | |
| $424,951 to $480,050 35% | $400,001 to $600,000 35% | |
| Over $480,050 39.6% | Over $600,000 37% | |
| Married Filing Separately (MFS) | Married Filing Separately (MFS) | |
| $0 to 9,525 10% | $0 – 9,525 10% | |
| 9,526 to 38,700 15% | 9,526 – 38,700 12% | |
| 38,701 to 78,075 25% | 38,701 – 82,500 22% | |
| 78,076 to 118,975 28% | 82,501 – 157,500 24% | |
| 118,976 to 212,475 33% | 157,501 – 200,000 32% | |
| 212,476 to 240,025 35% | 200,001 – 300,000 35% | |
| Over 240,025 39.6% | Over 300,000 37% | |
| Head of Household (HOH) | Head of Household (HOH) | |
| $0 to 13,600 10% | $0 – 13,600 10% | |
| 13,601 to 51,850 15% | 13,601 – 51,800 12% | |
| 51,851 to 133,850 25% | 51,801 – 82,500 22% | |
| 133,851 to 216,700 28% | 82,501 – 157,500 24% | |
| 216,701 to 424,950 33% | 157,501 – 200,000 32% | |
| 424,951 to 453,350 35% | 200,001 – 500,000 35% | |
| Over 453,350 39.6% | Over 500,000 37% | |
| Standard Deduction | Single: $6,500 | Single: $12,000 |
| MFJ: $13,000 | MFJ: $24,000 | |
| MFS: $6,500 | MFS: $12,000 | |
| HOH: $9,550 | HOH: $18,000 | |
| Personal Exemption | Exemption Amount: $4,150 subject to phaseout | Personal exemption deduction is suspended for tax years beginning after 12/31/2017 and before 1/1/2026 |
| Child Tax Credit | $1,000 child tax credit, partially refundable. Phaseout beginning at AGI of $75,000 (Single) and $110,000 (MFJ) | Increased to $2,000 ($1,400 maximum refundable) with an additional $500 nonrefundable credit also available for dependents other than qualifying children. Phaseout threshold increased to $200,000 (Single) and $400,000 (MFJ) |
| Alimony | Deductible to the payer and taxable to the recipient | No longer deductible to the payer nor taxable to the recipient (effective for tax years after 12/31/2018) |
| Itemized Deductions | Limited for taxpayers with Adjusted Gross Income over $266,700 (Single), $320,000 (MFJ), $160,000 (MFS), and $293,350 (HOH) | Temporarily removes limit on itemized deductions for tax years beginning after 12/31/2017 and beginning before 1/1/2026. |
| Mortgage interest deduction threshold limitation is $1,000,000 | Mortgage interest deduction limitation lowered to $750,000 (for new purchases), but reverts back to $1,000,000 for tax years beginning after 12/31/2025 | |
| Home equity interest deduction limitation is $100,000 | Home equity interest no longer deductible | |
| Taxes paid deduction allowed for state and local income taxes and property taxes | Taxes paid deduction now capped at $10,000 for state/local sales, income, or property taxes | |
| Medical expenses deductible in excess of threshold set at 10% of AGI (7.5% of AGI for 65 and older) | Medical expense deduction floor lowered to 7.5% of AGI, for tax years 2017 and 2018 (returns to 10% after 2018) | |
| Charitable contribution limit is 50% of AGI for cash contributions | Charitable contribution limit is increased to 60% of AGI for cash contributions | |
| Miscellaneous deductions allowed for certain employee expenses, investment expenses, and tax preparation fees subject to the 2% AGI floor | Miscellaneous deductions subject to the 2% AGI floor are suspended | |
| Casualty & theft losses are allowed, with certain limitations | Casualty losses only allowed if a result of federally-declared disaster | |
| Affordable Care Act Individual Mandate | In general, imposes a penalty (shared individual responsibility payment), if taxpayer doesn't maintain health insurance coverage, equal to the higher of: $695 or 2.5% of Income | Bill reduces penalty to $0 beginning after 12/31/2018, effectively repealing the provision |
| Individual AMT | 28% maximum AMT tax rate, with taxable income subject to certain adjustments and preferences where, for example, certain itemized deductions are disallowed. Exemptions: | Certain AMT preferences, such as the medical expense deduction floor will follow the lower 7.5% of AGI set for the regular tax. Exemptions Increased to: |
| Single Taxpayer: $55,400 | Single Taxpayer: $70,300 | |
| MFJ Taxpayer: $86,200 | MFJ Taxpayer: $109,400 | |
| MFS Taxpayer: $43,100 | MFS Taxpayer: $54,700 | |
| Phaseout begins at AMTI of: | Phaseout begins at AMTI of: | |
| Single Taxpayer: $123,100 | Single Taxpayer: $500,000 | |
| MFJ Taxpayer: $164,100 | MFJ Taxpayer: $1,000,000 | |
| MFS Taxpayer: $82,050 | MFS Taxpayer: $500,000 | |
| Estates & Gifts | ||
| Provision | Former 2018 Law | 2018 Enacted Law |
| Estate & Lifetime Gift Tax Exemption | Exemption of $5,600,000 with inflation adjustments | Increases exemption to $10,000,000 with inflation adjustments for 2018 through 2025. The exemption reverts to the current level after 2025. |
| Businesses | ||
| Provision | Former 2018 Law | 2018 Enacted Law |
| Corporate Tax Rate | Multiple tax brackets, with a top tax rate of 35% | Reduced to a flat-rate of 21% for tax years beginning after 12/31/2017 |
| Pass-through Entity 20% Deduction | Deduction not available in current law | Taxpayers who have "qualified business" income from a partnership, S corporation, or sole proprietorship can deduct 20% of their qualified business income. Deduction limitations apply if the taxpayer has taxable income exceeding $157,500 (Single) or $315,000 (MFJ). |
| A "qualified business" is generally a business other than a "specified service business." | ||
| A "specified service business" generally includes, the performance of services in certain professional fields, and any business in which the principal asset is the reputation or skill of owners or employees. Engineering and Architecture services are excluded. | ||
| Taxpayers with income from "specified service businesses" whose taxable income does not exceed $157,500 (Single) or $315,000 (MFJ) can also benefit from this deduction. Special income phaseout rules apply if taxable income is above these amounts. | ||
| The deduction applies to tax years beginning after 12/31/2017 and expires after December 31, 2025 | ||
| Section 179 | Limit on deduction capped at $500,000, with phaseout threshold beginning at $2,000,000 of expenditures | Deduction limit increased to $1,000,000, with phase-out threshold increased to $2,500,000 of expenditures. The availability of this deduction will be expanded for certain purchases for the improvement of nonresidential real property. Effective for property placed in service in tax years beginning after 2017. |
| Bonus Depreciation | Can deduct 50% of cost for qualifying property, with phaseouts to 40% in 2018, 30% in 2019 and 0% thereafter | Can deduct 100% of costs of qualifying property through 2022, then phase-out will begin for following 4 tax years |
| For new property only | No longer limited to new property | |
| Applies to property acquired AND placed in service after 9/27/2017 | ||
| Corporate AMT | 20% tax rate, with taxable income subject to certain adjustments and preferences where deductions such as depreciation, life insurance proceeds, and municipal bond interest are treated differently | Repealed for tax years beginning after 12/31/2017 |
| Business Interest Deduction | Generally, allows full deduction of interest paid | In general, limits the business interest deduction to 30% of adjusted taxable income. Adjusted Taxable Income, in general, is the Business's Taxable Income without deductions for interest, tax, depreciation, amortization, NOLs, and the 20% deduction for certain pass-through income for tax years beginning before 1/1/2022. After that, adjusted taxable income is modified to include deductions for depreciation and interest. Small businesses with average gross receipts of $25 million or less are exempt. Floor plan financing loans for car dealer inventory are also exempt. |
| Net Operating Losses (NOL) | In general, the NOL can be carried back for 2 years and carried forward for 20 years to offset taxable income | Removes carrybacks and allows NOLs to be carried forward indefinitely. Limited to 80% of taxable income |
| Cash Accounting Method | Eligibility ceiling was capped at $5,000,000 in gross receipts for corporations and partnerships with corporate partners | Increases eligibility ceiling from $5,000,000 in gross receipts to $25,000,000 |
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