**Republicans’ Tax Overhaul Bill: What’s in It and What It Means for You**.
**Introduction**.
On December 20, 2017, President Trump signed into law the Tax Cuts and Jobs Act (TCJA), the most significant overhaul of the US tax code in decades. The TCJA made sweeping changes to individual and corporate taxes, and its effects will be felt by businesses and taxpayers for years to come..
**Key Provisions of the TCJA**.
**Individual Taxes:**.
* **Lowered tax rates:** The TCJA reduced the number of individual tax brackets from seven to four, with the top marginal rate dropping from 39.6% to 37%..
* **Increased standard deduction:** The standard deduction, which taxpayers can take without itemizing deductions, was nearly doubled for both single and married couples..
* **Eliminated personal exemptions:** The personal exemption, which was previously a flat deduction for each taxpayer and dependent, was eliminated..
* **Child Tax Credit increased:** The Child Tax Credit was increased from $1,000 to $2,000 per child under age 17..
* **State and local tax (SALT) deduction capped:** The SALT deduction, which allowed taxpayers to deduct state and local income and property taxes, was capped at $10,000..
**Corporate Taxes:**.
* **Lowered corporate tax rate:** The corporate tax rate was reduced from 35% to 21%..
* **Eliminated corporate AMT:** The corporate alternative minimum tax (AMT) was eliminated..
* **Increased expensing limits for capital investments:** The amount of capital investments businesses can expense immediately was increased from $500,000 to $1 million..
**Impact on Businesses and Taxpayers**.
The TCJA is expected to have a significant impact on businesses and taxpayers..
**Businesses:**.
* **Reduced tax burdens:** The lower corporate tax rate and other provisions are expected to reduce the tax burdens of most businesses..
* **Increased investment:** The increased expensing limits for capital investments are expected to encourage businesses to invest more in equipment and other capital assets..
* **Reduced competitiveness for certain industries:** The SALT deduction cap could hurt businesses in high-tax states, as it reduces the value of the deduction for their employees..
**Taxpayers:**.
* **Lower tax bills:** Most taxpayers will see their tax bills decrease under the TCJA, due to the lower tax rates and increased standard deduction..
* **Increased after-tax income:** The TCJA is expected to increase after-tax income for most taxpayers, which could lead to increased consumer spending..
* **Financial planning challenges:** The elimination of the personal exemptions and the SALT deduction cap could require taxpayers to make changes to their financial plans..
**Conclusion**.
The TCJA is a major change to the US tax code that will have significant implications for businesses and taxpayers. While it is still too early to say definitively what the long-term effects of the law will be, it is clear that it will have a major impact on the economy and on individual finances for years to come..
