The New Tax Law Highlights

This year, Trump has changed the tax code. This changes should be well understood for everyone who is at stake. It is smart to be flexible to change in order to adapt. In this article, you can see the highlights of this reform. I encourage you to further research on any one that interests you.

Personal Taxes

• Bracket rates were reduced. The maximum bracket went from 39.6% to 37%. This means that, on a personal level, we will pay less taxes.

• The standard deduction was increased from $13,000 to $14,000

• Personal exemptions were eliminated

• Capital gain taxes remained the same (20%)

• In 2019, there will be no more ObamaCare

• Alimony is not deductible anymore (apparently this is a big concern for the people who were at the conference I attended about this topic)

• State and local taxes deduction are now limited to $10,000

• Residential mortgages interest deduction is now limited to $750,000 (it used to be $1M)

• Estate (inheritance) and gifts do not pay taxes under $11.6M

Business

• Corporations now pay a flat rate of 21%—no more brackets for corporations. Last year, the smallest bracket rate for corporations was 15%. Now they pay more. I am expecting an increase in the creation of LLCs because of this.

• The 1031 exchange still exists (thank God) but is now more restricted. It is only allowed for Real Estate properties. Before, you could use it for boats too.

• For pass-through entities like LLCs and Partnerships, 20% of qualifies business income, that is operating income and not interest, stocks, etc, is deductible for members with incomes less than $200,000.