Republican Tax Bill Enacted Into Law

The Republican Tax Bill was signed by President Trump on December 22nd 2017 and has been enacted into law. What does this newly enacted tax bill mean for you?

I have provided a link to the summary of changes to the tax laws by Tax Foundation. I have not read the entire bill, which I have provided a link to below, but based on my observations, my thoughts of the bill are: 

• To take advantage of the tax changes, I suggest that incorporating businesses will advantageous to most taxpayers. 
• Although the business tax deduction will not apply to certain service corporations (such as Lawyers, Doctors or Accountants) it may be still advantageous to incorporate service corporations because service corporations can take advantage of the business tax deduction provided that their taxable income is below the threshold. 
• The estate tax exemption has doubled from $5.6 million to approximately $10 million. This means that fewer individuals would need to plan around estate taxes. However, estate planning is still a good idea in order to avoid probate. 
• California residents should see a reduction in the amount of deductions they itemize due to the $10,000 State tax limitation along with the mortgage interest limitation. It will also be interesting to see how the State of California reacts to the changes with its own tax law changes. 

Overall, I think we shall wait and see how the changes will be implemented in practice and we should see the majority of changes take effect next tax season for 2018 tax year. 
​

Summary of Tax Changes

Tax Bill