Tax Cuts And Jobs Act Of 2017

Tax Cuts And Jobs Act Of 2017
Tax Cuts And Jobs Act Of 2017
Quick Summary of Tax Cuts And Jobs Act Of 2017

The Tax Cuts and Jobs Act of 2017 (TCJA) is a significant revision to the tax regulations that President Trump signed into law in 2017. It brought about numerous alterations to the taxation of individuals and businesses. Regarding individuals, it modified the tax rates, raised the standard deduction, and imposed limitations on certain deductions. Concerning businesses, it lowered the corporate tax rate, introduced a deduction for pass-through income, and implemented changes to the taxation of international income. While some of these changes are permanent, many are set to expire by the end of 2025.

Full Definition Of Tax Cuts And Jobs Act Of 2017

The Tax Cuts and Jobs Act of 2017 (TCJA) was signed into law by President Trump and brought about significant changes to the tax code. These changes impacted corporate tax rates, standard deductions, and estate taxes, with some being permanent and others set to expire by the end of 2025. For individual tax deductions, the TCJA reduced tax rates, increased the standard deduction, and capped the state and local tax (SALT) deduction at $10,000. It also eliminated miscellaneous tax deductions for things like workplace expenses. These changes will revert back to their pre-TCJA provisions after 2025. Additionally, the TCJA reduced the highest tax bracket for individuals from 39.6% to 37% and increased the standard deduction from $6,500 to $12,000.

For businesses and investors, the TCJA permanently reduced the corporate tax rate to 21% from 35%, provided a 20% deduction for pass-through income, and enacted a 100% bonus deduction for business assets purchased through the end of 2022. It also made fundamental changes to taxing international income, including exempting foreign earned dividends from U.S. income tax for those owning over 10% of the foreign corporation. These changes illustrate how the TCJA impacted business and investor taxes by reducing the corporate tax rate, providing a deduction for pass-through income, and enacting a 100% bonus deduction for business assets purchased.

Tax Cuts And Jobs Act Of 2017 FAQ'S

The TCJA lowered individual tax rates for most taxpayers, with the top rate dropping from 39.6% to 37%.

The standard deduction was nearly doubled for all filing statuses, making it more beneficial for many taxpayers to take the standard deduction rather than itemizing.

The TCJA increased the child tax credit from $1,000 to $2,000 per qualifying child and made it available to more taxpayers by raising the income limits.

Yes, the TCJA eliminated or limited several deductions, including the deduction for personal exemptions, the deduction for state and local taxes over a certain amount, and the miscellaneous itemized deductions subject to the 2% floor.

For divorce or separation agreements executed after December 31, 2018, alimony payments are no longer deductible by the payer or included in the recipient’s income.

The TCJA doubled the estate tax exemption, meaning fewer estates are subject to the tax.

Yes, the TCJA introduced a new deduction for qualified business income from pass-through entities, allowing eligible taxpayers to deduct up to 20% of their qualified business income.

The TCJA lowered the corporate tax rate from 35% to 21%.

The TCJA increased the AMT exemption and raised the income thresholds at which the exemption phases out, resulting in fewer taxpayers being subject to the AMT.

Many of the changes made by the TCJA are set to expire after 2025, unless Congress takes further action to extend them.

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This glossary post was last updated: 6th June 2024.

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