Unveiled late last week was the tax reform package from the House and Senate Tax Cuts and Jobs Act Conference Committee. After a week of intense negotiations, the legislative package is predicted to pass through Congress as the final version before lawmakers leave for the holiday recess later this week.

If passed, the legislative bill would be the most impactful tax change seen in more than 30 years and would be felt by virtually all individuals and businesses on some level. Carrying an effective date of Jan. 1, 2018 for most provisions, the bill would lower individual and corporate tax rates, and repeal countless tax credits and deductions, among many other things. With President Trump’s public support of the bill, we will likely see new tax legislation signed into law before the year-end.

Details of Tax Cut and Jobs Act (H.R. 1)

A blend of both the House’s and Senate’s original versions, the final bill submitted will call for the below as it relates to individuals and businesses.


  • Reducing the individual income tax rates until at least 2025, where the top income tax rate for individuals is 37 percent, as outlined in the brackets below:

  • Continuation of the Affordable Care Act taxes, as well as Medicare tax and the medical device excise tax, yet elimination of the individual shared responsibility requirement.
  • Temporarily near doubling of the standard deduction to $24,000 for married individuals filing a joint return, $18,000 for head-of-household filers and $12,000 for all other individuals.
  • Capping the deduction for mortgage interest at interest paid on principal amounts of up to $750,000. Grandfathering of existing mortgages at $1 million is called for, as well as allowing mortgage interest of second homes to be deducted within the $750,000 threshold. However, no deduction will be allowed for interest on home equity indebtedness.
  • Providing a deduction of up to $10,000 for state and local property or income taxes with a provision that disallows prepayment in 2017 of future years.
  • Repealing all miscellaneous itemized deductions subject to the two-percent floor.
  • Retaining the deduction for unreimbursed medical expenses.
  • Increasing the child tax credit to $2,000 per qualifying child, with up to $1,400 refundable for those joint filers with gross income under $400,000.
  • Keeping the student interest deduction and the graduate tuition waiver exclusion.
  • Maintaining current 401(k) and other retirement plan rules, however disallowing the recharacterization of Roth IRA contributions as traditional.
  • Doubling the estate and gift tax exclusion amounts to $22 million for married couples, while also doubling the generation-skipping transfer tax exemption.
  • Preserving a modified version of alternative minimum tax (AMT) for individuals, however with some modifications including temporary exception amounts of $109,400 for joint filers and a phase-out level for joint filers with more than $1 million in income.


  • Reducing the top corporate tax rate to 21 percent (from 35 percent under current law) effective beginning in 2018.
  • Repealing the AMT for corporations.
  • Increasing the 50-percent “bonus depreciation” allowance to 100 percent for property in service between Sept. 27, 2017 and Jan. 1, 2023, followed by a 20-percent phase-down schedule.
  • Raising the caps placed on depreciation write-offs of business-use vehicles to $10,000 for the first year, $16,000 for the second year, $9,600 for the third year and $5,760 for the subsequent years until costs are fully recovered for vehicles placed into service beginning Jan. 1, 2018.
  • Enhancing the Section 179 expensing to a $1 million limitation and an investment limitation of $2.5 million.
  • Eliminating numerous business tax deductions and credits, such as Section 199 and non-real property like-kind exchanges. However, it does call for keeping the research and development tax credit, but with five-year amortization expenditures.
  • Temporarily gives a credit for employees paying employees who are on family and medical leave.
  • Capping net interest expenses at 30 percent of adjustable taxable income, except for small businesses with gross receipts of $25 million or less who would receive an exception.
  • Allowing pass-through entities a 20 percent deduction on certain qualifying income.
  • Creating a divided-expansion system for taxing U.S. corporations on foreign earnings when being distributed, and modifying the foreign tax credit and Subpart F rules.

Next Steps

The Senate is likely to vote on the measure early this week with a House vote expected shortly thereafter. Doeren Mayhew will keep you up-to-date as new information becomes available on the nation’s future tax legislation. Should you have any questions in the meantime of how the proposed legislation may impact you or your business, please contact our tax advisors.