| Tax Reform 2018 Old vs. 2019 New Laws Comparison Chart |
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AIFA |
| Issue |
Prior Law |
New Law |
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| Corporate Tax Rate |
Four
brackets (10%, 25%, 34% 35%). 34% rate starts at income of $75,000. |
21%
permanent starting in 2018 |
|
| Individual Tax Rate |
Seven
brackets (10, 15, 25, 28, 33, 35, 39.6) |
Seven
brackets (10, 12, 22, 24, 32, 35, 37) with higher thresholds for most
brackets. Expires after 2025. |
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| Passthrough Tax Rate |
Individual
marginal rates |
20%
deduction on qualifed business income. Eligible income for partnership
or S corp owner limited to 50% of wages or 25% of wages plus 2.5% of business
assets. Specified service business income is not eligible for the
deduction. Taxpayers with taxable income less than $157,500 ($315,000
filing joint) would be exempt from wage limitation and would be eligible to
treat service income as qualified business income. Expires after 2025. |
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| Bonus Depreciation |
50%
bonus depreciation on qualified property purchased new |
100%
bonus depreciation for qualified property purchased new or used and placed in
service from 09/27/2017-12/31/2022 |
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| Section 179 Deduction |
Up
to $500,000 of eligible property can be expensed annually. |
Up
to $1M of eligible property can be expensed annually. |
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| Small Business Accounting Changes |
Certain
entities over $5M in annual receipts must use accrual method of accounting
instead of cash (unless inventories exist than threshold is lowered to $1M) |
Cash
method threshold increases to $25M annual revenue regardless of inventory
(including three prior tax periods) |
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| Business Interest Deduction |
Business
interest fully deductible subject to certain limitations |
Limitation
on business interest expense to 30% of business’ adjusted taxable
income. Can elect to not apply to real estate businesses. Does
not apply to businesses with less than $25M of annual revenues. |
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| Like Kind Exchange |
Real
or personal property |
Only
real property not held primarily for sale |
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| Domestic Production Activities Deduction |
9%
of the lesser of qualified production activities and business’ taxable income |
Eliminated
beginning in tax years after 12/31/2017 |
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| Meals and Entertainment Expense Deduction |
50%
deductible if directly related to trade or business |
Entertainment
deduction eliminated, meals deduction retained. |
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| Standard Deduction |
$6,350
individual, $12,700 joint filers |
$12,000
individual, $24,000 joint filers. Expanded deduction expires after 2025. |
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| Filing Status |
2018 Standard Deduction |
2019 Standard Deduction |
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| Single or Married Filing Separately |
$12,000
|
$12,200
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| Married Filing Jointly |
$24,000
|
$24,400
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| Head of Household |
$18,000
|
$18,350
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| Property Tax Deduction |
Permitted
as itemized deduction |
Limited
to $10,000 aggregate for property taxes and state and local income/ sales
tax. Change applies from 2018 to 2025. |
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| State and Local Tax Deduction for Non Business Income |
Permitted
as itemized deduction |
Limited
to $10,000 aggregate for property taxes and state and local income/ sales
tax. Change applies from 2018 to 2025. |
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| Mortgage Interest Deduction |
Permitted
up to $1.1M in debt on two personal residences as itemized deduction |
Permitted
on $750,000 of home acquisition indebtedness. Deduction of interest on
home equity indebtedness disallowed. Expires after 2025. |
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| Principal Residence Gain Exemption |
Gain
excluded on sale up to 250,000 for individuals ($500,000 for joint filers).
Taxpayer must use the home for two of five years. Available only once every
two years. |
No
change to prior law. |
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| Personal Exemptions |
$4,000
per filer and dependent |
Eliminated.
Expires after 2025. |
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| Estate Tax |
40%
with $5.59M exemption |
40%
with $11.18M exemption. Exemption reverts to 2017 level (adjusted for
inflation) after 2025. |
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| Alternative Minimum Tax Regime |
Affects
over 4.5M American personal and corporate filers |
Corporate
AMT eliminated. Higher thresholds for personal AMT. |
|
| Tax Filing Status |
2018
AMT Exemption Amount |
2019
AMT Exemption Amount |
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| Single or Head of Household |
$70,300
|
$71,700
|
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| Married Filing Jointly |
$109,400
|
$111,700
|
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| Married Filing Separately |
$54,700
|
$55,850
|
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| Tax Filing Status |
2018
Phase-Out Threshold |
2019
Phase-Out Threshold |
exemption
phase-out income thresholds |
| Married Filing Jointly |
$1,000,000
|
$1,020,600
|
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| All Others |
$500,000
|
$510,300
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| R & D Credit |
Credit
allowed for qualified research expenditures |
Credit
retained |
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| Individual
tax braket |
Former
Marginal Tax Rates (2017 and Prior Years) |
New
Marginal Tax Rates (2018-2025 Tax Years) |
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| 10% |
10% |
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| 15% |
12% |
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| 25% |
22% |
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| 28% |
24% |
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| 33% |
32% |
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| 35% |
35% |
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| 39.60% |
37% |
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| Filing Status |
2018 Standard Deduction |
2019 Standard Deduction |
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| Single or Married Filing Separately |
$12,000
|
$12,200
|
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| Married Filing Jointly |
$24,000
|
$24,400
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| Head of Household |
$18,000
|
$18,350
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| Child Tax
Credit |
$ 1,000.00 |
$ 2,000.00 |
Qualifying Child
under 17 years |
| Charitable
Cintribution Deductions |
50% of AGI |
60% of AGI |
The Tax Cuts and Jobs
Act
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