The most comprehensive tax act in 31 years is described as a 23% cut for the middle class. There are two sweeping changes, five major changes and several other important changes.
The sweeping changes are the reduction of the corporate rate from 35 to 21% and the increase in the standard deduction which almost doubles to $24,000 for taxpayers filing jointly.
The bill repeals personal exemptions, doubles childcare credits, caps interest tax deductions and creates at 20% pass-through deduction.
The home mortgage interest deduction reduces the limit on acquisition indebtedness to $750,000 from the current limit of $1 million.
The bill increases the child tax credit to $2,000 per qualifying child.
Under the bill the limit for state and local income or property tax deductions is $10,000.
The take away for CPAs is: 2018 will be a busy tax year for CPAs handling taxes and a reduced market for itemized tax returns in 2019 and beyond.