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Special Edition Tax Alert – Senate Bill Passes: Start Planning for Tax Reform

Early Saturday morning, December 2, 2017, the Senate passed H.R. 1, the Tax Cuts and Jobs Act. The following are a few of the key revisions included in the current version of the bill:

  • Allow a deduction for up to $10,000 in property taxes paid to state and local governments (the original Senate bill proposal was zero);
  • Keep the individual and corporate alternative minimum tax (AMT), with AMT exemption amounts and phase-out thresholds increased by approximately 39%;
  • Lower the threshold in 2017 and 2018 for individuals to deduct medical expenses from 10% of adjusted gross income (AGI) to 7.5% of AGI;
  • Provide new due diligence requirements for paid tax return preparers who have clients filing as head of household;
  • Allow funds from Section 529 savings accounts to be used toward K-12 school tuition;
  • Extend the 100% expensing for qualified business property by four more years, while gradually phasing it out over time; and
  • Increase the deduction for qualifying passthrough entities from 17.4% to 23%.

The proposed legislation now heads to the Joint Conference Committee. If the differences can be resolved  and both houses can agree on a final bill, we will have tax reform.

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