Proposed Income Tax Reform for 2017

There are a lot of changes being proposed to our current tax code. Tax reform is a popular topic, and that often leads to many questions and uncertainties. Though the details on tax reform change almost daily, here are the high level possible changes being proposed that could affect your future taxes: 

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  • Double the standard deduction: This will provide a higher standard deduction for every taxpayer. Most people will not need to claim itemized deductions on their tax returns and will be able to use a simpler form (i.e. Form 1040EZ).

  • Reduce the tax brackets from 7 to 3: This change would result in 3 tax brackets at 10%, 25%, and 35%.

  • Some tax credits will be eliminated and some will remain: The following credits that remain may have their credit amounts changed: 

    • Child Tax Credit: Increased to $1500/child

    • Earned Income Tax Credit: Amounts would stay the same

    • Adult Care Expenses Credit: Replacing the current Child and Dependent Care Tax Credit, this would give a $500 tax credit to tapayers caring for adult dependents.

  • These tax deductions will remain:

    • Mortgage Interest Deduction

    • Charitable Contribution Deduction

  • Eliminate other deductions such as: 

    • Medical Expenses Deduction

    • Tuition Deduction

    • State and Local Tax Deduction

    • Unreimbursed Employee Expenses Deduction

    • Gambling Losses Deduction

  • Repeal the Alternative Minimum Tax (AMT)

  • Repeal the Estate or “Death” Tax

How Would Tax Reform Work in My Tax Situation? 

Below are examples of two scenarios, Single and Married Filing Jointly, which show different outcomes of a tax return if Tax Reform is passed. Please note that the results assume the withholdings claimed on the W-4 noted in this table:

Filing Details Single Married Filing Joint Result
Dependents 0 2  
Withholdings claimed on W-4 0 2  
Annual Taxable Income $30,000 $50,000  
Annual Federal Taxes Withheld* $3,668 $4,055  
2016 Return $1,204 Refund $3,838 Refund Lower refund without Tax Reform
Proposed 2017 Reform Return $1,580 Refund $4,055 Refund Higher refund with Tax Reform

*Based on assumed W-4 withholdings

Still confused? Estimate your tax return with the above proposed changes by using the Taxpert Tax Reform Calculator below. It will give you high level details of your 2017 Tax Return and any estimated tax refund (or taxes owed). 

The free Reform Calculator will be updated as new details about tax reform are released. Please contact a Taxpert if you have any questions or feedback about the Calculator. 

1SPECIAL NOTE: Tax reform is currently NOT the law, so it has not been put in place. The above details are what is being discussed and could change in the next upcoming months. This page will be updated as new tax reform details are released.

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