Tax Reform Approved by Congress
Yesterday, as many of you know, the House and Senate passed major tax reform for the first time in more than thirty years.

A few weeks ago we sent you a newsletter detailing the anticipated changes. This week we wanted to give you a brief overview of those changes.
United States Capitol Building in Washington DC USA
Changes Include Standard Deduction, Home Equity Interest

The standard deduction has almost doubled to $12,000 (single) and $24,000 (married). However, gone are the personal exemptions ($4,050 per person). Many taxpayers who have typically itemized in the past will start taking the standard deduction in 2018. In addition, deductions for state and local taxes will be capped at $10,000. This will include both real estate taxes and state income taxes. So it makes sense for you to pay your 4th quarter state income tax estimate(s) and all or a portion of your real estate taxes before year-end.

Home equity loan interest is no longer deductible under the new tax bill. You may want to consider paying off this debt first if you are looking to pay down your mortgages.

Also, because many will not itemize their deductions in 2018, it may make sense to accelerate your charitable giving into 2017. You may want to consider opening a donor-advised fund which lets you get the deduction immediately and then decide later who gets the funds.
heart monitor in hospital surgery, with doctors in background
The new tax law keeps the medical deduction intact and even improves it slightly. If you are able to itemize, medical deductions in excess of 7.5% of your adjusted gross income (AGI) are deductible (as opposed to the current 10% of AGI).

The new tax rates are 10%, 12%, 22%, 24%, 32%, 35% and 37%. These are lower than the tax brackets for 2017. Therefore, if possible, defer income until 2018.

The new law substantially increases the alternative minimum tax (AMT) exemption amount, beginning next year. If you hold incentive stock options (ISOs), it may be wise to postpone exercising them until next year.

“Like-kind exchanges” are a popular way to avoid current tax on the appreciation of an asset. However, after December 31, 2017, such swaps will be possible only if they involve real estate that isn’t held primarily for sale. If you are considering a like-kind swap of other types of property, do so before year-end.
Impact on Businesses
Some people who are self-employed and owners of "pass-throughs" (S Corporations or partnerships) will be able to deduct 20% of their income under the new law.

Under the previous tax law, businesses have been able to deduct 50% of the cost of entertainment directly related to the active conduct of a business. Under the new law, there will be no deduction for amounts paid or incurred for entertainment. 
Let Us Help You Plan
There are many items in the new tax bill (too many to put in this newsletter) but as always, if you have any questions or concerns, please call our office at 630-653-1616, or email us at info@mmaadvisors.com. We look forward to being of service.