The table below compares the current law to the House and Senate Conference report released December 15, 2017.

Current lawConference report
Personal tax rateSeven tax brackets: 10%, 15%, 25%, 28%, 33%, 35%, 39.6%Seven tax brackets: 10%, 12%, 22%, 24%, 32%, 35%, 37% (expires 2025)
Sole proprietorship and pass through tax rate39.6%20% deduction for qualifying domestic non service business income including architects and engineers; small services qualify (expires 2025)
Max corporate tax rate35%21% beginning 2018; reduce 80% dividends received deduction to 65% and 70% to 55%
DepreciationSection 179 limit $500,000Immediate expensing of most property through 2022 (excludes structures); Section 179 limit increased to $1 million. Certain real property improvements qualify
Mortgage interestDeductible on up to $1.1 million debtDeductible on up to $750,000 of new debt; old debt limit to remain at $1.1 million (expires 2025)
Personal state income and property taxAllowable as an itemized deductionAllowable up to $10,000 (expires 2025)
Business InterestGenerally deductibleAve gross receipts greater than $25 million limitation on net interest deductible to 30% of adjusted taxable income (EBITDA) thru 2022, then EBIT thereafter
Cash method of accountingGenerally limited to businesses with less than $1 million, $5 million, or $10 million in revenue depending on the factsExpanded to include businesses with less than $25 million in revenue
Domestic production activities deductionDomestic producers eligible for 9% deduction of qualifying incomeRepealed after 2017
Alternative minimum tax (AMT)Corporate AMT: 20%, Personal AMT: 26%/28%Repeal corporate AMT, increased personal exemption amounts (personal expires 2025)
Gift and estate taxTax up to 40% on gifts and estates,     subject to $5.45 million lifetime exemption per spouseLiftetime exemption doubled, estate tax remains (expires 2025)
Health Insurance MandateMandatory health insurance coverageRepeals mandate beginning 2019
Net operating lossesAllowed two years back and twenty years forward to offset up to 100% of taxable incomeCarried forward only indefinitely and offset up to 80% of taxable income
Business entertainment expenses50% deductibleNon deductible
Self created propertyCapital gain on saleOrdinary income on sale
Employer paid Family and Medical leave wagesNo creditEligible employers receive 12.5% or greater tax credit

Richard Huffman, CPA, MST
Tax Partner
rhuffman@cpa-wfy.com

Wright Ford Young & Co
(949) 910-2727
16140 Sand Canyon Avenue
Irvine, CA 92618-3715