The table below compares the current law to the House and Senate Conference report released December 15, 2017.
| Current law | Conference report | |
| Personal tax rate | Seven 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 rate | 39.6% | 20% deduction for qualifying domestic non service business income including architects and engineers; small services qualify (expires 2025) |
| Max corporate tax rate | 35% | 21% beginning 2018; reduce 80% dividends received deduction to 65% and 70% to 55% |
| Depreciation | Section 179 limit $500,000 | Immediate expensing of most property through 2022 (excludes structures); Section 179 limit increased to $1 million. Certain real property improvements qualify |
| Mortgage interest | Deductible on up to $1.1 million debt | Deductible on up to $750,000 of new debt; old debt limit to remain at $1.1 million (expires 2025) |
| Personal state income and property tax | Allowable as an itemized deduction | Allowable up to $10,000 (expires 2025) |
| Business Interest | Generally deductible | Ave 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 accounting | Generally limited to businesses with less than $1 million, $5 million, or $10 million in revenue depending on the facts | Expanded to include businesses with less than $25 million in revenue |
| Domestic production activities deduction | Domestic producers eligible for 9% deduction of qualifying income | Repealed after 2017 |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 tax | Tax up to 40% on gifts and estates, subject to $5.45 million lifetime exemption per spouse | Liftetime exemption doubled, estate tax remains (expires 2025) |
| Health Insurance Mandate | Mandatory health insurance coverage | Repeals mandate beginning 2019 |
| Net operating losses | Allowed two years back and twenty years forward to offset up to 100% of taxable income | Carried forward only indefinitely and offset up to 80% of taxable income |
| Business entertainment expenses | 50% deductible | Non deductible |
| Self created property | Capital gain on sale | Ordinary income on sale |
| Employer paid Family and Medical leave wages | No credit | Eligible 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
