How will the Trump Tax Law Changes Impact you?

The Trump administration is working overtime for getting the tax law cleared, and it has exasperated the average tax payer as to what is happening, and how it is going to affect him or her. Whatever happens, an average taxpayer must know that the impact of any changes will not take place before the tax year 2018. Hence the 2017 taxes will need to be filed as usual.

How will the proposed tax law impact an average taxpayer like you and me? Here is a summary of what to expect from the proposed tax law, as compared to the current tax law for individuals (The table does not show Corporate and Business Tax changes):

Issue	Current	Proposed	Notes
Tax rate slabs	7 (10%, 15%, 25%, 28%, 33%, 35%, 39.6%)	3 (12%, 25%, 35%)	Simple, but note that the minimum tax rate is higher
Standard Deduction (Single)	$6,350	$12,000	Balanced by removal of Personal exemption
Standard Deduction (MFJ)	$12,700	$24,000
Personal Exemption	$4,050	Eliminated	For MFJ, a return with standard deduction will pay taxes on $3,200 less than earlier (24,000-12,700-4,050-4,050)
Medical Expenses on Schedule A	Deductible once they exceed 10% of AGI	Deduction eliminated	Older people will not get advantage of high medical bills that took their itemized deductions higher
Mortgage Interest and donations	Applies on Schedule A	Will continue	Process on how these will be put on the return is awaited
Health Insurance Credit	Premium tax credit for people who purchased health insurance through the market	No provision	People having coverage at low premium from the marketplace are uncertain about the insurance cover
Child tax credit	$1000 per child	Child tax credit will increase. Details awaited
AMT	Applies	Repealed
3.8% Net investment Income Tax	Applies	No provision
.9% Medicare for high earners	Applies	No provision
Education benefits	AOTC, Lifetime Learning etc	No changes	To encourage higher studies, this will remain
HSA	$3,550 for single, and $6,750 for MFJ	No provision	This is going to hit common middle class
FSA	$2,500	No provision	Another saving process taken away from middle class
Penalty for no health Insurance	Applies	No provision

 As mentioned these are all provisional, and they might change. Be your own judge as to how these will impact you. In a nutshell, it may not help the average tax payer much. 

Feel free to contact if there are any questions.

Your tax de-mystifying partner

Tax Guru USA

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Email:    tax@taxguruusa.com