As of today, both the House and Senate have passed tax reform legislation. The President is expected to sign this bill before the end of the week.
Below is a brief summary of some of the significant changes the tax reform bill makes for individuals. Critically, most of the changes in the bill will go into effect on January 1, 2018. In order for your internal employees and co-employees to accurately withhold the correct amount of federal employment taxes, NAPEO would recommend that you send out an email asking both internal employees and co-employees to review the changes contained in the tax reform bill and to update their W-4 accordingly, as these changes are effective beginning January 1, 2018. Feel free to use the information below in your own communications.
An analysis of the full bill will be available soon.
Summary of the Tax Reform Bill
Increases the standard deduction in 2018 from $6,500 to $12,000 for a single filer and from $13,000 to $24,000 for a joint filer;
Increases the child tax credit from $1,000 (up to $1,000 refundable) per qualifying child to $2,000 (up to $1,400 refundable), and introduces a new $500 non-refundable “family” credit;
Limits the deductibility of state and local taxes to the first $10,000 paid for property or income taxes (or sales taxes in lieu of income taxes); and,
Sets new individual tax rates effective January 1, 2018 (these individual tax rates changes sunset after 2025).
Whats in and Whats Out.
Stay tuned for more updates.