What You Should Know About the New Tax Legislation

Share on facebook
Share on twitter
Share on linkedin
Share on email

Here’s what’s changing and what’s not based on the final bill passed by Congress

u.s. capitol building tax legislation

UPDATE: Download our 2019 Tax Planning Guide

On December 20, both the Senate and the House of Representatives passed the final version of the pending tax legislation, which will now move to President Trump’s desk for signature. The legislation is the largest rewrite of the U.S. tax code in more than three decades, and will have broad implications for individuals, families, and businesses.

We will share more details in the coming weeks, but here are the key takeaways you should know in the interim:

What’s changing

  • The highest rate on ordinary income will move from 39.6 percent to 37 percent.
  • For married couples filing jointly, there will be a higher threshold before moving into the highest tax bracket—from $480,000 now to $600,000 in 2018.
  • The legislation nearly doubles the standard deduction.
  • The holding period to obtain capital gains treatment on carried interest will go from one year now to three years moving forward.
  • The deduction for state and local income taxes, sales tax, and property tax will be capped at $10,000.
  • The mortgage interest deduction will be retained, but just on $750,000 of acquisition indebtedness, not $100,000 home equity indebtedness.
  • Qualifying trades and businesses will be eligible for a 20 percent deduction on pass-through income. This is one of the most detailed portions of the bill, and it will take time to digest what qualifies as business income.
  • The alternative minimum tax, or AMT, still exists, but with a higher exemption.
  • The estate and gift tax still exist, but with double the exemption—the $5.6 million per person limit moves to $11.2 million and the per couple cap to $22.4 million.

What remains the same

  • Income tax rates on capital gains and qualified dividends were left unchanged.
  • Taxes incurred in carrying on a trade or business are still deductible.
  • The net investment income tax and the Medicare surtax on wages or self-employment income over $250,000/$500,000 still exist.
  • Charitable deductions are still allowed, but the overall limit for charitable contributions in a given year has increased from 50 to 60 percent of adjusted gross income.

What has been eliminated

  • Personal exemptions
  • Certain other deductions

We continue to evaluate the bill’s final provisions, and will post more updates in the near future.

Read more from our blog:


Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Brighton Jones LLC), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained on this blog serves as the receipt of, or as a substitute for, personalized investment advice from Brighton Jones LLC.

To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Brighton Jones LLC is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the Brighton Jones LLC’s current written disclosure statement discussing our advisory services and fees is available for review upon request.

Brighton Jones is not affiliated with Facebook, Twitter, LinkedIn, Google+, YouTube or other social media websites and we have no control over how third-party sites use the information you share. Please remember that you should never communicate any personal or account information through social media and it is important to familiarize yourself with their respective privacy and security policies.