December 25, 2017 | lmsXpect3 By a vote of 51-49, the Republican majority in the United States Senate passed an overhaul of the federal tax code. The U.S. House of Representatives already passed its own version of “tax reform.” With the Senate advancing its own version of the legislation, the chances of sweeping tax reform becoming law have increased dramatically. Big Changes to Federal Tax Code Here is a sample of the biggest changes made in the Senate’s tax reform bill, according to Forbes.com. The corporate tax rate is reduced from 35 percent to 20 percent. Businesses will also be able to expense a multitude of asset purchases right away. The top individual income tax rate will be reduced to 38.5 percent (a slight decrease from the current 39.6 percent). However, the new top tax rate will only kick in if you make $500,000 as an individual or $1,000,000 if you are filing as a married couple. If you earn your income through an S-Corp business or partnership, the top tax rate is reduced to under 30 percent. The standard federal tax deduction will jump to $12,400 per individual and $24,800 per married couple. This is a major reform since it doubles the standard deduction (currently $6,350 for a single filer and $12,700 if a married couple files). An array of itemizable deductions are repealed including state and local income taxes, casualty losses, unreimbursed employee expenses (e.g., teachers purchasing school supplies for students, etc.), among others. The child tax credit is doubled to $2,000. Major Modifications to Estate Tax In the Senate’s tax reform legislation, the estate tax is not repealed. Instead, the exemption for estate taxes jumps to $11 million for a single individual who passes away and $22 million for someone who passes away and is survived by a spouse. In the House version of the tax reform legislation, the estate tax is repealed in full, but the repeal is phased in and goes into full effect in 2024, according to Forbes.com. The legislation has yet to become law, so modifications may still be made, but it appears likely the estate tax will undergo a major overhaul. Schedule a Meeting with a Renton Estate Planning Lawyer If you have questions about whether your estate could be subject to the federal estate tax, schedule a meeting with the Law Offices of Dan Kellogg PLLC. We are eager to assist you with your case.