2018 Tax Reform Chart

Print Tax Reform Resources Page 1 of 24
Business Provisions
Topic Previous Tax Law New Tax Law
Tax Rates
Flat rate of 21 percent (effective

Corporate tax rate Top rate of 35 percent
1/1/2018)
Repealed; AMT credits refundable

Alternative minimum tax (AMT) 20 percent
from 2018 through 2021(1)
Personal service corporations Flat rate of 35 percent Flat rate of 21 percent
70 & 80 percent deduction for any Deduction amounts reduced to 50 &

dividend received from corporations 65 percent for corporations owning <
Dividends received deduction
owning < 20 or ≥ 20 percent of stock 20 or ≥ 20 percent of stock of
of another corporation, respectively(2) another corporation, respectively(2)
Deduction of 20 percent of domestic

qualified business income (QBI);
Pass-through treatment Individual rate on ordinary income
subject to limitation(3); expires after
12/31/2025
Cost Recovery
100 percent through 2022 for

40, 30 & 20 percent bonus qualified property placed in service
depreciation for qualified property in after 9/27/2017(4); 80, 60, 40 & 20
Bonus depreciation
2018–2020, respectively; property percent bonus depreciation for
must be new to qualify property placed in service in 2023 to
2026, respectively
$3,160, $5,100, $3,050 & $1,875 for $10,000, $16,000, $9,600 & $5,760
Luxury auto depreciation limitations first, second, third & remaining for first, second, third & remaining
recovery years, respectively(5) recovery years, respectively(5)
Seven-year recovery period for

machinery & equipment, grain bins,
fences & cotton ginning assets; Modifies recovery period to five years
Cost recovery for certain farm property (other than nonresidential for certain farm property; required
property real property, residential real use of 150 percent declining balance
property & trees or vines bearing fruit method repealed(6)
or nuts) is subject to the 150 percent
declining balance method
http://www.bkd.com/services/tax-reform-resources-print.htm 2/23/2018
Maintains previous law recovery

periods for residential rental real
27.5 years for residential rental real
Cost recovery for residential rental & property & nonresidential real
property & 39 years for
nonresidential real property property; 30-year alternative
nonresidential real property
depreciation system (ADS) recovery
period for residential rental property
Deductible by materially participating Expands deductibility to cover third

third parties holding a minority parties acquiring the entire equity
interest during the entire taxable year interest held by the loss-suffering
Citrus plant replanting costs
while the loss-suffering taxpayer taxpayer; effective for replanting
holds an equity interest of at least 50 costs paid after 12/22/2017 & before
percent 12/22/2027
Small Business Reforms
Up to $520,000; phaseout beginning Up to $1 million; phaseout beginning

Section 179 expensing at $2,070,000 of assets placed in at $2.5 million of assets placed in
service service(7)
Allowed for C corporations that do

Allowed for C corporations with less
Cash method of accounting not exceed a $5 million gross
than $25 million of gross receipts
receipts test
Required use of inventories Gross receipts > $10 million Gross receipts > $25 million
Required application of §263A Gross receipts > $10 million for Gross receipts > $25 million for
uniform capitalization rules to property acquired for resale; no property acquired for resale or
inventory threshold for manufactured property manufactured property
Required use of percentage-of-

completion method for long-term Gross receipts > $10 million Gross receipts > $25 million
contracts
Distributions from an eligible

terminated S corp treated as paid
from accumulated adjustments
account & earnings & profits on a pro
S corporation conversion to C
Not addressed rata basis; §481(a) adjustments
corporation
taken into account ratably over six-
year period; applies to S corps that
revoke elections during two-year
period following enactment date
Reform of Business-Related Exclusions, Deductions, etc.
Deduction limited to business interest

income, floor plan financing interest
Deduction allowed for interest
Interest expense & 30 percent of entity’s adjusted
expense
taxable income; excess carried
forward indefinitely(8)
Deduction limited to 80 percent of

taxable income for tax periods after
2017; no carryback, carried forward
Carried back two years & carried indefinitely – retains previous law
Net operating loss (NOL)
forward 20 years treatment for property & casualty
(P&C) insurance companies &
permits NOL deductions for life
insurance companies(9)
Deferral of gain permitted on like-

Limits deferral of gain on like-kind
kind exchanges of certain property
Like-kind exchanges exchanges to real property that is not
held for productive use in a trade or
held primarily for sale
business or for investment
Contributions to capital do not Expands previous law to also

include any contribution in aid of exclude contributions made by a
Capital contribution definition
construction from a (potential) non-shareholder governmental entity
customer or civic group
Deduction allowed for expenses

No deduction for amounts paid or
Local lobbying expenses incurred in connection with
incurred after 12/22/2017
influencing local legislation
Deduction for domestic production Up to 9 percent for domestic Repealed; effective for taxable years
activities production activities beginning after 12/31/2017
Deduction limited to 50 percent of No deduction for amounts paid or

Entertainment expenses(10)
expense incurred after December 31, 2017
Defined as an item of tangible

personal property given to an
employee in recognition of either
length of service or safety Clarifies “tangible personal property;”
Employee achievement awards
achievement presented as part of a excludes cash & gift cards
meaningful presentation; deductible
by employer, excludible from
employee income
Deduction limited for taxpayers with

FDIC premiums Deductible consolidated assets more than $10
billion(11)
Tax-free rollover of publicly traded

securities gain into small business Permitted within 60 days of sale Repealed
investment companies
Property held by taxpayer generally Self-created patents, inventions,

Capital assets considered capital asset unless models, designs & secret formulas or
otherwise excluded processes are excluded
Partnership treated as terminated if,

within any 12-month period, there’s a
Partnership technical termination sale or exchange of 50 percent or Repealed
more of the total interest in
partnership capital & profits
Capital gains rate after one-year

Capital gains rate after three-year
holding period for interests received
Carried interest holding period with respect to any
in exchange for performance of
applicable partnership interest
services
Tax credit available to businesses

Research & development credit that develop new or improved Explicitly retained(12)
products or processes
Taxpayers may defer recognition of

income for advance payments to the
Accrual basis income recognition end of succeeding tax year if same Explicitly retained
methodology is followed for financial
statement purposes
Deduction allowed for payments

identified in a court order or
No deduction allowed if related to
Fines & penalties settlement agreement as restitution,
any law violation
remediation or required to come into
compliance with a law violation
No deduction for settlement, payout

Deduction for settlements paid in or attorney fees related to sexual
Generally deductible as ordinary &
connection with sexual harassment harassment or sexual abuse if
necessary trade or business expense
or sexual abuse subject to a nondisclosure
agreement
Reform of Business Credits
50 percent business tax credit for

50 percent credit decreased to 25
Clinical testing expense credit certain expenses related to testing
percent
drugs for rare diseases or conditions
20 percent credit for qualified 20 percent credit for qualified

rehabilitation expenditures related to rehabilitation expenditures, to be
Rehabilitation credit a certified historic structure; 10 claimed over a 60-month period;
percent credit if related to a qualified repeals 10 percent credit for qualified
rehabilitated building(13) rehabilitated buildings
Nonrefundable tax credit for 40

percent of qualifying wages paid to
Work opportunity tax credit No change
certain employees who qualify as
members of disadvantaged groups
Deduction allowed for unused

Unused business credits business credits; carried back one No change
year; carried forward 20 years
Tax credit available to eligible

employers of 12.5 percent of wages
paid to qualifying employees during
Employer credit for paid family &
Not addressed any period such employees are on
medical leave
family & medical leave if payment
rate under program is 50 percent of
wages normally paid(14)
Bond Reforms
Taxation of private activity bond

Tax-exempt No change
interest
Taxation of governmental advance

Tax-exempt Repealed
refunding bond interest
Provide tax credits to investors in lieu Prospectively repeals ability to issue

Tax credit & direct-pay bonds
of interest payments new bonds
Interest on bonds used to finance

Professional sports stadium bonds professional sports stadiums is tax- No change
exempt
Compensation
Deductible compensation for publicly

Covered employees include CEO,
traded corporate employers limited to
CFO & three other most highly
$1 million for covered
Excessive employee remuneration compensated officers; covered
employees—includes CEO & three
employees maintain designation for
other most highly compensated
all future years(15)
officers
21 percent excise tax on

compensation more than $1 million
Tax-exempt organization executive paid to five highest-paid employees;
Not addressed
compensation remuneration of a covered employee
that isn’t deductible under the $1
million limitation isn't considered
Allows qualified employees(16) to elect

Qualified equity grants Not addressed to defer recognition of income
attributable to qualified stock(17)
15 percent excise tax imposed on

Expatriated corporation stock Increases 15 percent rate to 20
value of stock compensation held by
compensation percent
insiders of an expatriated corporation
Other Provisions
Taxable gain determined according

Taxable gain determined according to the results of a hypothetical sale of
Sales of partnership interests by
to “asset use” & “business activities” partnership assets; in certain cases,
foreign taxpayers
tests(18) transferee required to withhold 10
percent of realized amount
Expands definition to include

situations where transferee would be
Exists if adjusted basis in partnership allocated a net loss in excess of
Section 743 substantial built-in loss property exceeds property’s FMV by $250,000 upon hypothetical
more than $250,000 disposition of partnership property
immediately after transfer of
partnership interest
Basis limitation on partner losses Basis limitation on partner losses is

doesn’t include partner’s share of decreased to reflect partner’s share
Partner loss limitations
charitable contributions & foreign of charitable contributions & foreign
taxes taxes
Taxpayers may use either a first-in,

first-out (FIFO) or specific
Identification of shares of stock sold, identification method when less than
No change
exchanged or otherwise disposed of entire holding of particular stock is
sold, exchanged or otherwise
disposed of
Individuals, estates & certain Expands list of qualified beneficiaries

Qualifying beneficiaries of an electing
charitable organizations eligible to to include nonresident alien
small business trust (ESBT)
hold S corporation stock directly individuals
Charitable contribution deduction for Determined according to rules Determined according to rules
ESBTs generally applicable to trusts generally applicable to individuals
Aging period not considered

UNICAP production period rules for Interest expense attributable to aging production period; interest expense
beer, wine & distilled spirits periods must be capitalized attributable to aging periods is
currently deductible
$18 per barrel; $16 per barrel for first

$18 per barrel; $7 per barrel for small
Beer excise tax 6 million; $3.50 per barrel for small
brewers(19), up to 60,000 barrels
brewers(21), up to 60,000 barrels
Tax-free to transferor even if

Transfer of beer between bonded Tax-free if breweries are owned by common ownership does not exist if
facilities the same brewer the transferee accepts responsibility
for payment of the tax
$1.07 per wine gallon for alcohol

$1.07 per wine gallon for alcohol
contents of 16 percent or less
contents of 14 percent or less
(includes mead & certain sparkling
Wine excise tax (excludes mead & sparkling wine);
wine); all producers allowed credit
small domestic producers allowed
against wine excise tax; modifies
credit against wine excise tax
credit calculation
$2.70 per proof gallon on first

100,000; $13.34 on proof gallons
Distilled spirits excise tax $13.50 per proof gallon between 100,000 & 22.13 million;
$13.50 per proof gallon exceeding
22.13 million
Distillers may transfer spirits in

Distillers may transfer spirits in bond
approved containers other than bulk
Bulk distilled spirits in containers at least one gallon in
containers in bond without payment
size without payment of tax
of tax
Native corporations may assign

certain payments to a settlement
Generally subject to tax under the
Tax treatment of Alaska Native trust without gross income inclusion;
same rules as other corporations &
Corporations & Settlement Trusts Native corporations may elect to
trusts, with exceptions
deduct contributions made to a
settlement trust
Excise tax imposed on amounts paid Exempts certain payments related to

for taxable transportation; 7.5 the management of private aircraft
Aircraft management services
percent plus a flat dollar amount for from excise taxes imposed on
each domestic flight taxable air transportation
Deferral/permanent exclusion of
capital gains reinvested in a
corporation or partnership that
invests at least 90 percent of its
Qualified opportunity zones Not addressed assets in qualified opportunity zone
property, which are targeted at
certain low-income community
population census tracts to be
established in each state
Tax credit available to owners of

Low-income housing credit qualified residential rental buildings No change
in low-income housing projects
International Tax Provisions
Taxation on profits generated by

Interest-charge domestic small U.S. manufacturers from
international sales corporation (IC- U.S.-manufactured products sold Retained
DISC) overseas can be deferred indefinitely
& reinvested into business
Worldwide income tax based on Territorial system with base erosion

Future foreign earnings
residence & source provisions(20) (21)
U.S. shareholders no longer required

Previously excluded subpart F to include previously excluded
Not addressed
income inclusion subpart F income in qualified foreign
base company shipping operations
Eliminates foreign base company oil-

Foreign base company income Not addressed related income as a category of
foreign base company income
Provides “downward attribution”(22)

from a foreign person to a related
CFC stock attribution rules Not addressed U.S. person for purposes of
determining whether the foreign
corporation is a CFC
U.S. person owning 10 percent or

U.S. person owning 10 percent or
Subpart F U.S. shareholder definition more of the total combined voting
more of the total share value
power
A corporation must be controlled for

Subpart F 30-day rule an uninterrupted 30 days before Repealed
subpart F inclusions apply
Passive income does not include Passive income does not include
income from a corporation income from a corporation with
PFIC insurance business exception
predominantly engaged in an insurance liabilities constituting more
insurance business than 25 percent of its total assets
Interest expense allocated among

Allocation based on adjusted tax
Interest expense apportionment members of an affiliated group based
basis of assets
on FMV of assets
15.5 percent for cash/cash

Untaxed accumulated foreign
Not addressed equivalents, 8 percent otherwise,
earnings
payable over eight years
1. Prior-year minimum tax credit is refundable in an amount equal to 50 percent of excess of credit for tax
year over amount of credit allowable for year against regular tax liability for 2018 to 2020 (100 percent
for 2021).
2. Deduction is 100 percent of dividend received where member of the same affiliated group.
3. Deduction does not apply to specified service businesses, except in case of taxpayer whose taxable
income does not exceed $157,500 for single filers ($315,000 married filing jointly (MFJ)) with a phaseout
beginning at the same levels over the next $50,000 ($100,000) of taxable income. QBI is all domestic
business income other than investment income (except income from publicly traded partnerships
that’s eligible for inclusion), investment interest income (other than qualified real estate investment
trust and corporate dividends), net capital gain, foreign currency gains, etc. The deduction is limited to
the greater of 50 percent of W-2 wages paid with respect to the business or 25 percent of W-2 wages
paid plus 2.5 percent of the unadjusted basis of all qualified property.
4. Definition of qualified property expanded by removing requirement that original use begin with
taxpayer. Excludes certain property used in regulated public utility businesses and property used in a
trade or business that has floor plan financing indebtedness; includes qualified film, television and live
theatrical productions.
5. Amounts adjusted for inflation annually. Additional $8,000 allowed for assets qualifying for bonus
depreciation; phased down in 2018 and 2019 to $6,400 and $4,800, respectively, for automobiles
acquired before September 28, 2017, but placed in service after September 27, 2017.
6. Five-year recovery period does not apply to grain bins, cotton ginning assets, fences or any other land
improvement. Original use must commence with the taxpayer. A 150 percent declining balance method
will continue to apply to any 15- or 20-year farm property to which the straight-line method does not
apply.
7. Definition of qualified property expanded to include certain improvements to nonresidential real
property, including roofs, HVAC systems, fire protection and alarm systems and security systems.
8. Adjusted taxable income is calculated without regard to items not properly allocable to a trade or
business, any business interest expense or business interest income, the 20 percent pass-through
income deduction, floor plan financing interest, any NOL deduction and, for taxable years beginning
before January 1, 2022, any deduction for depreciation, amortization or depletion. The interest
deduction is not limited for any taxpayer with average annual gross receipts for the preceding three
taxable years of $25 million or less or a regulated public utility business (including electric
cooperatives). Real property trade or businesses described in IRC §469(c)(7)(C) may elect to not be
subject to the limitation provided they make an irrevocable election and use the alternative
depreciation system (ADS) for any of its non-residential real property, residential real property and
qualified improvement property. Farming businesses may also elect not to be subject to the limitation
provided they use the ADS method to depreciate farming property with a recovery period of 10 years or
more. Electing farming businesses specifically include agricultural and horticultural cooperatives.
9. NOLs for any tax year are generally excess of life insurance deductions over life insurance gross
income for that year. Deduction is limited to 80 percent of the excess and can be carried forward
indefinitely (no carryback).
10. Includes entertainment, amusement or recreation activities; does not include qualified meal expenses.
11. No deduction allowed for taxpayers with total consolidated assets of $50 billion or more. For taxpayers
with consolidated assets between $10 billion and $50 billion, disallowed deduction calculated based on
ratio of the excess of total consolidated assets exceeding $10 billion to $40 billion.
12. For tax periods beginning after December 31, 2021, certain research and experimentation expenditures,
including software development costs but excluding land acquisition and improvement costs and mine
(including oil and gas) exploration costs, would be required to be capitalized and amortized over a five-
year period. For foreign research projects, this amortization period increases to 15 years. Upon
retirement, abandonment or disposition of property, any remaining basis would continue to be
amortized over remaining amortization period.
13. Requires the use of straight-line depreciation or the ADS method.
14. Credit increased by 0.25 percentage points (but not above 25 percent) for each percentage point by
which rate of payment exceeds 50 percent. Credit is effective for wages paid in tax years beginning
after December 31, 2017, and before tax years beginning after December 31, 2019.
15. Would not apply to any remuneration under written binding contracts in effect on November 2, 2017,
that isn’t modified in any material respect; renewals are considered material modifications.
16. Qualified employees exclude any individual who, with respect to the employer corporation, (1) was a 1
percent owner at any time during the 10 preceding calendar years, (2) has ever held the position of
CEO or CFO, (3) is a family member of an individual described in (1) or (2), or (4) was one of the four
highest compensated officers for any of the 10 preceding taxable years.
17. Stock must be received from a nonpublicly traded corporation in connection with the exercise of an
option or in settlement of a restricted stock unit granted in connection with the performance of
services.
18. In determining whether the asset use or business activities test are met, due regard is given to whether
such assets, income, gain or loss were accounted for through such trade or business. The extent to
which the income, gain or loss is derived from assets used in or held for use in the conduct of the U.S.
trade or business and whether the activities of the trade or business were a material factor in the
realization of the income, gain or loss is considered.
19. Small brewers are defined as brewers producing fewer than 2 million barrels of beer during a calendar
year.
20. 100 percent of foreign-sourced portion of dividends paid by foreign corporation to U.S. corporate
shareholder owning 10 percent or more of foreign corporation’s stock exempt from U.S. taxation. No
foreign tax credit or deduction allowed for any foreign taxes paid or accrued with respect to any
exempt dividend. The new law also includes provisions relating to deductions for disqualified related-
party amounts paid or accrued pursuant to a hybrid transaction between a hybrid entity and an
expanded definition of intangible property.
21. Provides an election to preserve NOLs and coordinate NOL, overall foreign loss and foreign tax credit
carryforward rules upon transition.
22. “Downward attribution” provides that certain stock of a foreign corporation owned by a foreign person
is attributed to a related U.S. person for purposes of determining whether the related U.S. person is a
U.S. shareholder of the foreign corporation.
Individual Provisions
Reduction & Simplification of Individual Income Tax Rates
Seven brackets with top rate of 39.6 Seven brackets with top rate of 37
Individual rates on ordinary income(1)
percent* percent*^
Unearned income exceeding $2,100 Unearned income exceeding $2,100

taxed at parents’ rates; remaining taxed at rates applicable to estates &
Unearned income of children income up to $2,100, less child’s trusts; remaining income up to
standard deduction, taxed at child’s $2,100, less child’s standard
rate deduction, taxed at child’s rate
Capital gains rate(1) Top rate of 20 percent* No change
Capital gains rate after one-year

holding period for interests received Capital gains rate after three-year
Carried interest
in exchange for performance of holding period
services
$6,500 for single filers, $9,550 head $12,000 for single filers, $18,000
Standard deduction
of household & $13,000 MFJ head of household & $24,000 MFJ(2)
Personal exemption $4,150(3) Repealed^
Taxpayers may use either a first-in,

Identification of shares of stock sold,
first-out (FIFO) or specific No change
exchanged or otherwise disposed of
identification method
Treatment of Business Income of Individuals, Trusts & Estates
Nonpassive losses limited to

Nonpassive losses from flow-through Deductible to extent sufficient tax $250,000 ($500,000 MFJ); excess
entity basis exists loss treated as NOL & carried
forward
Deduction of 20 percent of domestic

qualified business income (QBI);
Pass-through tax rate Individual rate on ordinary income
subject to limitation(4); expires after
12/31/2025
Simplification & Reform of Family & Individual Tax Credits
$2,000 ($1,400 refundable);

$1,000; phaseout at $75,000 for
Child tax credit phaseout beginning at $200,000 for
single filers ($110,000 MFJ)
single filers ($400,000 MFJ)(2)
$500 nonrefundable credit for

dependents other than qualifying
Family tax credit Not addressed
children; phaseout at $200,000 for
single filers ($400,000 MFJ)(2)
Three higher education tax credits

provided: American Opportunity Tax
Education tax credits No change
Credit (AOTC), Hope Scholarship
Credit & Lifetime Learning Credit
Qualified education expenses Elementary & secondary school

Education savings rules restricted to qualified higher expenses, up to $10,000, treated as
education qualified expenses for §529 plans
Income from discharge of student

Generally included in taxable income loan debt on account of death or total
Student loan indebtedness
unless certain exceptions apply & permanent disability of student
excluded from taxable income(2)
Deduction for qualified student loan

interest paid during year for
Student loan interest nondependent taxpayers with No change
adjusted gross income (AGI) less
than $80,000 single ($160,000 MFJ)
Deduction for qualified tuition & fees

Tuition & related expenses No change
paid during year
Permits rollover of amounts from

Tax-free rollovers to qualified ABLE qualified tuition programs to ABLE
Qualified tuition program rollovers to
accounts under §529A are not accounts without penalty; effective
qualified ABLE programs
permitted for distributions made after
December 22, 2017(2)
Total amount of otherwise allowable

itemized deductions reduced by 3
percent of the amount by which the Repealed(2)
Itemized deductions limitation
taxpayer's AGI exceeds a threshold;
does not reduce itemized deductions
by more than 80 percent
Simplification & Reform of Deductions & Exclusions
Deduction for mortgage interest paid

Deduction for mortgage interest paid
or incurred on up to $750,000 of
or incurred on up to $1 million of
Home mortgage interest acquisition indebtedness; deduction
acquisition indebtedness & $100,000
for interest paid on home equity
of home equity indebtedness
loans eliminated(2)(5)
Deduction for: (1) state, local & Deduction limited to $10,000 for the
State & local taxes paid or accrued foreign real property taxes, (2) state aggregate of: (1) state & local real &
not in connection with a trade or & local personal property taxes & (3) personal property taxes & (2) state &
business state & local income taxes (or state & local income tax (or state & local
local sales tax paid, if higher) sales tax paid, if higher)(2)
Eliminated except for losses incurred

within a major disaster area under
Deduction for casualty & theft losses
Personal casualty & theft losses the Robert T. Stafford Disaster Relief
incurred
and Emergency Assistance Act (as
amended 2016)(2)
Clarifies that “wagering losses”

Deduction allowed to extent of include any otherwise allowable
Wagering losses
wagering gains deduction incurred in connection with
wagering transactions
Deduction for charitable contributions

Deduction for cash contributions
made during year; deduction for cash
Gifts to charity modified to increase AGI limitation to
contributions limited to 50 percent of
60 percent(2)(6)
AGI
Deduction for tax preparation fees,

unreimbursed employee expenses &
Miscellaneous itemized deductions other miscellaneous items paid Repealed(2)
during year to extent they exceed 2
percent of AGI
For 2017 & 2018, deduction for out-

Deduction for out-of-pocket of-pocket expenses paid or incurred
expenses paid or incurred during during year to extent expenses
Medical & dental expenses
year to extent expenses exceed 10 exceed 7.5 percent of AGI; threshold
percent of AGI raises to 10 percent of AGI beginning
in 2019
Repealed (both deduction & income

Deduction for qualifying amounts
inclusion); effective for divorce
Alimony paid paid under a divorce or separation
decrees executed after December
instrument
31, 2018
Deduction & income exclusion for

Deduction & income exclusion
qualified expenses paid for moving at
Moving expenses eliminated except for active-duty
least 50 miles in connection with a
members of the armed forces(2)
job or business
Deduction up to $250 ($500 MFJ) for

Educator expenses qualified expenses paid by eligible No change
educators
Reimbursements up to $20 per

Repealed(2)
Bicycle commuting reimbursement month excludible from employees’
gross income
Exclusion up to $250,000 for single

filers ($500,000 MFJ) of gain from
Gain on sale of principal residence sale of principal residence where No change
home used as principal residence for
at least two of previous five years
Simplification & Reform of Savings, Pensions & Retirement
Contributions to a traditional IRA

permitted to be recharacterized as
Recharacterization of certain IRA & Recharacterization can’t be used to
contributions to a Roth IRA or vice
Roth IRA contributions unwind Roth IRA conversions
versa; permits recharacterization of
conversions
An employee who receives a plan

The 60-day rollover period is
Extended rollover period for the loan distribution has 60 days to
extended to the due date for filing the
rollover of plan loan offset amounts contribute the distribution to an
employee's tax return for that year
in certain cases eligible retirement plan to avoid
(including extensions)
additional tax
Provides exception to deferred

compensation plan rules if aggregate
Increases the aggregate amount of
Length-of-service award programs amount of length-of-service awards
length-of-service awards for bona
for bona fide public safety volunteers accruing for a bona fide volunteer
fide volunteers to $6,000
with respect to any year of service
does not exceed $3,000
Alternative Minimum Tax
28 percent top rate; exemption of

28 percent top rate; exemption of
$70,300 for single filers ($109,400
$55,400 for single filers ($86,200
MFJ) beginning after 12/31/2017;
Alternative minimum tax MFJ); exemption amounts begin to
exemption amounts begin to phase
phase out at $123,100 & $164,100,
out at $500,000 & $1 million,
respectively
respectively^
Elimination of Shared Responsibility Payment for Individuals Failing to Maintain Minimal

Essential Coverage
Individuals not covered by health

plan that provides at least minimum Individual shared responsibility
Affordable Care Act individual
essential coverage must pay payment reduced to zero for months
mandate
individual shared responsibility beginning after 12/31/2018
payment(7)
Other Provisions
Contributions are not deductible & Increases contribution limit to ABLE

generally may not exceed the annual accounts under certain
gift tax exclusion amount or limits circumstances; designated
Contributions to ABLE accounts
imposed on accounts under the beneficiary may claim saver’s credit
qualified tuition program of its for contributions made to ABLE
respective state account(2)
The IRS has nine months to return Extends period of time IRS has to
the monetary proceeds from the sale return monetary proceeds to two
of wrongfully levied property; an years; also extends the time period
Contesting IRS levy
action for wrongful levy must be for bringing a civil action for wrongful
brought within nine months from the levy to two years(8)
levy date
Members of the armed forces serving

in combat zones are afforded a
Grants combat zone tax benefits to
Combat zones number of tax benefits, including
the Sinai Peninsula of Egypt(9)
income exclusions for certain military
pay
Provides an exception to the 10

Distributions from qualified retirement
percent early withdrawal tax in the
plans are generally included in
case of a distribution due to a
income; early distributions are
qualified 2016 disaster – taxpayers
generally subject to a 10 percent
may recognize income attributable to
additional early withdrawal tax –
a qualified 2016 disaster distribution
2016 disaster area relief taxpayers may roll over distributions
ratably over three years; taxpayers
into another eligible retirement plan
are allowed a period of up to three
within 60 days to avoid income
years for recontributions of qualified
inclusion; individuals may claim
2016 disaster distributions – modifies
itemized deductions for personal
casualty loss limitations associated
casualty losses, subject to limitation
with a 2016 disaster(10)
* Plus 3.8 percent net investment income tax on unearned income when modified adjusted gross
income exceeds $200,000 for single filers ($250,000 married filing jointly (MFJ)).
^ Expires after December 31, 2025, except amounts would continue to be indexed for inflation using
chained measurement of the consumer price index where applicable.
1. See also Individual Brackets tab below.

2. Reverts to its form before January 1, 2018, after December 31, 2025.
3. Subject to phaseout based on AGI under previous law. This limitation is repealed under the new law,
except would revert to its form before January 1, 2018, after December 31, 2025.
4. Deduction does not apply to specified service businesses, except in case of taxpayer whose taxable
income does not exceed $157,500 for single filers ($315,000 MFJ) with a phaseout beginning at the
same levels over the next $50,000 ($100,000) of taxable income. QBI is all domestic business income
other than investment income (except income from publicly traded partnerships that’s eligible for
inclusion), investment interest income (other than qualified real estate investment trust and corporate
dividends), net capital gain, foreign currency gains, etc. The deduction is limited to the greater of 50
percent of W-2 wages paid with respect to the business or 25 percent of W-2 wages paid plus 2.5
percent of the unadjusted basis of all qualified property.
5. Interest deductions related to acquisition indebtedness for existing mortgages are unchanged. Interest
deductions related to home equity loans, except where proceeds are used for home acquisition, is
disallowed, regardless of when the debt was incurred.
6. Repeals exception to contemporaneous written acknowledgment requirement for contributions of $250
or more when donee organization files required return. Effective for contributions made in tax years
beginning after December 31, 2016.
7. Tax imposed for any month an individual does not have minimum essential coverage unless an
exception applies. Tax for any calendar month is one-twelfth of tax calculated as an annual amount.
Annual amount is equal to greater of flat dollar amount (lesser of sum of individual annual dollar
amounts for members of taxpayer’s family or 300 percent of adult individual dollar amount of $695 for
2018) or excess income amount (2.5 percent of excess of taxpayer’s household income for taxable year
over threshold amount of income for requiring taxpayer to file income tax return).
8. Effective for levies made after December 22, 2017, and levies made on or before December 22, 2017, if
the nine-month period has not expired as of December 22, 2017.
9. Generally effective beginning June 9, 2015, through any subsequent tax year beginning before January
1, 2026.
10. A qualified 2016 disaster distribution includes any distribution made on or after January 1, 2016, and
before January 1, 2018, to an individual whose principal place of abode at any time during calendar
year 2016 was in a 2016 disaster area. Personal casualty loss relief applies to losses arising in tax
years beginning after December 31, 2015, and before January 1, 2018.
Insurance Company Provisions

General Provisions
Flat rate of 21 percent (effective

Corporate tax rate Top rate of 35 percent
January 1, 2018)
Repealed; AMT credits refundable

Alternative minimum tax (AMT) 20 percent
from 2018 to 2021
70 & 80 percent deduction for any Deduction amounts reduced to 50 &

dividend received from corporations 65 percent for corporations owning <
Dividends received deduction
owning < 20 or ≥ 20 percent of stock 20 or ≥ 20 percent of stock of
of another corporation, respectively(1) another corporation, respectively(1)
100 percent through 2022 for

40, 30 & 20 percent bonus qualified property placed in service
depreciation for qualified property in after September 27, 2017(2); 80, 60,
Bonus depreciation
2018 to 2020, respectively; property 40 & 20 percent bonus depreciation
must be new to qualify for property placed in service in 2023
to 2026, respectively
Up to $520,000; phaseout beginning Up to $1 million; phaseout beginning

Section 179 expensing at $2,070,000 of assets placed in at $2.5 million of assets placed in
service service(3)
Deduction limited to business interest

income, floor plan financing interest
Deduction allowed for interest
Interest expense & 30 percent of entity’s adjusted
expense
taxable income; excess carried
forward indefinitely(4)
Deduction limited to 80 percent of

taxable income for tax periods after
2017; no carryback; carried forward
indefinitely.
Carried back two years & carried
Net operating loss (NOL) Retains current law treatment for
forward 20 years
property & casualty (P&C) insurance
companies & permits NOL
deductions for life insurance
companies(5)
Employee compensation not

includable in gross income until year
Deferred compensation No change
of receipt; employer deduction
allowed at that time
Deduction for compensation paid or

accrued with respect to a covered
employee of a publicly traded Redefines covered employee;
corporation limited to no more than covered employees maintain that
§162(m) deduction for excessive
$1 million per year. Commissions, distinction for all future years; repeals
employee remuneration
performance-based remuneration & the performance-based
payments to a tax-qualified compensation exception
retirement plan are excluded from
this limitation
For an accrual-basis taxpayer, an Accrual-basis taxpayers would be

amount is included in gross income required to recognize income no later
when all events have occurred that than the tax year in which item is
Accounting methods – tax year of fix the right to receive such income & recognized as revenue on the
inclusion the amount thereof can be applicable financial statement; this
determined with reasonable accuracy change may limit the §1276
(the “all events test,” unless an treatment to defer market discounts
exception applies) for tax purposes
Insurance Company Provisions (Other than Life)
P&C insurance companies required

to reduce reserve for losses incurred
Proration factor changed to
deduction by 15 percent of tax-
“applicable percentage” of 5.25
exempt interest, deductible portion of
Proration rules percent divided by top corporate tax
dividends received & increase in
rate, i.e., 25 percent beginning in
cash value of life insurance,
2018
endowment or annuity contracts
owned by company
Loss payment pattern for each line of

insurance business determined by
reference to industrywide historical
Historical payment pattern election
Loss reserve discounting loss payment pattern applicable to
repealed
such line of business; may elect to
use own particular historical loss
payment patterns
P&C companies must discount Amount of unpaid losses discounted

deduction for unpaid losses based on using corporate bond yield curve (as
Nonlife tax reserves
loss payment pattern using midterm specified by the U.S. Department of
applicable federal rates(6) the Treasury)(7)
P&C companies may elect to claim a

deduction equal to difference
Section 847 special loss discount between amount of reserves
Repealed
account computed on a discounted basis &
amount computed on an
undiscounted basis(8)
Life Insurance Company Provisions
Complex calculation based on

Company & policyholder share Company’s share is 70 percent;
company’s share of net investment
percentages policyholder’s share is 30 percent
income
Life insurance companies with assets

< $500 million may deduct 60
Small life insurance company percent of first $3 million of life
Repealed
deduction insurance-related income; deduction
is phased out for companies with
income between $3 & $15 million
No surtax on life insurance

Life insurance surtax No change
companies currently exists
2.09 percent for annuities; 2.45

1.75 percent for annuities; 2.05 percent for group life; 9.2 percent for
percent for group life; 7.7 percent for other specified insurance contracts;
Deferred acquisition costs other specified insurance contracts; expands 120-month amortization
60-month & 120-month amortization period to 180 months; preserves 60-
periods based on premium level month amortization of the first $5
million (with phaseout)
Tax reserves for any contract equal

to greater of (1) net surrender value
of contract or (2) 92.81 percent of
Actuarial-based tax reserves; can’t reserve computed as required by the
be less than contract’s cash National Association of Insurance
Life insurance tax reserves
surrender value; can’t be greater Commissioners (NAIC) at time
than statutory reserve reserve is determined. Tax reserves
can’t be less than contract’s cash
surrender value or greater than the
statutory reserve
Adjustments in computing reserves

Adjustments treated as a change in
Adjustment for change in computing may be taken into account over 10
method of accounting; subject to
life insurance reserves (§807(f)) years, regardless of effect on taxable
§481 rules
income
Special rule for distributions from

Policyholders surplus account (PSA) pre-1984 PSAs provides tax deferral Eight-year inclusion of PSA balances
opportunity(9)
1. Deduction is 100 percent of dividend received where member of the same affiliated group.
2. Definition of qualified property expanded by removing requirement that original use begin with
taxpayer.
3. Definition of qualified property expanded to include certain improvements to nonresidential real
property, including roofs, HVAC systems, fire protection and alarm systems and security systems.
4. Adjusted taxable income is without regard to items not properly allocable to a trade or business, any
business interest expense or business interest income, the 20 percent pass-through income deduction,
floor plan financing interest, any NOL deduction and, for taxable years beginning before January 1,
2022, any deduction for depreciation, amortization or depletion. Interest deduction not limited for any
taxpayer who meets a $25 million gross receipts test, is a regulated public utility business (including
electric cooperatives) or a real property business. Farming businesses may elect not to be subject to
limitation provided they use ADS method to depreciate farming property with recovery period of 10
years or more. Electing farming businesses specifically include agricultural and horticultural
cooperatives.
5. NOLs for any tax year are generally excess of life insurance deductions over life insurance gross
income for that year. Deduction is limited to 80 percent of the excess and can be carried forward
indefinitely (no carryback).
6. Loss payment pattern computed based upon assumption that all losses are paid (1) in general, during
the accident year and the three calendar years following the accident year, or (2) in the case of lines of
business relating to auto or other liability, medical malpractice, workers’ compensation, multiple peril
lines, international coverage and reinsurance, during the accident year and 10 calendar years following
the accident year. For long-tail lines of business, a special rule extends the loss payment pattern
period, so the amount of losses that would have been treated as paid in the tenth year after the
accident year is treated as paid in the tenth year and in each subsequent year (up to five years) in an
amount equal to the amount of the losses treated as paid in the ninth year after the accident year.
7. Amount of losses that would have been treated as paid in the third year after the accident year treated
as paid in third year and in each subsequent year in an amount equal to the average of the amount of
the losses treated as paid in the first and second years after the accident year, and in the case of lines
of business relating to auto or other liability, medical malpractice, workers’ compensation, multiple
peril lines, international coverage and reinsurance, the amount of losses that would have been treated
as paid in the tenth year after the accident year would be treated as paid in the tenth year and in each
subsequent year in an amount equal to the average of the amount of the losses treated as paid in the
seventh, eighth and ninth years after the accident year; would result in a lower tax deduction for
reserves.
8. Companies that make this election are required to make a special estimated tax payment equal to the
tax benefit attributable to the deduction. Amounts added to the special loss discount account are
automatically subtracted from the account and made subject to tax if they have not already been
subtracted after 15 years.
9. Tax rules for insurance companies enacted in 1959 included a rule that half of a life insurer’s operating
income was taxed only when the company distributed it, and a PSA kept track of untaxed income. In
1984, this deferral of taxable income was repealed, although existing policyholders’ surplus account
balances remained untaxed until they were distributed. Legislation enacted in 2004 provided a two-year
holiday that permitted tax-free distributions of these balances during 2005 and 2006.
Individual Brackets
Single
2018 Ordinary Rates 2018 Capital Gains Rates
Bracket Previous Tax Law* New Tax Law*^ Previous Tax Law* New Tax Law*^
$0–$9,525 10% 10% 0% 0%
9,526–38,600 15% 12% 0% 0%
38,601–38,700 15% 12% 0% 15%
38,701–82,500 25% 22% 15% 15%
82,501–93,700 25% 24% 15% 15%
93,701–157,500 28% 24% 15% 15%
157,501–195,450 28% 32% 15% 15%
195,451–200,000 33% 32% 15% 15%
200,001–424,950 33% 35% 15% 15%
424,951–425,800 35% 35% 15% 15%
425,801–426,700 35% 35% 15% 20%
426,701–500,000 39.6% 35% 20% 20%
More than 500,000 39.6% 37% 20% 20%
Head of Household
$0–$13,600 10% 10% 0% 0%
13,601–51,700 15% 12% 0% 0%
51,701–51,800 15% 12% 0% 15%
51,801–51,850 15% 22% 0% 15%
51,851–67,500 25% 22% 15% 15%
67,501–82,500 25% 22% 15% 15%
82,501–133,850 25% 24% 15% 15%
133,851–157,500 28% 24% 15% 15%
157,501–200,000 28% 32% 15% 15%
200,001–216,700 28% 35% 15% 15%
216,701–424,950 33% 35% 15% 15%
424,951–452,400 35% 35% 15% 15%
452,401–453,350 35% 35% 15% 20%
453,351–500,000 39.6% 35% 15% 20%
More than 500,000 39.6% 37% 20% 20%
Married Filing Separately

$0–$9,525 10% 10% 0% 0%
9,526–38,600 15% 12% 0% 0%
38,601–38,700 15% 12% 0% 15%
38,701–45,000 25% 22% 15% 15%
45,001–70,000 25% 22% 15% 15%
70,001–78,075 25% 22% 15% 15%
78,076–82,500 28% 22% 15% 15%
82,501–118,975 28% 24% 15% 15%
118,976–157,500 33% 24% 15% 15%
157,501–200,000 33% 32% 15% 15%
200,001–212,475 33% 35% 15% 15%
212,476–240,025 35% 35% 15% 15%
240,026–300,000 39.6% 35% 20% 15%
More than 300,000 39.6% 37% 20% 20%
Married Filing Jointly

$0–$19,050 10% 10% 0% 0%
19,051–77,200 15% 12% 0% 0%
77,201–77,400 15% 12% 0% 15%
77,401–156,150 25% 22% 15% 15%
156,151 – 165,000 28% 22% 15% 15%
165,001–237,950 28% 24% 15% 15%
237,951–315,000 33% 24% 15% 15%
315,001–400,000 33% 32% 15% 15%
400,001–424,950 33% 35% 15% 15%
424,951–479,000 35% 35% 15% 15%
479,001–480,050 35% 35% 15% 20%
480,051–600,000 39.6% 35% 20% 20%
More than 600,000 39.6% 37% 20% 20%
* Plus 3.8 percent net investment income tax on unearned income when modified adjusted gross
income exceeds $200,000 for single filers ($250,000 MFJ). Bracket income levels would be inflation
adjusted based on a chained measurement of the Consumer Price Index.
^ Expires after December 31, 2025.
Transfer Provisions
40 percent tax rate with $5.6 million 40 percent rate with inflation adjusted
Estate tax basic exclusion amount per taxpayer $10 million basic exclusion amount
(1)
per taxpayer^(1)
40 percent rate with $5.6 million 40 percent rate with basic exclusion
Gift tax basic exclusion amount per taxpayer amount per person(1); $15,000 annual
(1)
; $15,000 annual exclusion(2) exclusion retained^(2)
40 percent rate with $5.6 million

40 percent rate with basic exclusion
Generation-skipping transfer tax basic exclusion amount per taxpayer
(1) amount per taxpayer^(1)
^ Expires after December 31, 2025, except amounts would continue to be indexed for inflation using
chained measurement of the consumer price index where applicable.
1. Basic exclusion amount adjusted for inflation annually.

2. Annual exclusion amount adjusted for inflation annually.
Exempt Organizations Provisions

21 percent execise tax on

compensation exceeding $1 million
Tax-exempt organization executive paid to five highest-paid employees;
Not addressed
compensation remuneration of a covered employee
that isn't deductible under the $1
million limitation isn't considered
Exempt Organizations – Unrelated Business Income Tax
Organization operating multiple

unrelated business activities may not
offset losses of one activity against
Unrelated business income (UBI) Subject to UBI tax
income of another; UBI increased by
amount of certain fringe benefits for
which deduction is disallowed
Exempt Organizations – Excise Taxes
Two-tier excise tax rate system (2

percent on net investment income;
Excise tax on private foundations No change
reduced to 1 percent in certain
cases)
Excise tax on private colleges & 1.4 percent on net investment

Not addressed
universities income(1)
1. Applies to institutions with 500 or more tuition-paying students and assets with a value of at least
$500,000 per full-time student, not including those used directly in carrying out the institution’s
educational purpose. Assets and related net investment income of related organizations would be
treated as part of the private college or university. Only applies to institutions with more than 50
percent of their tutition-paying students located within the United States.

2018 Tax Reform Chart

Загружено:

Сведения о документе

Исходное описание:

Авторское право

Доступные форматы

Поделиться этим документом

Поделиться или встроить документ

Параметры публикации

Этот документ был вам полезен?

Это неприемлемый материал?

Авторское право:

Доступные форматы

2018 Tax Reform Chart

Загружено:

Авторское право:

Доступные форматы

Print Tax Reform Resources Page 1 of 24

Flat rate of 21 percent (effective

Repealed; AMT credits refundable

Personal service corporations Flat rate of 35 percent Flat rate of 21 percent

70 & 80 percent deduction for any Deduction amounts reduced to 50 &

Deduction of 20 percent of domestic

100 percent through 2022 for

Seven-year recovery period for

Maintains previous law recovery

Deductible by materially participating Expands deductibility to cover third

Small Business Reforms

Up to $520,000; phaseout beginning Up to $1 million; phaseout beginning

Allowed for C corporations that do

Required use of percentage-of-

Distributions from an eligible

Reform of Business-Related Exclusions, Deductions, etc.

Deduction limited to business interest

Deduction limited to 80 percent of

Deferral of gain permitted on like-

Contributions to capital do not Expands previous law to also

Deduction allowed for expenses

Deduction limited to 50 percent of No deduction for amounts paid or

Defined as an item of tangible

Deduction limited for taxpayers with

Tax-free rollover of publicly traded

Property held by taxpayer generally Self-created patents, inventions,

Partnership treated as terminated if,

Capital gains rate after one-year

Tax credit available to businesses

Taxpayers may defer recognition of

Deduction allowed for payments

No deduction for settlement, payout

Reform of Business Credits

50 percent business tax credit for

20 percent credit for qualified 20 percent credit for qualified

Nonrefundable tax credit for 40

Deduction allowed for unused

Tax credit available to eligible

Taxation of private activity bond

Taxation of governmental advance

Provide tax credits to investors in lieu Prospectively repeals ability to issue

Interest on bonds used to finance

Deductible compensation for publicly

21 percent excise tax on

Allows qualified employees(16) to elect

15 percent excise tax imposed on

Taxable gain determined according

Expands definition to include

Basis limitation on partner losses Basis limitation on partner losses is

Taxpayers may use either a first-in,

Individuals, estates & certain Expands list of qualified beneficiaries

Aging period not considered

$18 per barrel; $16 per barrel for first

Tax-free to transferor even if

$1.07 per wine gallon for alcohol

$2.70 per proof gallon on first

Distillers may transfer spirits in

Native corporations may assign

Excise tax imposed on amounts paid Exempts certain payments related to

Tax credit available to owners of

International Tax Provisions

Taxation on profits generated by

Worldwide income tax based on Territorial system with base erosion