The proposed 2017 tax bill keeps charitable deductions and includes several other measures business owners and nonprofits should pay close attention to. While not yet approved, draft language in the 2017 Jobs & Tax Act includes a number of measures designed to stimulate the economy, save middle class families money and ensure non-profits continue to benefit from American generosity.
Of note, the 2017 tax act:
- Keeps the highly popular 401(k) savings plan program, allowing individuals and families to deduct pre-tax income for retirement savings.
- The proposal doubles the standard deduction.
- Keeps charitable deductions for qualified non-profit gifts.
- Increases the Child tax credit to $1600.
- Reduces the number of tax brackets to four capping individual taxes at 39.5% for the wealthiest Americans and reducing the remaining three tax brackets.
- Simplifies the income tax reporting process, such that most Americans will require little more than a post card to complete their annual return.
- Maintains mortgage deductions on houses up to $1 million.
The tax act remains controversial however as it eliminates the State income tax deduction viewed as critical by big spending states like Illinois, New York and California. Without the ability to deduct State income tax, these states will face pressure from constituents to re-evaluate government spending.