This is a big change. Itemized deductions might be limited to mortgage interest and charitable donations and might have a cap of $100,000 if you are single and $200,000 if you are married. The standard deduction may increase to $15,000 if you are single and $30,000 if you are married.
Under the proposed law, the reduction in taxable income for personal exemptions will be gone.
Tax will be simpler to compute, with only 3 brackets down from 7 and reducing the current maximum tax rate of 39.6% to 33%.
If you have an entry on this line, you can be pleased to know that the proposal calls for the elimination of the Alternative Minimum Tax (AMT).
We can’t tell if the new proposal will eliminate the Foreign tax credit (there is a change in the business taxes on foreign income), but keep an eye on your brokerage statements and be sure to use the credit.
The child care credit will likely be replaced with an above-the-line deduction for child and elder care, especially benefitting working families utilizing day care.
As with tuition expenses, take advantage of any college credits for yourself or dependent children. They may be eliminated.
No indications on this credit, but it may be eliminated and another good reason to fund your 401(k), especially if you are making under about $61,000 (married) or $30,500 (single).
Like line 49 above, this child tax credit will likely be eliminated and replaced with a deduction for child care expenses.
No word on the elimination of these, but credits are a direct reduction of tax. You can get a credit of 10% of the cost up to $500 on items such as high-efficiency furnaces, air conditioners, biomass stoves, heat pumps, boilers, fans, insulation, roofs, water heaters, windows, doors, and skylights for your principal residence. Solar systems are eligible for a 30% credit.
If the Affordable Care Act (Obamacare) is eliminated, there will not be a Health care tax.
The proposals call for the elimination of the 3.8% Net Investment Income Tax and the additional 0.9% Medicare tax on high-wage earners.
The Earned Income Credit may be enhanced under current proposals.