Tax Law Changes

Pursuant to the Act, the child tax credit is increased to $2,000 per eligible child for 2018 through 2025.

The income level at which the credit phase-out begins is increased to $400,000 for taxpayers filing married filing jointly and $200,000 for all others. The credit continues to phase out at a rate of $50 for every $1,000 that AGI exceeds the threshold amounts.

The refundability of the credit was also modified so that the earned income threshold is reduced to $2,500.
No child tax credit will be allowed unless the taxpayer provides the child’s Social Security Number.
The Act creates a new non-refundable $500 credit for each dependent (using the definition that exists currently) other than a qualifying child.

Under pre-Act provisions, a taxpayer could claim a child tax credit of up to $1,000 per qualifying child under the age of 17. This amount would be phased out by $50 for every $1,000 that the taxpayer’s AGI exceeded certain threshold amounts.

The maximum amount of Social Security tax a taxpayer will pay increased from $7,347 in 2016 to $7,883.40 in 2017, an increase of $539.40.

The maximum monthly Social Security benefit a worker can receive at full retirement age is $2,687, which is an increase from the 2016 amount of $2,639.

The maximum earnings a person can earn in the year they reach their full retirement age is $44,880, an increase from the 2016 amount of $41,880.
One dollar in benefits will be withheld for every $3 in earnings above the limit.

The SSA announced that Social Security beneficiaries will get a 0.3% increase in benefits in 2017 after getting no increase in 2016. The average retiree will receive an increase of $5 a month.

The maximum amount of wages in 2017 subject to the 6.2% Social Security tax will rise from $118,500 to $127,200, an increase of more than 7%.
There is no limit on the amount of wages subject to the medicare tax at a rate of 1.45%

Various energy tax provisions extended through 2014 include: The credit for energy-efficient new homes;
The incentives for biodiesel and renewable diesel;
The credit for nonbusiness energy property;
The credit for alternative fuel vehicle refueling property;
The second-generation biofuel producer credit;
The production credit for Indian coal facilities placed in service before 2009;
The credits with respect to facilities producing energy from certain renewable resources;
The special allowance for second-generation biofuel plant property;
The deduction for energy-efficient commercial buildings;
The special rule for sales or dispositions to implement Federal Energy Regulatory Commission or state electric restructuring policy for qualified electric utilities;
The excise tax credits relating to certain fuels.

Business tax incentives extended through 2014 include: The increased expensing limitations and treatment of certain real property as Sec. 179 property;
The provision allowing 15-year straight-line cost recovery for qualified leasehold improvements, qualified restaurant buildings and improvements, and qualified retail improvements;
The bonus first-year depreciation (for certain property with longer production periods, the property must be placed in service before Jan. 1, 2016);
The exclusion of 100% of gain on certain small business stock;
The allowance for basis adjustments to stock of S corporations making charitable contributions of property;
The reduction in S corporation recognition period for built-in gains tax;
The work opportunity tax credit;
The Research & Development credit;
The temporary minimum low-income housing tax credit rate for non-federally subsidized buildings;
The empowerment zone tax incentives;
The military housing allowance exclusion for determining whether a tenant in certain counties qualifies as low-income under the Housing Assistance Tax Act of 2008,
The Indian employment tax credit;
The new markets tax credit (and carryovers of the unused limitation are extended through 2019);
The railroad track maintenance credit;
The mine rescue team training credit;
The employer wage credit for employees who are active duty members of the uniformed services;
The provision classifying certain race horses as three-year property;
The provision allowing a seven-year recovery period for motorsports entertainment complexes;
The provision allowing accelerated depreciation for business property on an Indian reservation;
The election to accelerate the alternative minimum tax credit in lieu of bonus depreciation (and special rules were added for round 4 extension property);
The enhanced charitable deduction for contributions of food inventory;
The election to expense mine safety equipment;
The special expensing rules for certain film and television productions;
The deduction allowable with respect to income attributable to domestic production activities in Puerto Rico;
The modification of tax treatment of certain payments to controlling exempt organizations;
The treatment of certain dividends of regulated investment companies (RICs);
The treatment of RICs as qualified investment entities under the Foreign Investment in Real Property Tax Act,
The subpart F exception for active financing income;
The look-through treatment of payments between related controlled foreign corporations under foreign personal holding company rules;
The temporary increase in the limit on cover over of rum excise taxes to Puerto Rico and the Virgin Islands;
The American Samoa economic development credit under the Tax Relief and Health Care Act of 2006.

Tax incentives for individuals that are extended through 2014 include: The deduction for certain expenses of elementary and secondary school teachers;
The above-the-line deduction for qualified tuition and related expenses;
The treatment of mortgage insurance premiums as qualified residence interest;
The exclusion from gross income of discharge of qualified principal residence indebtedness;
The provision providing parity between employer-provided mass transit and parking benefits;
The deduction for state and local general sales taxes;
The special rule for contributions of capital gain real property made for conservation purposes;
The provision allowing tax-free distributions from individual retirement plans for charitable purposes.