Congress is poised to pass a once in a lifetime tax bill today. The last time a tax bill of this size was passed was 1986 (The Tax Reform Act of 1986) and practitioners still refer to Title 26 of the United States Code as the 1986 tax code.

While the new 2017 tax bill goes to a vote today we practitioners still do not have a copy of the bill. We can’t pick over every pronoun and comma as lawyers, especially tax lawyers, like to do. I can however give you somewhat of a general overview of how this new bill may affect you.

Employees– If you earn a living as an employee you’ll likely see a reduction in your taxes since the standard deduction, which reduces taxable income, is doubling to $12,000 for single filers and $24,000 for married filing joint filers. Overall rates for earned income will be reduced slightly.

However, if you live in high state income tax states such as New York or California your tax saving may be wiped out by limitations on the state income tax deduction which will be capped at $10,000. This $10,000 cap will apply to either sales or income taxes, and property taxes. Mortgage interest will also be phaseout or capped.

Heirs – If you’re expecting a large inheritance you’ll be doing better off after this bill. While the Estate tax isn’t going anywhere it is increasing drastically, up to $11 million for individuals and $22 million for couples. If the portability rules are retained this will mean that very few estates will fall under the estate tax.

Businesses – Corporations are receiving a very large reduction in taxes. The corporate rate will go down to 21% form 35%. Also, the U.S. is adopting a “territorial tax system”, something the rest of the world has been doing for years, that drastically changes the way businesses are taxed overseas.

If you’re a sole-proprietor, Single Member LLC, or you’ve elected to be taxed as an S-Corporation you’ll likely be seeing a reduction as well. Taxes on pass-through entities, where the business income is taxed at the individual level and rates, are being reduced form 39.6% to below 30%. However, the bill does include “Anti-Abuse Rules” which are supposed to reduce tax advantages for high income pass-through businesses and singles out doctors and lawyers particularly but may affect other service based businesses as well.

If your business invests in capital equipment, everything from machinery to buildings to cars, you’ll be able to deduct more of that faster. Full expensing will be allowed for 5 years letting businesses write off the entire cost of newly purchased equipment that would in previous years require up to 29.6 years to deduct fully.

Businesses didn’t get all the breaks though. Interest deductions will be reduced to 30% of income which may have an effect on borrowing for expansion.

We’ll have more details available once this bill is passed and the actual text is made available to tax professionals.  Until then make sure you reach out to your tax professional and discuss your situation to maximize your planning opportunities. If you don’t have a tax professional feel free to reach out to me.