AUSN

WINTER 2018

Navy magazine is distributed on Capitol Hill,the Pentagon and naval bases around the world. It provides information that impacts Sailors, their families and the Navy. Navy is published quarterly by the Association of the United States Navy (AUSN).

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38 Navy | Winter 2018 YOUR MONEY ISTOCKPHOTO O n Dec. 22, President Donald J. Trump signed into law the Tax Cuts and Jobs Act of 2017, which was passed by Congress on Dec. 20. e act took effect on Jan. 1 and will make important changes to existing tax laws and impact you. Estate, Gi and Generation-Skipping Tax Exemption: e act doubles the individual federal estate, gi and generation-skipping tax exemptions from $5 million, adjusted for inflation ($5.49 million in 2017), to $10 million, adjusted for inflation ($11.0 million in 2017). e act also maintains the basis step-up of inherited assets to their fair market value at death. Income Taxation of Individuals: e act maintains seven income tax brackets, but lowers the income tax rates to 10, 12, 22, 24, 32, 35 and 37 percent from 10, 15, 25, 28, 33, 35 and 39.6 percent. e act also decreases the income threshold to $600,000 for married taxpayers filing jointly and $500,000 for single filers. e new individual tax rates will sunset on Dec. 31, 2025. For comparative purposes, under 2017 federal income tax brackets and rates, a single taxpayer with $40,000 of taxable income would be in the 25 percent tax bracket and would have a tax liability of $5,739. Under the new 2018 tax brackets and rates, a single taxpayer with $40,000 of taxable income would be in the 22 percent tax bracket and would have a tax liability of $4,740. Alternative Minimum Tax: e act also increases the individual exclusions and phase-out thresholds for the individual alternative minimum tax to $1 million for couples and $500,000 for single taxpayers, but does not eliminate the alternative minimum tax. Income Taxation of Trusts and Estates: Income in excess of $12,500 will be subject to the 37 percent income tax bracket. Deductions Standard Deduction: e standard deduction for single and married taxpayers filing separately is The 2017 Tax Cuts and Jobs Act: What You Need to Know By LCDR Marc J. Soss, SC, USN TAX REFORM

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