As I mentioned earlier this week, the 401(k) deduction limits were left unchanged in the House GOP tax reform legislation that was finally released yesterday. There are MANY details to the plan and the final product will likely look different after public input and reconciliation negotiations, but here are a few highlights .
1. The Highest Marginal Rate Will Be 45.6% on SOME Income over $1,000,000.
2. Capital Gains Tax Unchanged but Still Tied to Old Tax Brackets
3. Standard Deductions Goes Up, Many Itemized Deductions Repealed, Phase Outs for Itemized Deductions Repealed.
4. Plug-In Electric Drive Motor Vehicle Credit Repealed (no more $7,500 subsidy for your Tesla).
5. Home Equity Loans No Longer Deductible.
6. Capital Gains Tax Exclusion On Primary Residence Phased Out.
7. 529 Plans Can Be Used For High School and Elementary School.
8. Estate Tax Repealed in 2024, but Capital Gain Step-up at Death Remains.
See more detail on these points and more at Michael Kitces at Nerd’s Eye View