New Tax Bill, Provisions You Haven’t Heard About

The new tax bill is just about 1100 pages long, and many of its provisions are very particular to certain situations, such as residents of high tax states, those subject to AMT, and so forth. For specific questions about your tax situation and the bill’s new provisions, be sure to talk to your accountant. That said, here are some little known provisions that will affect investors:

  1. The exemption from AMT taxation was hiked, to take account for the fact that inflation has caused more folks to fall into the AMT trap.
  2. Estates can now be nearly twice as large before paying tax, up to $10 million, with another hike due to inflation to over $11 million expected in 2018.
  3. Phase out of the subsidy for purchasing an electric car. This one is complicated. It is geared to each manufacturer’s production. Once a car maker has constructed its 200,000th electric car, the $7500 subsidy associated with buying that maker’s EVs begins to decline. So Tesla’s subsidies will run out relatively quickly, while makers who have barely made one car will take months if not years to run out their subsidies.
  4. No more deduction for home equity line of credit interest.
  5. Private purpose municipal bonds, earlier on the chopping block, were preserved, so these can still be offered to muni investors. That is important for maintaining supply in this market.
  6. Section 529 college savings plans can now be used for elementary and secondary school education, not just for college. This vastly improves these accounts’ usability.

Per above, any questions about the bill and its effect on your particular tax situation, we suggest a quick call to your accountant.