The Tax Cuts and Jobs Act might reduce taxes about $1,600 on average in 2018, with the biggest benefit going to households making $308,000 to $733,000, according to a new analysis by the Tax Policy Center.

The households in the top 1 percent of income—those who will make about $733,000 and up—would get an average tax cut of roughly $50,000, according to the analysis. Those in the top 0.1 percent, who will make $3.4 million or more next year, would get an average tax cut of about $190,000.

“The Tax Policy Institute is probably correct in their analysis that the greatest dollar amount of savings go to the highest income individuals. And this analysis also appears to confirm that the largest percentage savings go to HNW individuals,” said Nicholas Lascari, a CPA and partner at Gordon J. Maier & Company in Brookfield, Wis. “The analysis seems to match what we have heard about tax reform, but with some caveats.”

Your HNW clients will encounter both new benefits and new limitations under reform. For instance, Lascari said, the above analysis only looks at taxable income without considering itemized deductions, personal exemptions and other offsets. “Those with families under $110,000 of income will see a doubling of the child credit,” he said. “The earned income credit rules are unchanged, and those alone have a significant benefit to low-income individuals with dependents.”

Jim Erickson, a CPA/PFS in Bellevue, Wash., represents “middle-America” businesses and their owners, typically with taxable income of $150,000 to $420,000. “I see ... a mixed bag of tax wins and losses for my clients,” Erickson said. “The 20 percent tax deduction for some pass-through entities is a big win if the owner qualifies. The same people will lose their large itemized deductions and exemptions.”

Many of your HNW clients will see limitations on their itemized deductions because they have much more than $10,000 of state and local taxes paid. They also may have significant expenses for financial advisors, accountants, tax preparers and money managers that will no longer be deductible.

“The new 20 percent deduction for pass-through income can be some advantage to those who have ownership interests in S corporations and partnerships not otherwise excluded," Lascari said. "We’re still unraveling some of the provisions, and the extensive and substantive planning will probably occur over the summer.”

“The pass-through deduction can be substantial,” added Richard J. Beason, a CPA practicing in Roanoke, Va., and Hilton Head, S.C. “The original bills coming out of the House and Senate actually raised taxes on upper-middle-income taxpayers. Some of the [subsequent] changes ... helped give these folks a small break.”

Wealthy clients will have to look at their complete tax picture. In states such as Virginia that base taxes on the federal return, for example, “what the federal government gives you may get taken away if state law isn’t changed,” Beason said. “Virginia requires the taxpayer to take their standard deduction if they use the federal standard deduction. If you had itemized deductions of $24,000 in the past but now take the federal standard deduction, you’ll have to pay state tax using the state standard deduction.”

The analysis also showed that middle-income taxpayers would pay about $900 less than under current law, while the lowest income households would get an even more modest tax cut compared with current law. “I suspect 40 percent of my middle-America clients will see higher 2018 taxes. My HNW and highincome ($1 million to $8 million) clients will see a tax refund,” Erickson said.

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