Tax Reform 2018: How Different Types of Taxpayers Will Be Impacted

March 2018 – As this year’s tax day approaches, many people will already be looking ahead to next year when the new tax law will be in effect. They’ll all be asking one simple question: “Will I have to pay more taxes?” Unfortunately, the answer is, “it depends.” There’s been a lot of speculation and confusion about the impacts of the most recent reform.

But here are three particularly important takeaways about the law to consider:

  • The new law caps state and local tax (SALT) deductions at $10,000 and eliminates miscellaneous itemized deductions. This will negatively impact some high net worth taxpayers, but may be offset by the up-to 20 percent deduction on pass-through income and the lower top tax bracket of 37 percent.
  • The capital gains tax rate is unchanged under the reformed tax code.
  • Changes to how the alternative minimum tax (AMT) is calculated means more taxpayers avoid paying it. The exemption was increased to 30 percent but, moreover, the income threshold where the exemption begins to be phased out was raised six-fold to $1 million for married taxpayers. Taxpayers still get taxed the greater of the AMT or regular income tax.

With these insights in mind, let’s take a closer look at how the specifics of the tax reform will impact a few different types of taxpayers. All the individuals described are fictional, but they are representative of potentially real scenarios.

Trust Beneficiaries
Unretired Company Executive
Company Shareholder
Family Business Owner
Family Business Employees


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Pitcairn is a true family office and leader in helping families navigate the challenges and opportunities created by the interplay of family and financial dynamics. Through Wealth Momentum®, an experience-based family office model, Pitcairn helps families achieve a more effective and complete experience. Since its inception, Pitcairn has partnered with some of the world’s wealthiest families to meet their needs and drive better outcomes – year to year, decade to decade, generation to generation. Today, Pitcairn is recognized as an innovator, guiding families through generational transitions and redefining the industry standard for family offices. The firm is located in Philadelphia, with offices in New York and Washington, DC and a network of resources around the world.