How Trump's Tax Plan Could Affect Doctors

Karen Riccio

Disclosures

November 10, 2017

In This Article

The Senate-Proposed Tax Bill

The Senate bill would also propose several changes, but they differ from those of the House bill. 

Key Elements of the Senate Bill

Senate Republicans released their version of the Tax Cuts and Jobs Act (TCJA) on November 9. The legislation also contains some substantial departures from the House's tax bill.

The number of individual tax brackets remains at seven. This is the same number of brackets as the current code but the income that qualifies for each one bracket will change to: 10%, 12%, 22.5%, 25%, 32.5%, 35%, and 38.5% under the new bill.

SALT deductions are eliminated. The bill eliminates the SALT deduction. By contrast, the House's bill allows up to $10,000 in property tax deductions but no state sales or income deduction.

"Most of the other differences relate to tax rates or credits that would have minimal impact on physicians," said Judith N. Aburmishan, MBA, CPA, CHBC, healthcare consultant from Bannockburn, Illinois.

The mortgage interest deduction remains. The bill keeps the cap for the deduction at $1 million, as opposed to the House bill, which would cut it to $500,000. While this primarily is helpful to builders and realtors, it could also be useful for physicians who have large houses and took large mortgages.

Eliminates the House bill's extra tax on very high earners. The House bill included a provision that would add a 6% surcharge for income between $1 and $1.2 million. The Senate bill does not include any such provision. There are high-earning specialists and two-physician families that could fall under this category.

Obamacare's individual mandate is not repealed. This means that individuals will still be required to get insurance coverage or be penalized.

The reality is more complicated and specifics have yet to unfold.

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