2018Issue1_Alabama_v2.indd

INSIDE THE BELTWAY

H ow T o b e a w i n n e r w i t h t h e n ew ta x l aw

JENNIFER HATCHER SENIOR VICE PRESIDENT GOVERNMENT AND PUBLIC AFFAIRS FOOD MARKETING INSTITUTE

deduction – a big win for second and third generation companies, secured with the help of key FMI members. After this deduction is taken, additional income tax is paid at the individual rates. The 20 percent deduction should create the equivalent of a top marginal rate of 29.6 percent. This goes into effect in 2018 and expires at the end of 2025 unless extended or made permanent prior to that time. The bill nearly doubles the standard deduction to $12,000 for a single filer and $24,000 for a joint filer (up from $6,350/$12,700). This will hopefully be a boost to associates and customers. The individual AMT remains in place but the exemption is increased to $109,400 for married filers and $70,300 for all other taxpayers. The phase-out threshold is increased to $1 million for married filers and $500,000 for other taxpayers, but expires at the end of 2025 and reverts to current law unless extended. The current system of state and local tax deductions is replaced with a new “hybrid” approach. Filers will be able to take up to a combined $10,000 deduction for state and local taxes, sales taxes and/or property taxes. Unfortunately, the estate tax was not

in every bill, there are winners and losers. fmi worked hard to try to secure as many wins for the grocery industry as possible with the new twax law and there are quite a few"

Below are some highlights and wins of particular interest to the supermarket industry: • The use of LIFO (last in first out accounting) is preserved with no changes.

In December, Congress passed the most significant overhaul of the U.S. tax code in 30 years, delivering a landmark legislative victory to President Trump and Republicans. The bill provides for a number of wins for the grocery industry. Some of the highlights are listed below. It is important to note you should work with your accountants and tax professionals to make sure you are able to utilize the provisions of the law could apply to your business and associates. Also, if you run across issues that you think could be addressed in a technical corrections bill, forward them to the Food Marketing Institute. As quickly as this bill moved through the legislative process, there are likely to be errors or mistakes that will need to be corrected this year.

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There is no BAT (border adjusted tax). The tax rate for “C” corporations is set at a flat 21 percent, down from 35 percent, goes into effect in 2018 and is permanent. The corporate alternative minimum tax (AMT) is permanently repealed. A 20 percent deduction for qualified business income is established for pass-through businesses. Pass-through businesses operating through estates or trusts are eligible for the 20 percent

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“The bill nearly doubles the standard deduction to $12,000 for a single filer and $24,000 for a joint filer.”

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| ALABAMA GROCER 16