The 1,101-page Tax Cuts and Jobs Act was signed into law Dec. 22 by President Donald Trump and has been touted by politicians as the most significant tax code change in decades. The bill passed in the House of Representatives by a vote of 224–201 and in the Senate by a vote of 51–49 with no Democratic support in either chamber. Bill sponsor and Houston-area U.S. Rep. Kevin Brady, R-The Woodlands, serves as chairman of the House Committee on Ways and Means. Brady said in a statement the measure would be a boost to the economy. “This legislation will deliver real relief to hardworking families in my district and across the country who will be able to keep more of the money they earn,” he said. How much relief the bill brings depends on various factors, including what people earn, how many children they have, and whether they use certain deductions, according to the law.

Standard deductions increase

About 70 percent of taxpayers use the standard deductions, meaning they do not itemize their tax deductions. But with the changes, that is expected to reach 94 percent, according to the Joint Explanatory Statement of the Committee of Conference. Standard deductions change year to year due to inflation and in 2018, each group of taxpayers saw an increase. The standard deduction is higher for taxpayers age 65 or older, or blind, and lower for those who can be claimed as a dependent, according to the IRS. This plus new tax rates for all filers means most people are affected in some way, said April Davis, senior accountant at KenWood & Associates Certified Public Accountants firm in Sugar Land. “It affects everybody,” Davis said. “It’s really the most comprehensive piece of tax legislation that’s passed during my professional career.” Companies that operate as pass-throughs are the most common form of business, according to TaxFoundation.org, an independent organization that researches tax policies. Until Jan. 1, 2026, individuals can also now deduct 20 percent of qualified business income from a partnership, S corporation, or sole proprietorship, as well as 20 percent of several types of dividends and qualified publicly traded partnership income, according to the new law.

Property tax Possibilities

One notable change was the new state and local property tax deduction cap—$10,000 or $5,000 for married couples filing separately, according to the law. Davis noted that most KenWood clients should experience positive saving trends as a result of the new law. “There’s the decrease in tax rates, which I think everybody is really excited about,” Davis said. “Seeing some projections for some of our clients we’re really seeing they’re going to see tax savings going forward.” Big families might see a bonus with child tax credit increasing from $1,000 to $2,000 per child under 16 years old, according to the new law. The credit was expanded to those with income up to $400,000 annually, depending on their filing status. “Some personal exemptions are going away, so I’m interested to see how that affects people maybe with lower incomes and multiple children,” Davis said.