Tax Reform Legislation: Highlights.

On Nov. 2, the House Ways and Means Committee released draft tax reform legislation, Tax Cuts and Jobs Act (H.R. 1), which could potentially make the biggest changes to the tax code since 1986, including new tax rates, a lower limit on the deductibility of home mortgage interest, the repeal of most deductions for individuals and full expensing of depreciable assets by businesses. The following are some bill highlights:

* Reducing the number of individual income tax brackets from seven to four: 12 percent, 25 percent, 35 percent and 39.6 percent. Taxpayers with income greater than $500,000 and married taxpayers filing jointly with income greater than $1 million would enter the 39.6 percent rate. The standard deductions would increase to $12,200 for single taxpayers and $24,400 for married couples filing jointly.

* A repeal of many deductions, including alimony, medical expenses and tax preparation fees, as well as eliminates the deduction for state and local income or sales taxes, except in the case of taxes paid in carrying out a trade or business or producing income.

* A repeal of many credits, including those for adoption, plugin electric vehicles and individuals over age 65 and who are disabled. One notable exception is the child tax credit, which increases to $1,600 and is expanded.

* An increase in the child tax credit to $1,600.

* The mortgage interest deduction on existing mortgages would remain the same; for residences purchased after Nov. 2, 2017, the limit on deductibility would be reduced to $500,000 from the current $1.1 million.

* Estate taxes would be eliminated by 2023 (the step-up in basis for inherited property would remain), with the...