Market volatility & changes from the new tax bill
D. Ryan Thompson CPA

This year, there has been one constant in the market… volatility. 2017 was one of the least volatile years in the last century, with only 4 trading days having more than a 1.5% downward move. We do not expect the recent extreme volatility, 1,000 point moves up and down, to persist, but relative to 2017, we anticipate that volatility will remain a fairly consistent part of the movements in the market on a day to day basis. The key is to remain focused on the long-term prospects of the underlying businesses we own. Tweets and headlines don’t change the nature of how companies like Delta and Alphabet operate on a day to day basis and should be largely ignored when analyzing the growth prospects of these company’s underlying businesses over the next three-to-five years.

As many of you are probably in the process of preparing your 2017 tax return, we thought this to be a good time to outline a few of the changes you can expect to see around this time next year, when filing 2018’s taxes:

1. New Tax Brackets – Both the rate and width of each tax bracket for tax years beginning after December 31, 2017 have been changed drastically. Highest bracket dropped for 39.6% to 37% and now begins at $600,000 of taxable income instead of $470,700 for those that file Married Filing Joint

2. Loss of Exemptions – the new tax law has eliminated the individual exemption when arriving at taxable income.

3. Hard cap on State and Local Income Tax (SALT) – There is a new $10,000 hard cap on the deduction of SALT, which includes<

4. Elimination of Misc Expense deduction – Deductions subject to 2% AGI floor have been eliminated.

5. Removal of Individual Insurance Mandate – Starting in 2019, the penalty affiliated with not having minimum essential coverage has been removed.

If you have further questions regarding how the tax law changes may impact your specific situation, please don’t hesitate to reach out to us.