What the Tax Cuts & Jobs Act?

The Tax Cuts and Jobs Act of 2017 is the largest tax overhaul since the Tax Reform Act of 1986. Everyone in the financial services industry is talking about how this sweeping legislation impacts clients. Strategic advisors will be able to capitalize on this enormous opportunityRemember:

  • Personal exemptions and phase-out eliminated
  • Increased standard deductions
  • Increased child tax credit
  • Medical and dental expenses deductible above 7.5 percent of the filer(s) adjusted gross income (AGI) for 2017 and 2018, then 10 percent
  • For tax year 2018 through 2025 miscellaneous itemized deductions are suspended
  • 20 percent deduction for pass-through income
  • Pass-through deduction phase-out for specified trades or businesses: $315,000 married, $157,500 single

Download our free Quick Reference Guide when you take a trial of Tax Clarity® for a summary of the changes that are most important to advisors serving mass-affluent clients. 

Impact on advisors

The Tax Cuts and Jobs Act provides both opportunities and risks for advisors.


Because the Tax Cuts and Jobs Act was so widely publicized, many Americans are asking how the legislation will impact them. Demonstrate for your clients and their CPAs exactly where there may be missed opportunities to make changes to withdrawal strategies, small or large, that could impact the total amount of taxes paid, and thus the total wealth of the client. Tax Clarity® can help you clearly and accurately calculate some of the changes introduced by the new legislation including:

  • Self-Employment Tax — Demonstrate the impact of paying both the employee and the employer's share of Social Security and Medicare taxes for self-employed clients.
  • Pass-Through Deduction — Show the impact of the deduction for pass-through income and the phase-out of the deduction for specified service businesses under the Tax Cuts and Jobs Act.
  • Dependent Tax Credit — Demonstrate the impact of the revised child tax credit, including dependents over age 16.
  • Saver's Credit — Show the impact of the saver's credit, which is particularly relevant for semi-retired individuals who have choices on which accounts to draw from in order to supplement part-time work.


Your clients may push you to provide tax advice. There are tax-related competencies that are at the heart of what advisers do, but that does not mean providing advice that will serve as the basis for clients’ specific tax-related decisions, and advisors need to be clear. Advisors, in general, are not authorized to represent clients in front of the Internal Revenue Service (IRS), which means by definition, the advice they give must not be tax advice. Therefore, it's important know when to refer the client to a CPA, enrolled agent or an attorney. The following tips can help you navigate a potentially risky situation:

  1. Use the phrase, "This is not tax advice."
  2. Bring in a tax professional to deliver actual tax advice when necessary. 
  3. Take advantage of tax-alpha opportunities.
  4. Consider miscellaneous items that could affect your clients.

To mitigate the risk, build referral relationships with tax professionals. Use our free CPA introduction letter template to get the conversation started. 

For your clients

How does the Tax Cuts and Jobs Act impact clients?

The Tax Cuts and Jobs Act impacts clients in different ways. Those who will be impacted the most include: clients with children, small business owners, semi-retired individuals and self-employed clients. In addition, fewer than 15 percent of people are expected to itemize now, compared to the roughly 30 percent who itemized deductions before the legislation passed. The legislation was expansive; here are some of the biggest changes:

  • Most tax bracket rates are reduced. 
  • The standard deduction was significantly increased, impacting not just ordinary income, but also the taxation of Social Security benefits and the impact of the zero percent capital gains bracket. 
  • Significant revisions to how taxes for people with dependents are calculated. The Tax Cuts and Jobs Act eliminated personal exemptions and instead created a tax credit for both child dependents and non-child dependents.
  • The 20 percent deduction for qualified business income on pass-through entities will provide substantial savings for clients. Clients with a business well under the threshold for the phase out could have opportunities to stack Roth conversions or IRA withdrawals on top of their self-employment income, and pay a rate that is considerably lower than expected.
  • For every dollar that an individual contributes to a qualified plan or IRA below the first threshold of the saver’s tax credit, they will receive a tax credit for 50 cents.

Industry impact

What is the impact on the industry?

The 2017 Tax Cuts and Jobs Act has created new opportunities for financial advisors and certified public accountants. Advisors should not ignore the impact that anticipated taxes or potential changes in various tax rates will have on client investing and retirement income decisions moving forward. In fact, routine financial planning work generally must consider a broad set of tax issues and how these relate to the advice that is being given.


  • Anytime you're talking about structuring income sources and the interplay of taxation, the interactions can become complicated very quickly.
  • Most advisors should not offer tax advice. Bring in a tax professional to deliver actual tax advice when necessary.
  • Financial software like Tax Claritycan help you quickly identify client opportunities and create opportunities for development of center of influence relationships with CPAs and enrolled agents.
  • CPAs and enrolled agents will be inundated with requests related to the new qualified business income rules. Ensuring that they understand your capability related to employee and retiree tax-related consulting positions you as a value to their business. 

Looking for additional help on how to provide tax-efficient retirement strategies for your clients? Try Tax Clarity for free. 

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Free White Paper

The Elephant and The Snowball: How Advisors Can and Should Talk Taxes With Clients

The topic of taxes is like the elephant in the room – many financial advisors know taxes have a significant impact on their clients, but due to uncertainty surrounding the scope of their duty to clients and the possibility of compliance issues for addressing taxes, they ignore or gloss over the topic of taxes. 

But clients are flooding their financial advisors with questions about how the Tax Cuts and Jobs Act will impact them. Be prepared to confidently address the topic and download our white paper now.