A monumental change is coming!
The Tax Cuts and Jobs Act was signed by President Trump and became public law on December 22, 2017. The tax overhaul is the first of its kind in over three decades and has significantly reformed both individual and corporate income taxes. Most of the cuts are effective starting in 2018; the individual tax cuts generally expire in 2025 while the business tax cuts will remain permanent. This massive change to the tax code means CPAs must prepare to determine the effects on their clients’ finances and reassess their tax planning strategies accordingly.
According to the Balance Website:
[The tax plan] cuts the corporate tax rate from 35 percent to 21 percent beginning in 2018. The top individual tax rate will drop to 37 percent. It cuts income tax rates, doubles the standard deduction, and eliminates personal exemptions.
How does the new tax plan impact the CPA Exam?
Although it is highly unlikely that the AICPA will make big changes to content allocations or representative tasks on the Regulation Blueprint, the tax portion of the Regulation Exam will undergo comprehensive content changes to align with the new tax plan.
The following REG Content Allocation table in the AICPA blueprints, summarizes the content areas and the allocation of content currently tested on the Exam. Content areas that will be most affected by the tax plan will be Areas III, IV, and V.
|Area I||Ethics, Professional Responsibilities and Federal Tax Procedures||10–20%|
|Area II||Business Law||10–20%|
|Area III||Federal Taxation of Property Transactions||12–22%|
|Area IV||Federal Taxation of Individuals||15–25%|
|Area V||Federal Taxation of Entities||28–38%|
When can the tax plan be tested on the CPA Exam?
The AICPA announced today that the new Tax Cuts and Jobs Act will be eligible to be tested on the CPA Exam on January 1, 2019. According to the AICPA:
The Exam will continue to test candidates on the tax laws and regulations in effect before the enactment of the Tax Cuts and Jobs Act through the 2018 Q4 test window ending on December 10, 2018. The Exam’s Authoritative Literature will continue to include (through December 10, 2018) the Internal Revenue Code as published before the enactment of the Tax Cuts and Jobs Act. In accordance with existing policy, there will be a simultaneous introduction of content related to the Tax Cuts and Jobs Act and removal of content related to the previous tax law.
No provisions of the Tax Cuts and Jobs Act, including those retroactive to periods before December 31, 2017, will be eligible for testing until January 1, 2019.
Therefore, we highly recommend studying for and taking the REG exam in 2018 before the tax reform content changes are implemented.
Why should you sit for REG now and obtain your CPA credential sooner?
- Avoid having to relearn everything you learned in your tax classes by sitting for REG prior to December 10, 2018, before the changes go into effect.
- Individuals and corporations will be needing the help of CPAs more than ever to ensure tax compliance on tax returns and to make sense of the new policies.
- Accounting firms will be increasing staff to accommodate a growing client base.
How is Roger CPA Review helping students prepare for REG changes?
We’re always dedicated to ensuring our students have access to the most up-to-date and relevant materials no matter when they plan to sit for the CPA Exam. Our team continues to work vigorously to ensure all 2018 course materials are thoroughly updated with all 2018 CPA Exam changes, including ensuring Regulation course materials are aligned with the new tax bill. Plus, with our new SmartPath Predictive Technology™, you’ll have all the data you need to pass REG faster and more efficiently.