As I am sure you are aware, significant tax legislation was passed and signed into law at the end of 2017. Most of the changes take effect in 2018, except where noted.
These are changes that affect individuals. I will address changes for business owners in a separate post.
This is not meant to be a comprehensive list, but I’ve tried to highlight the changes that will affect most people. I hope you find this summary useful for your planning purposes.
As always, you should consult your tax advisor about your specific circumstances.
Standard Deductions – $12,000 for singles, $18,000 for head of household, $24,000 for joint filers.
Personal and Dependent Exemptions – No longer allowed.
Child Tax Credits – Increased to $2,000. Phase-out starts at: $200,000 single, $400,000 joint.
State and Local Taxes – Deduction limited to $10,000.
Medical Expenses – Limited to 7.5% of income regardless of age.
Mortgage Interest – Interest deductions limited to $750k for new mortgages. No home equity interest deduction.
Casualty Losses – Not allowed unless federal disaster area.
Miscellaneous Itemized Deductions – Not allowed. Includes: Investment Advisory Fees, Tax Prep Fees, Mileage and Home Office deductions for employees (not businesses).
Itemized Deductions – No longer reduced based on income.
Moving Expenses – Not allowed unless military.
Tuition Accounts (Sec 529) – Up to $10k per year for elementary and secondary school expenses.
Alimony – No deduction (or inclusion in income) for divorces AFTER 12/31/18.
Estate Tax – Exemption amount doubled.
Health Insurance Penalty – Repealed AFTER 2018. Still in effect for 2017 and 2018.
New Individual Tax Rates –
10% – taxable income up to $9,525, single, $19,050 joint
12% – taxable income up to $38,700 single, $77,400 joint
22% – taxable income up to $82,500 single, $165,000 joint
24% – taxable income up to $157,500 single, $315,000 joint
32% – taxable income up to $200,000 single, $400,000 joint
35% – taxable income up to $500,000 single, $600,000 joint
37% – taxable income over $500,000 single, $600,000 joint
New Capital Gains Rates –
0% up to $38,599 single, $77,199 joint
15% up to $425,799 single, $478,999 joint
20% at $425,800 single, $479,000 joint