Tax Cuts & Jobs Act of 2017

On December 22, 2017, President Trump signed the Tax Cuts & Jobs Act of 2017 (TCJA). The highlights of the new tax bill are outlined below.
  • Click this link for the new tax brackets and rates effective for 2018-2025.

  • The standard deduction has increased to $12,000 for single and married filing separate filers, $18,000 for head-of-household filers and $24,000 for joint filers in 2018.

  • Personal exemptions ($4,050 per individual in 2017) have been repealed and will no longer be allowed effective in 2018.

  • The maximum amount that will be allowed as a deduction for local property taxes (real estate) and state income (or sales) taxes will be $10,000 per return for both single and joint filers. The limit will be $5,000 for married filing separate taxpayers. Previously there were no limitations unless AMT applied.

  • The amount of acquisition indebtedness for purposes of the mortgage interest deduction has decreased from $1 million to $750,000 for debt incurred after 12/14/2017. The mortgage interest deduction will be limited if your overall acquisition indebtedness exceeds $750,000 for homes purchased or refinanced after this date.

  • Interest from home equity lines of credit (HELOC) will no longer be deductible, regardless of the loan date, effective in 2018.

  • The deduction for all miscellaneous itemized deductions that are subject to the 2% AGI floor has been repealed effective in 2018. Therefore you will no longer be able to deduct unreimbursed employee business expenses, union dues, work uniforms, tax prep & legal fees, and investment management fees after 2017 as an itemized deduction.

  • The child tax credit is increasing to $2,000 per qualifying child under the age of 17, up from $1,000. There will also be a nonrefundable credit of $500 for qualifying dependents other than qualifying children. The income thresholds for when the credit begins to phase out have increased for joint filers to $400,000 and $200,000 for all other filers.

  • The individual shared responsibility payment with respect to health care coverage under the Affordable Care Act, aka "the health insurance penalty" will no longer be assessed effective in 2019. As of now, the penalty still applies for 2017 and 2018.

  • The deduction for alimony paid has been repealed and therefore the requirement to include alimony as income by the recipient has also been repealed effective for any divorce agreement, separation instrument, or modification executed after 12/31/2018. Alimony paid under an agreement prior to this date is generally grandfathered under the prior rules of income and expense recognition.

  • The deduction for moving expenses (meeting the 50 mile test) and the exclusion from income of qualified moving expense employer reimbursements has been repealed effective in 2018.

  • Distributions of up to $10,000/year per student from designated 529 plans can be used for tuition at a public, private or religious elementary or secondary school effective in 2018.

  • The taxability of net unearned income of a child will be simplified in 2018. Often referred to as the "kiddie tax," the ordinary and capital gains rates applicable to trusts & estates will now be applied to the net unearned income of a child. Earned income of a child will be taxed according to an unmarried taxpayer's brackets and rates. The child's tax will no longer be impacted by the tax situation of his/her parents and siblings.

  • The present law maximum rate of 20% on net capital gains and qualified dividends has been retained.

  • The itemized deduction for medical expenses paid has been retained and is deductible to the extent total medical expenses exceed 7.5% of adjusted gross income.

  • The income based percentage limit for a charitable contribution deduction has been increased from 50% to 60% of income.

  • Casualty and theft losses may only be claimed if such a loss was attributable to a disaster declared by the President. Previously taxpayers were entitled to an itemized deduction if they suffered a loss, such as a fire, where insurance proceeds do not fully cover the damages.

  • The Section 121 rules for the exclusion of gain from the sale of a principal residence remain unchanged.

  • The $250 deduction for certain expenses of eligible educators has been retained.

Days until April 15

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