The new year brings a new and sweeping one thousand page tax bill. Here are some of the highlights for individual taxpayers:
- The deduction for state, local income, sales, and property taxes are to be limited to $10,000.
- Eliminates the deduction for unreimbursed business expenses and miscellaneous expenses such as tax preparation fees and attorney fees for preparation of wills and trusts.
- Eliminates the deduction for home equity loan interest.
- Eliminates all personal exemptions (currently $4,050).
- Standard deductions will increase from $6,300 to $12,000 single and $24,000 for MFJ.
- The deduction of mortgage interest is limited to $750,000 principal balance.
- Medical expense deduction will remain, the percentage over AGI is lowered to 7.5% for two years and 10% after that.
- Child tax credit increased to $2,000 for children under age 17. $1,400 refundable. There is also a $500 tax credit for dependents who are not children, such as parents and grandparents.
- American Opportunity Tax Credit was changed to a five year provision. Hope and Lifetime credits are eliminated.
- Alimony will no longer be deductible or includable in income starting for those who divorce in 2019.
- Capital gains tax rates remain virtually the same as 2017.<
- Income tax rates are still seven tiered, however, the highest rate is 37% for 2018 as compared to 39.6% in 2017. Income levels for all rates have shifted.
These are the main changes affecting individuals in 2018. The changes to small businesses and corporations will be addressed in later articles.
