Taxes are typically on our minds as we head into a new year. April 15th always seems to come sooner than we expect. This year, 2018 will prove to be no exception as we close out 2017 and turn our attention to what lies ahead in the new tax code. On December 20th Congress passed a comprehensive tax reform legislation. December 22nd President Donald Trump signed the Tax Cuts and Jobs Act. Below is a summary of the new tax reform.
Summary of the Tax Reform
- Increases the standard deduction in 2018 from $6,500 to $12,000 for a single filer and from $13,000 to $24,000 for a joint filer and how to buy stocks in canada;
- Increases the child tax credit from $1,000 (up to $1,000 refundable) per qualifying child to $2,000 (up to $1,400 refundable), and introduces a new $500 non-refundable “family” credit;
- Limits the deductibility of state and local taxes to the first $10,000 paid for property or income taxes (or sales taxes in lieu of income taxes); and,
- Sets new individual tax rates effective January 1, 2018 (these individual tax rates changes sunset after 2025).
Below are current individual tax rates and the new individual tax rates set by the tax reform bill:
|Income Where Tax Rate Starts (2017)
Single / Joint
|Current Tax Rate||New Tax Rate||Income Where Tax Rate Starts (2018)
Single / Joint
|$0 / $0||10%||10%||$0 / $0|
|$9,326 / $18,651||15%||12%||$9,526 / $19,051|
|$37,951 / $75,901||25%||22%||$38,701 / $77,401|
|$91,901 / $153,101||28%||24%||$82,501 / $165,001|
|$191,651 / $233,351||33%||32%||$157,501 / $315,001|
|$416,701 / $416,701||35%||35%||$200,001 / $400,001|
|$418,401 / $470,701||39.6%||37%||$500,001 / $600,001|
What’s In / What’s Out
|Mortgage Interest Deduction||Currently limited to first $1 million in mortgages; going forward limited to first $750,000 (new mortgages); deduction for interest on home equity loans is suspended
|Death Tax||Doubles the basic exclusion amount from $5 million to $10 million
|Medical Expense Deduction||Deduction is available for expenses exceeding 7.5% of AGI in 2017 and 2018 (a 10% AGI threshold applies in 2019 and beyond)
|Student Loan Interest Deduction||Student loan interest remains deductible up to $2,500 per year
|Graduate Student Tuition Waivers||Remains Tax Free
Unique Employment Services is committed to ensuring our clients are ready for 2018. Please contact us at 361-852-6392 for more information.
No comments yet. You should be kind and add one!
The comments are closed.