New Tax Law

The Tax Cuts and Jobs Act (TCJA) of 2017 brought many changes for individuals and businesses. Below are the major changes for Individuals for 2018, 2019 and beyond.

   

Standard Deduction

Increases the standard deduction to $12,000 for single filers, $18,000 for heads of household, and $24,000 for joint filers, while eliminating the additional standard deduction and the personal exemption. Provisions sunset at the end of 2025.

   
   

Itemized Deductions

State and Local Income and RE Tax

Caps the state and local tax deduction at $10,000 (property plus choice of income or sales taxes, as under current law), except for taxes paid or accrued in carrying on a trade or business.

 

Medical

Medical expense deduction – applies to expenses that exceed 7.5% of AGI in 2017 and 2018, and expenses that exceed 10% of AGI thereafter. The medical expense deduction threshold is lowered to 7.5 percent for 2018, and reverts to 10 percent thereafter. Eliminates other itemized deductions.

 

Other

Repeals the moving expense deduction (except for active duty military personnel) and eliminates the alimony deduction effective 2019 (though those receiving alimony no longer count it as income). Retains other above-the-line deductions, including educator expenses and student loan interest. Graduate student tuition waivers also remain in place.

Repeals all itemized deductions subject to the 2% floor (home office, license and regulatory fees, professional dues)

   

 

 

   

Tax Rates

Income Tax Brackets

Retains seven brackets, but at reduced rates, including a top marginal rate of 37 percent. The current tax rates of 10%, 15%, 25%, 28%, 33%, 35%, 39.6% rates would be replaced with tax rates of 10%, 12%, 22%, 24%, 32%, 35%, and 37%. Provisions sunset at end of 2025.

 

Capital Gains

Net capital gains and qualified dividends would continue to be taxed at the current 0%, 15%, 20% rates and also would continue to be subject to the 3.8% net investment tax

   
   

Tax Credits

Child Tax Credit

Increases the child tax credit to $2,000. Of this, $1,400 would be refundable, with the refundable portion indexed to inflation. All dependents ineligible for the child tax credit are eligible for a new $500 per-person family tax credit. Provisions begin to phase out at $400,000 ($200,000 for single filers). Social Security Numbers required for portions of the above. All provisions sunset at the end of 2025.

 

Adoption

Retains this credit