author image

The Street

Broadcasting & Media Production Company · Newspaper

Follow this author

Highlights of the New Tax Laws That Kick in for 2018

02/23/2018 06:00AM | 1183 views

By Robert Powell

Now that the Tax Cuts and Jobs Act (TCJA) of 2017 is on its way into the law books, people saving for retirement and people who are already retired (that's everybody, really) should consider how the new law will affect their financial planning. 

And now, highlights of the bill include the following provisions that kick in for 2018:

  • An overall lowering of the tax bracket rates, including the top tax bracket which falls from 39.6% to 37%
  • Personal exemptions are repealed

For taxpayers who itemize deductions:

  • State and local income and real estate taxes are capped at $10,000 per year
  • Home mortgage interest from home equity loans will no longer be deductible
  • Home mortgage interest on new mortgages is only deductible to the extent of $750,000 of acquisition indebtedness
  • Charitable contributions of cash can be deducted currently up to 60% of adjusted gross income (up from 50%)
  • Miscellaneous itemized deductions -- including unreimbursed employee business expenses, tax return preparation and investment management fees -- are no longer deductible

Also,

  • Standard deduction for joint taxpayers increases to $24,000
  • Child tax credit expanded and will be allowed at higher levels of income (phasing out beginning at $400,000 of income in place of $110,000)
  • Up to a 20% deduction for income earned by "pass-though" businesses such as partnerships and S corporations (subject to a bunch of limitations)
  • Alternative Minimum Tax (AMT) provisions are retained, but fewer people will be subjected to its reach
  • Lifetime exemption from estate and gift taxes double for 2018 - potentially allowing for a great deal of planning to occur for those who haven't adequately protected their estate or who can now take advantage of the higher limits

Source: Michael Jackson, Partner, Grant Thornton

Post your Comment

Please login or sign up to comment