How does the 2018 Tax Reform affect me?
NOTE: this list is not all-encompassing, but includes main changes from 2017 tax year.
PROS:
- Tax Brackets - rates reduced; this benefits nearly all, other than single filers with income over $157,501. Click here to view our Tax Rates page
- Child Tax Credit - credit amount doubled from $1k to $2k…and income phaseout increased from $110k to $400k (joint filers) and $75k to $200k (single filers)
- AMT - exemption amounts increased and phaseout levels are now higher
- Medical Expenses - adjusted gross income threshold decreased from 10% to 7.5% (for 2017 & 2018)
- 529 Plans - now expanded to include K-12 schooling (previously just post-secondary education)
- Business Deduction - many businesses now qualify for a 20% expense deduction (in addition to expenses already incurred & claimed)
- Gift/Estate Taxes - exemption amounts doubled
CONS:
- SALT (state and local taxes) - deduction capped at $10,000
- Mortgage Interest - deduction limited to $750,000 loan indebtedness (only affects loans acquired after 12/15/17)...home equity loan/credit line interest no longer deductible, unless used to acquire home
- Moving Expenses - deduction eliminated
- Unreimbursed Employee Expenses - deduction eliminated…can significantly affect tax liability for those who usually claim this
- Professional Fees - deduction eliminated for fees paid to attorneys, financial advisors, etc.
- Business Meals/Entertainment - mostly eliminated (some specifics apply)
NEUTRAL (can be pro or con, pending your situation):
- Standard Deduction/Personal Exemptions - standard deductions have doubled and personal exemptions have been eliminated (so if you previously took the standard deduction, this is beneficial…if you itemized, this likely hurts)
- Alimony - no more deductions for payers…recipient now exclude from income (helps recipients of alimony; hurts payers…only applies to divorces after 12/31/2017)
