Tax Reform Changes for Tax Years 2018 & 2019

Here is the latest bill that was passed by Congress (House and the Senate) and signed by the President in December 2017:

What's Changing...

Here are the things that are increased or eliminated from the current tax code: 

Changes the Seven Tax Rates: The new rates will be 10%, 12%, 22%, 24%, 32%, 35%, and 37%. They would phase out in eight years.

Doubles the Standard Deduction: The standard deduction amount is increased from $6,350 to $12,000 for single filers, $12,700 to $24,000 for married filing jointly and widow filers, and $9,350 to $18,000 for Heads of Household. 

Eliminates the Personal Tax Exemption: The personal tax exemption will be replaced by the doubled standard deduction. 

Decreases the Home Mortgage Interest Tax Deduction: For new loans starting in 2018, the deduction amount is decreased from $1 million to $750,000 (current homeowners will be carried over to current tax code rules). It will go back to the original amount in 2026.

Increases the Tax Deduction for Charitable Contributions: The limit for charitable cash donations to public charities and certain other organizations increases from 50% to 60%. The charitable standard mileage rate stays at 14% with no adjustment for inflation.

Increases the Child Tax Credit: The Child Tax Credit is increased from $1,000 to $2,000 per child (first $1,400 is refundable). The credit will start to phase out at $400,000 and more than $200,000 for other taxpayers. This increased amount would phase out in eight years. 

Adds a New Tax Credit for Non-Child Dependents: There will be a new $500 nonrefundable tax credit for non-child dependents/parents. The credit can be applied to children over 17 years old, senior parents, or children with disabilities. 

Reduces the State and Local Tax Deduction: State and local property taxes up to $10,000 can be deducted, in addition to income taxes or sales taxes.

Decreases the Medical Tax Deduction Rate: The Medical Tax Deduction rate will decrease from 10% to 7.5% for 2017 and 2018 Tax Returns, regardless of age. It will rise back to 10% in 2019. 

Eliminates the Moving Expenses Deduction: Starting in 2018, you will not be able to deduct moving expenses related to a new job (there are some exceptions for the military). This would apply until 2025.

Eliminates the Tax Deduction for Casualty and Theft Loss: All tax deductions for casualty and theft loss are eliminated (except for those losses attributable to a federal disaster as declared by the President) from 2018 to 2025. 

Eliminates the Tax Deduction for Alimony

Eliminates the Tax Deduction for  Educator Expenses

Eliminates the Tax Deduction for Tax Return Preparation Expenses

Doubles the Estate or "Death" Tax: The Estate Tax amount is doubled from $5.5 million to $11.2 million ($22.4 million for married taxpayers), which will increase with inflation. The doubled amount will expire on December 31, 2025.

Eliminates the Individual Health Care Tax Penalty: The tax penalty for not having health insurance will be eliminated in 2019. This means you would still be required to pay the penalty in 2018 (for 2017 Tax Returns) and 2019 (for 2018 Tax Returns), but not in 2019 (for 2020 Tax Returns).

What is staying the same?

Earned Income Tax Credit: The  maximum amount is $6,444 for taxpayers filing jointly who have 3 or more qualifying children.

American Opportunity Tax Credit

Student Loan Interest Deduction

Adoption Tax Credit

Alternative Minimum Tax: The amounts permanently adjusted for inflation are  $70,300 for single and head of household, $109,400 for married filing joint filers and widowers, $54,700 for married filing separately

Tax Deductions for 401K and IRA Retirement Savings Options

Capital Gains and Dividend Rates

Investment Interest Expense Tax Deduction

Real Estate Tax Deduction up to $10,000

"View the latest bill introduced December 15, 2017"
https://www.congress.gov/bill/115th-congress/house-bill/1/text