2018 Major Overhaul

As many of you know, the tax code has had a major overhaul effective beginning in the 2018 tax year.  One of the changes that will impact every one of us is the elimination of the personal exemption - $4,050 per exemption in 2017. However, the standard deduction has increased.  For single people under 65 years of age, the 2017 standard deduction was $6,500 and will be $12,000 in 2018. This increases once taxpayer turns 65.  For married filing joint returns, the standard deduction was $13,000 in 2017 and is $24,000 in 2018, increasing once taxpayers turn 65.Some of us will benefit from this change; some of us will not.

Tax rates have gone down as well.  There are still seven brackets. In 2017 they were from 10% to 39.6% and for 2018 10% to 37%. Most of us will fall into the 12% (was 15%) and 22% (was 25%) rates.

A few other changes include;

• Elimination of moving expense deduction except for active-duty members of the military.

• Elimination of 2% miscellaneous itemized deductions, including unreimbursed business expenses; investment expenses; and tax preparation fees.

• Cap on the $ amount of taxes that can be deducted on Schedule A to $10,000 for both state withholding taxes and property taxes.

I will share updates to the new code changes once I have learned about them.  Check this website periodically for updates.

2018 will be an interesting year for all of us.