Below are some highlight of the new tax reform and how it may impact you.
Changes have been made to both individual and corporate tax rates, these are set to expire by the end of 2025. Most of the corporate changes provisions are permanent and will not expire. The nonpartisan joint committee claims the deficit will increase by 1.46 trillion over the next decade.
There are seven tax brackets ranging from 10, 12, 22, 24, 32, 37 percent. The standard deduction has doubled but the personal exemption is gone. This will not be good for larger families. Example a family of 5 filing married gets 12,600 plus 4050 per each member totaling 32,850.00 now in 2018 they will only get to deduct from AGI (adjusted gross income) 24,000.
State and local tax is capped at 10,000.
The child tax credit has been expanded for children claimed under age of 17 to $2,000, and limit is raised to $200,000 for single and $400,000 married income. If you claim a elderly parent you get $500.00 tax credit now there is none. There’s a new tax credit for non-child dependents, like elderly parents or children over the age of 17 with a disability.
Need for AMT tax changed for singles $70,300 and $109,400 for married couples. You can only deduct the first $750,000 of mortgage insurance. This was previously a million.
By the way, you can still deduct student loan interest max $2,500.00.
Teachers still get the tint $250.00.
Medical expenses are still deductible and all at 7.5 % of income. Not the 10% like in past for under 65 years old.
Electric car credit is still alive up to $7,500 for only the first 200,000 electric cars sold.
529 Savings account now up to $10,000 can be distributed towards the cost of sending to school. This includes public, private or religious elementary or secondary schools.
Tax deduction for alimony payments are gone. This is for couples that sign divorce or separation paperwork after December 31, 2018.
Moving expenses are gone.
Tax preparation cost gets limited (ouch).
Bike commuters get $20 per month credit off income.
Estate tax limits got double so less people must pay.
Adjustments for inflation will be slower.
Mandate on health insurance for scrapped.
The rumor about filing taxes on a post care is not that simple, so no.
Corporate rate dropped form 35% to 21%. Pass-through like S-Corporations, LLC and partnerships get a 20% deduction (we need to get more information this.
Multinational corporation’s taxes are changing (more to follow).
Businesses will not be able to write off sexual harassment settlements.