12 things about the Tax Cuts & Jobs Act that may impact your bottom line

Well, it’s done.  Congress has passed and President Trump signed a major tax overhaul.

As the bill becomes law, here are 12 things you need to know as an individual starting in 2018.

  1. Still seven (7) tax brackets, but different rates. (see below)
  2. Double the standard deduction – For single filers went from $6,350 to $12,000; for married filing jointly went from $12,700 to $24,000.
  3. Goodbye to the personal exemption: the personal exemption in 2017 is $4,050 per person.
  4. The state and local tax deduction have $10,000 ceiling.  Previously, filers could deduct an unlimited amount for state and local property taxes, plus income or sales taxes.
  5. The child tax credit has been doubled to $2,000 for children under 17.  Single parents who make up to $200,000 or Married Couple who make up to $400,000 can claim the entire credit.
  6. $500 temporary credit for non-child dependents.  If you support an adult child or elderly parents, this may apply to you.
  7. Alternative Minimum Tax is not eliminated.  However, the exemption has been raised to $70,300 for singles and to $109,400 for married couples.
  8. Lowered mortgage interest deduction (except for current homeowners).  Anyone buying a new home will only be able to deduct the first $750,000 of their mortgage debt (down from $1,000,000).
  9. No more home interest deduction on Home Equity Line of Credit when you use it for personal use such as credit card consolidation, new car, education, etc.
  10. 529 plan can be used beyond just college expenses.  Now, up to $10,000 per year, you can use it to cover the cost of elementary or secondary school.
  11. No more individual mandate on health insurance.
  12. If you are writing the checks to your ex-spouse for alimony, no more alimony payment tax deduction.  This provision will apply to couples who’s agreement is effective for any divorce or separation instrument executed after December 31,
    2018.
2017 Tax Rates – Single Taxpayers 2018 Tax Rates – Single Taxpayers
10%  $                           –  $                    9,325 10%  $                           –  $                    9,525
15%  $                    9,325  $                 37,950 12%  $                    9,525  $                 38,700
25%  $                 37,950  $                 91,900 22%  $                 38,700  $                 82,500
28%  $                 91,900  $               191,650 24%  $                 82,500  $               157,500
33%  $               191,650  $               416,700 32%  $               157,500  $               200,000
35%  $               416,700  $               418,400 35%  $               200,000  $               500,000
39.60%  $               418,400 37%  $               500,000
2017 Tax Rates – Married Jointly & Surviving Spouses 2018 Tax Rates – Married Jointly & Surviving Spouses
10%  $                           –  $                 18,650 10%  $                           –  $                 19,050
15%  $                 18,650  $                 75,900 12%  $                 19,050  $                 77,400
25%  $                 75,900  $               153,100 22%  $                 77,400  $               165,000
28%  $               153,100  $               233,350 24%  $               165,000  $               315,000
33%  $               233,350  $               416,700 32%  $               315,000  $               400,000
35%  $               416,700  $               470,700 35%  $               400,000  $               600,000
39.60%  $               470,700 37%  $               600,000
2017 Tax Rates – Married Filing Separately 2018 Tax Rates – Married Filing Separately
10%  $                           –  $                    9,325 10%  $                           –  $                    9,525
15%  $                    9,325  $                 37,950 12%  $                    9,525  $                 38,700
25%  $                 37,950  $                 76,550 22%  $                 38,700  $                 82,500
28%  $                 76,550  $               116,675 24%  $                 82,500  $               157,500
33%  $               116,675  $               208,350 32%  $               157,500  $               200,000
35%  $               208,350  $               235,350 35%  $               200,000  $               300,000
39.60%  $               235,350 37%  $               300,000
2017 Tax Rates – Head of Household 2018 Tax Rates – Head of Household
10%  $                           –  $                 13,350 10%  $                           –  $                 13,600
15%  $                 13,350  $                 50,800 12%  $                 13,600  $                 51,800
25%  $                 50,800  $               131,200 22%  $                 51,800  $                 82,500
28%  $               131,200  $               212,500 24%  $                 82,500  $               157,500
33%  $               212,500  $               416,700 32%  $               157,500  $               200,000
35%  $               416,700  $               444,500 35%  $               200,000  $               500,000
39.60%  $               444,500 37%  $               500,000

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