The Tax Cuts and Jobs Act (TCJA) enacted in December 2017 was a sweeping bill that brought changes so significant, sophisticated taxpayers are reevaluating their approach to tax planning in some meaningful ways. Following is an excerpt from Tax Matters, our comprehensive guide to help you navigate the complex tax code.
Check this list before you prepare your taxes!
We suggest consulting with your tax advisor to understand the full implications of these changes on your taxes.
Income tax brackets and rates changed. Most notably, the top bracket tax rate was reduced from 39.6% to 37%—with similar rate reductions in other brackets—in addition to brackets widening in some instances.
The standard deduction increased for single taxpayers from $6,350 to $12,000, and for married filing jointly from $12,700 to $24,000. Many who had previously itemized will now take the standard deduction.
Personal exemptions were eliminated (previously $4,050 per person).
The deduction for state/local property taxes and income taxes (SALT) is now limited to $10,000.
Unless grandfathered, the limit on mortgages qualifying for the home mortgage deduction is reduced from $1,000,000 to $750,000.
The deductibility of home equity loan interest is greatly curtailed.
Miscellaneous itemized deductions (subject to the 2% of adjusted gross income threshold) are no longer deductible.
The Alternative Minimum Tax (AMT) exemption amount is significantly increased, which will reduce the number of taxpayers subject to the AMT.
No deduction for alimony allowed to payor or income applied to recipient for divorce or separation agreements executed after December 31, 2018, with some grandfathered exceptions.
Personal casualty losses are eliminated, unless attributable to a federally declared disaster or to offset casualty gains for the year.
For more information on how tax reform may affect your year-end tax planning, download Tax Matters, our comprehensive guide to help you navigate the complex new tax code.
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