2018 Tax Law Change – Summary for Individuals
- Standard Deduction and Personal Exemption: There will be an increase in the Standard Deduction and the Personal Exemption will be eliminated. This is really a simplification of the prior law and is unlikely to lead to any significant change on the individual tax bill.
Standard deductions are increasing as follows:
- Married Filing Jointly: Increase of $11,000 up to $24,000.
- Single Filers and Married Filing Separate: Increase of $5,500 up to $12,000.
- Head of Household: Increase of $8,450 up to $18,000.
- The tax rates are changing. Top income tax rate is now 37 percent and will affect individual with incomes of $500,000 and higher. For married taxpayers, the top tax rate of 37 percent kicks in at $600,000 and up.
| Rate | For Unmarried Individuals, Taxable Income Over | For Married Individuals Filing Joint Returns, Taxable Income Over | For Heads of Households, Taxable Income Over |
| 10% | $0 | $0 | $0 |
| 12% | $9,525 | $19,050 | $13,600 |
| 22% | $38,700 | $77,400 | $51,800 |
| 24% | $82,500 | $165,000 | $82,500 |
| 32% | $157,500 | $315,000 | $157,500 |
| 35% | $200,000 | $400,000 | $200,000 |
| 37% | $500,000 | $600,000 | $500,000 |
| Table 1. Tax Brackets and Rates, 2018 | |||
3. Estate tax: In 2010 sweeping changes to the Estate Tax resulted in what was viewed as high lifetime estate and gift tax credits reaching over 5 Million per individual in 2017. The 2018 changes double the exemption to $11.2 million per individual and $22.4 million per couple in 2018. These numbers remain indexed for inflation.
4. Child tax credit: The child tax credit has been doubled. It is up to $2,000 per qualifying child, those who are under 17. There is also a $500 credit is available for dependents who do not get the $2,000 credit.
5. Mortgage interest: Mortgage Interest deduction cap is reduced by $250,000 to $750,000 for loans taken out after December 15, 2017.
6. State and Local Tax Deduction gets a cap: Now, the deduction is limited to $10,000.00 for taxes paid to the state and local governments.
For more information or to receive a consultation regarding your tax matters, Contact MMPE LAW. Our tax professionals can help. (573)996-3814 or info@mmpelaw.com