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2018 Tax Law Change – Summary for Individuals

  1. 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.

 

  1. 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