Most of the tax changes are effective beginning December 31, 2017 and runs through December 31, 2025.
Changes affecting Individual Returns
I. Individual income Tax Rates for tax years 2018-2025
a. 10%, 12%,24%,32%, 35% and 37% ( Please see the tax brackets in the next PDF)
b. Kiddie Tax modified (In prior years, tax rates were applied using parents’ tax rate). Effective tax rate for Kiddie tax is
i. Unearned income is taxed at Trust and Estate rate
ii. Earned income is taxed using unmarried taxpayer bracket rate
iii. Parents return will not be affected by dependent’s income
c. AMT Exemption Amounts are Increased:
i. MFJ to $109,400
ii. Single to $70,300
iii. MFS to 50% of MFJ
d. Standard Deduction is Increased:
i. MFJ $24,000
ii. Head of House Hold $18,000
iii. Single & MFS $12,000
e. Deduction For Personal Exemption is Suspended
f. Miscellaneous Itemized Deductions are Disallowed: Including:
i. Unreimbursed employee business expenses
ii. Unreimbursed vehicle expenses of rural mail carriers
iii. Investment expenses and expenses for the production or collection of income
iv. Tax Prep Fees
g. Only for 2018 Tax Year, medical expenses deduction is set to 7.5% in excess of adjusted gross income
h. $10,000 Limitation for state, local and foreign property taxes
i. Mortgage Interest:
i. Deduction for home equity is suspended
ii. Maximum Acquisition debt is limited $750,000
j. Casualty Losses are Non Deductible –
i. Deductions are allowed ONLY to the extent they are attributable to a federally declared disaster.
i. Alimony no longer deductible- that is, for divorce or separation instruments executed after December 31, 2018.
ii. No deductions allowed to the taxpayer and no inclusion in income for the receiver.
II. Moving Expenses are nondeductible
III. Child Tax Credit
a. Qualifying child’s SSN is required
b. Increased to $2,000 and child has to be under 17
c. Phase out increase to $400,000 for joint and $200,000 for all the others.