With the passing of the Tax Cuts and Jobs Act, there are numerous changes to traditional tax law and the 2018 tax return season will be quite a bit different compared to previous years. In addition, the IRS has recently released draft versions of the 2018 1040 and those drafts are incorporating additional schedules to the standard 1040. Here is a quick summary of some of the changes set to take place in 2018.
- Income tax brackets are being lowered across the board. The top individual and married filing jointly income tax rates are dropping from 39.6% to 37.0%.
- The standard deduction is being raised to $12,000 for single filers, $18,000 for heads of household and $24,000 for married filing jointly filers.
- Miscellaneous itemized deductions subject to a 2% floor of adjusted gross income are now eliminated and no longer deductible. This category includes unreimbursed business expenses.
- The child tax credit is increasing from $1,000 to $2,000 and the income phaseout level is also increasing from $110,000 to $400,000 for married couples.
- The alternative minimum tax exemption is increasing from $86,200 to $109,400 for married filers and the phaseout threshold is increasing to $1 million.
- There will be a cap of $10,000 on the total amount of state, local and property taxes that can be deducted.
There are a number of other changes in addition to those noted above. The best course of action is to discuss your tax situation with a CPA. Give us a call at 847-827-8100 or check Gurdak Group, Ltd. if you’d like to discuss your situation in more detail.