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A Reference List of Tax Changes for 2018

This blog post first appeared on Jill On Money.

How the 2018 tax legislation impacts your bottom line depends on how much you earn, how you earn it, where you live and the size of your family.  To see a rough estimate of its impact, check out this Wall Street Journal tax plan calculator (subscription required).

The cuts are estimated to cost $1.46 trillion over the next ten years. That amount would add to the current $20.6 trillion of national debt.

Here's a list of changes in the version of the legislation released Friday, Dec. 15, 2017.

Individual Tax brackets (7) – EXPIRES after 2025:

  • Current: 10%, 15%, 25%, 28%, 33%, 35% and 39.6%
  • Proposed: 10%, 12%, 22%, 24%, 32%, 35% and 37%
    • 10% (up to $9,525 for Individuals; up to $19,050 Married Filing Jointly)
    • 12% (over $9,525 to $38,700 IND; over $19,050 to $77,400 MFJ)
    • 22% (over $38,700 to $82,500 IND; over $77,400 to $165,000 MFJ)
    • 24% (over $82,500 to $157,500 IND; over $165,000 to $315,000 MFJ)
    • 32% (over $157,500 to $200,000 IND; over $315,000 to $400,000 MFJ)
    • 35% (over $200,000 to $500,000 IND; over $400,000 to $600,000 MFJ)
    • 37% (over $500,000 IND; over $600,000 MFJ)

Corporate Tax brackets – PERMANENT:

  • Current: 35%
  • Proposed: 21%
  • Repeals corporate Alternative Minimum Tax

Standard deduction (EXPIRES after 2025):

  • $12,000 IND
  • $18,000 Head of Household
  • $24,000 MFJ
  • Personal exemptions: Eliminated (For families with 3 or more kids, could minimize/negate tax relief they might get as a result of other provisions)

Child/Family Tax Credit (EXPIRES after 2025):

  • $2,000 (up from $1K currently)
  • $1,400 (even if you don’t owe taxes, you would receive a credit of up to $1,400 in the form of a tax refund)
  • Non-Child Dependent Family Tax Credit (NEW) i.e. a child 17 or older, an ailing elderly parent or an adult child with a disability: $500
  • BOTH phase out at $400K MFJ, $200K IND (up from 110K/75K)
  • Adds new requirement – MUST provide SSN to claim credit

State and Local Income Tax (SALT), Sales tax, Property Taxes (EXPIRES after 2025):

  • Can deduct up to $10,000 in a combination of all
  • Unclear if the $10,000 is the same for joint and individual filers
  • Can’t prepay 2018 state and local income taxes in 2017 to take advantage of final year of the unlimited deduction (prohibition doesn’t explicitly include property or sales taxes)

Mortgage Interest (EXPIRES after 2025):

  • Can deduct home mortgage interest debt up to $750,000 (from $1M)
  • Applies to primary and second homes
  • Existing mortgages would be grandfathered in as of Dec 15, 2017—lower limit applies to NEW home loans.
  • Repeals deduction for interest on home-equity loans through 2025

AMT (EXPIRES after 2025):

  • Increases exemption levels to $70,300 for IND and $109,400 MFJ (up from $54,300/$84,500)
  • Increases the phase-out threshold to $500K for IND and $1 million MFJ

Estate tax (EXPIRES after 2025):

  • Retains top 40% rate, but doubles exemption to $11.2M for individuals
  • Expires after 2025

Long-Term Capital Gains:

  • Current: Top rate of 23.8%
  • Proposed: No change
  • Left out of Final: FIFO rule on asset sales

Other Deductions/Credits (EXPIRES after 2025):

  • Maintains tax breaks for charitable contributions and retirement savings plans
  • Keeps deduction for student loan interest
  • Doesn’t tax graduate students on tuition waivers
  • Keeps adoption tax credit
  • Keeps Earned income tax credit
  • Keeps credit of up to $7,500 for electric vehicles
  • Eliminates deductions for alimony (for agreements signed after 2018), moving expenses, tax preparation fees and personal casualty losses.
  • Keeps deduction for teacher expenses
  • Expands use of 529 college savings plans to include private school tuition for elementary and high school students
  • Eliminates deductibility of losses from fires, floods or other events (unless covered by specific federal disaster declarations


  • Repeals individual mandate (as of 2019), which required all taxpayers to buy health insurance or pay a penalty
  • Retains deduction for high out-of-pocket medical expenses, but lowers the threshold for 2017 and 2018 to 7.5 percent of AGI (from 10%). Rate returns to 10 percent in 2019

Principal Residence Gain exclusion:

  • Retains exclusion from long-term capital gains from the sale of a principal residence of up to $250K for single and $500K for MFJ
  • NO CHANGE to ownership requirement (2 out of previous 5 years)

Pass-through entities:

  • Current: Pass-through businesses (sole proprietorships, partnerships, limited liability companies and S corporations) pay taxes based on individual income tax rates and brackets
  • PROPOSED: Business owners get a 20% deduction for the first $315,000 of pass-through income, capped at either 50% of wages or 25% of wages plus 2.5% of capital assets, whichever is greater.
  • Phases out for some businesses starting at $315K of income (MFJ)/$157,400 IND
  • Applies to businesses that ARE NOT in professional service industries (Engineers and architects were specifically carved out)
  • Allows tax break based on capital investment

Collaborate with your tax professionals and your CERTIFIED FINANCIAL PLANNER™ professional to be sure you are optimizing all your opportunities and taking all appropriate new laws into account as you move forward this year.

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