Here’s a brief run-down of the tax changes for 2018.
Tax rates were lowered for 2018. There are seven income tax brackets now, ranging from 10 percent to 37 percent.
The Standard Deduction nearly doubled over last year. For 2018, the basic standard deduction is $12,000 for singles, $18,000 for heads of household and $24,000 for married couples filing a joint tax return. Higher amounts apply to people who are blind or filers who are at least age 65. The increased standard deduction, coupled with other changes, mean that some of those who itemized their deductions – for mortgage interest, charitable contributions and state and local taxes in tax year 2017, may instead take the higher standard deduction in 2018.
Various deductions are now limited or discontinued. For example, the state and local tax deduction is limited to $10,000, $5,000 if married and filing a separate return, and new limits apply to mortgage interest. In addition, the miscellaneous itemized deduction for job-related costs (Employee Business Expenses, EBE) and certain other expenses is not available.
The Child Tax Credit doubled, and more people now qualify. The maximum credit is now $2,000 for each qualifying child under age 17. In addition, the income limit for getting the full credit is $400,000 for joint filers and $200,000 for other taxpayers.
There is a new credit for other dependents. A $500 credit is available for each dependent who does not qualify for the Child Tax Credit. This includes older children, disabled adult children and qualifying relatives, such as a parent.
Personal and dependency exemptions were suspended. This means that an exemption can no longer be claimed for a tax filer, spouse and dependents.
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