Do you file an income tax return? Here are the major changes from tax reform that you should know:

1.Tax Rates: Most are reduced, albeit slightly (0-4% depending on the bracket).

2.Standard deduction: Large increase. $6,500 to $12,000 for single people (S) and $13,000 to $24,000 for couples married filing jointly (MFJ).

3. Itemized deductions:

  • Limit on total itemized deductions: Repealed. There is no longer a limit on the amount of deductions one may claim.
  • State and local tax (property, sales, and income) deductions: Greatly reduced. One may deduct up to $5,000 for S and $10,000 for MFJ. There used to be no limit.
  • Medical expenses: Harder to deduct. Must exceed 7.5% of income.
  • Charitable giving: Increased. The threshold went from 50% to 60% of one’s income.
  • Mortgage interest: Reduced. Deductible on new loans of up to $750,000. No deductions allowed for interest on home equity loans.
  • Miscellaneous expenses: Repealed (safe deposit box fees, tax prep fees, advisory fees, etc).

5. Personal exemption: Repealed. This was $4,050 for each person listed on the return.

6. Obamacare penalty: Repealed. Penalty reduced to $0 those without health insurance.

7. Child tax credit: Increased. From $1,000 to $2,000 and the income phase-out amounts were increased to $200,000 for S and $400,000 for MFJ.

8. Passthrough rates: Reduced. Deduction now available for 20% of “domestic qualified business income”.

9. Gift/Estate Tax: Exemption Increased. From $5M for S and $10M for MFJ to double that for both.

Would you like a deep dive on any of the topics mentioned above? Then contact me at my email provided below.

*Please note that many of these figures change after 2025 due to the bill’s sunset provision.