2018 Tax Changes
Tax Cuts & Jobs Act Highlights
(signed into law December 22, 2017)
There are a number of changes that are effective as of January 1, 2018.
Please call us to inquire how we can help you plan for 2018 as one or more of these changes may affect you.
Here are the most common for individuals:
Lower Tax Brackets:
The tax bracket thresholds have been increased so most Americans will pay less tax.
The standard deduction has nearly doubled to $12,000 (Single), $24,000 (Married Filing Joint), and $18,000 (Head of Household). You may still itemize your deductions if they are higher than the standard deduction although there are some limits on itemized deductions.
The new law repeals the personal exemption for dependents (currently $4,050 for 2017 tax year). New in 2018 is a dependent credit for $500 per dependent claimed (not including self and spouse).
Child Tax Credit:
For qualified dependent children under 17, the child tax credit doubles from $1,000 per child to $2,000 with up to $1,400 of the credit refundable. Phase-out brackets were increased allowing more parents to claim the credit.
State, Local and Property Taxes:
If you itemize, the limit on deducting the aggregate total of state, local and property taxes is limited to $10,000 annually.
Home Equity Mortgage Interest:
The new law suspends the deduction for home equity mortgage interest starting in 2018.
Unreimbursed Employee Business Expenses:
If you are a W-2 employee and deduct unreimbursed business expenses (mileage, per diems, tools, union dues, etc.), this deduction is repealed as of January 1, 2018 and no longer available. Please call us to discuss a tax plan and perhaps some changes you may inquire with your employer.
Moving expenses are no longer deductible unless you (or spouse) are a member of the Armed Forces.
529 Savings Plans:
Ohio has doubled the state-level tax deduction from $2,000 per beneficiary to $4,000 per beneficiary. You may contribute up to $15,000 without exceeding the gift exclusion amount but contributions are still limited to $462,000. New in 2018, withdrawals may now be used for private and religious elementary and secondary education for tuition and materials (up to $10,000 per student per year).
2018 Major Business Changes:
Corporation (C-Corp) tax rates have been cut to a flat 21%.
Pass-Through Businesses (sole propietors, S-Corps, LLC’s, and partnerships) will be able to deduct 20% of their pass-through income (there are income phase-out limits for personal service corporations) on the flow-through to their personal returns.
Bonus Depreciation and Section 179 limits increase for 2018.
Corporate Alternative Minimum Tax repealed
Many other changes to credits and deductions.
While the above list is a highlight of the major changes, there are many others not mentioned here. Contact us to discuss a tax plan to outline how these changes will affect you.