Most of the Tax Cuts and Jobs Act has to do with reducing corporate tax rates from 35 to 21 percent, however, some provisions relate to individual taxpayers. Here are the highlights:
- Estate Taxes. With the federal exemption already scheduled to increase in 2018 to $5.6 million for individuals and $11.2 million for couples, this is now nearly doubled to an estimated $11.18 million and $22.36 million respectively, indexed for inflation. The tax rate for those few estates subject to taxation remains at 40 percent.
- Tax Rates. These are slightly reduced and the brackets adjusted, with the top bracket dropping from 39.6 percent to 37 percent.
- Standard Deduction and Personal Exemption. Standard deduction increases to $12,000 for individuals, $18,000 for heads of household and $24,000 for joint filers, all adjusted for inflation. Personal exemptions largely disappear.
- Home Mortgage Interest Deduction. The current limit of deducting interest on up to $1 million of mortgage interest stays in effect for existing mortgages, but new mortgages are subject to a $750,000 limit. The deduction for interest on home equity loans disappears.
- Medical Expense Deduction. After much outcry it was enhanced by permitting medical expenses in excess of 7.5 percent of adjusted gross income to be deducted in 2017 and 2018, after which it reverts to the 10 percent under existing law.
This article is written by an attorney at Wyatt & Mirabella, PC. Always consult an attorney before making any legal decisions. To make an appointment today for a free consultation, please click here to contact us.