The “Tax Cuts and Jobs Act”, signed into law at the end of December, provides for the most substantive changes in the U.S. Tax Code since 1986. Some of the more notable changes that may impact Individuals for the 2018 tax year are as follows:
- The standard deduction for joint filers increases to $24,000 (from $12,700). For single filers, the standard deduction rises to $12,000 (from $6,350). For head of household filers, the standard deduction increases to $18,000 (from $9,350).
- The deduction for the payment of state and local income tax, property tax and sales tax is limited to $10,000 in total for those that itemize.
- Itemized deductions for certain business expenses and investment fees are no longer deductible.
- The deduction for interest expense on new home mortgage debt is now limited to $750,000 of principal.
- The deduction for home equity loan interest is suspended resulting in a loss of an interest deduction for those with home equity debt.
- New deduction for 20% of qualified business income from a partnership, S corporation or sole proprietorship.
- Alimony Changes in 2019 – For divorce or separation instruments executed after December 31, 2018, alimony will no longer be deductible by the payor or includible in income of the payee.
There are substantial planning opportunities for individuals to be considered for those impacted by the changes noted above.
We are proactively addressing each of these individual changes for all our clients. Anyone interested in understanding how these changes may impact you individually should feel free to contact us at 215-675-8364.