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Six key changes under the tax reform plan

The tax reform changes went into effect on Jan. 1, 2018. But, most of those changes don't impact 2017 tax returns.

1

Standard Deduction Increases

No matter your filing status, the standard deduction increases in 2018.

  • Single and Married Filing Separately: $12,000
  • Married Filing Jointly: $24,000
  • Head of Household: $18,000
2

Personal Exemption Eliminated

Under the tax reform, taxpayers can no longer claim the $4,050 personal exemption for each of their dependents.

3

Child Tax Credit Rises

The Child Tax Credit increases in value from $1,000 to $2,000. The tax reform bill also introduces a new $500 credit for non-child dependents.

4

State and Local Capped

Taxpayers can deduct up to $10,000 in state and local income taxes. Previously there was no cap.

5

ACA Individual Mandate Repealed

Beginning in 2019, individuals who choose to go without healthcare coverage for the year will not have to pay tax penalties.

6

Mortgage Interest Deduction Drops

Individuals who purchase a home in 2018 can only deduct interest up to $750,000 in mortgage debt (previously $1 million). The interest deduction on home-equity loans is eliminated.

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2018 Income Tax Brackets

The tax reform bill keeps the same seven tax bracket structure, but most taxpayers will see lower tax rates.The income thresholds were also adjusted.

Tax Rate Individual Married Filing Separate Head of Household Married Filing Joint
10% $0 - $9,525 $0 - $9,525 $0 - $13,600 $0 - $19,050
12% $9,526 - $38,700 $9,526 - $38,700 $13,601 - $51,800 $19,051 - $77,400
22% $38,701 - $82,500 $38,701 - $82,500 $51,801 - $82,500 $77,401 - $165,000
24% $82,501 - $157,500 $82,501 - $157,500 $82,501 - $157,500 $165,001 - $315,000
32% $157,501 - $200,000 $157,501 - $200,000 $157,501 - $200,000 $315,001 - $400,000
35% $200,001 - $500,000 $200,001 - $300,000 $200,001 - $500,000 $400,001 - $600,000
37% over $500,000 over $300,000 over $500,000 over $600,000

Remember to not simply multiply all of your income by the top rate. Learn how income tax brackets work.