New Federal Tax Law – Individual Changes

The new tax law took effect January 1, 2018.  Barring legislative changes, it will be with us through tax year 2025.  Here is a summary of changes that will affect you.


Here are the new federal tax brackets


For Single Filers:

Taxable income over But not over Is taxed at
$0 $9,525 10%
$9,525 $38,700 12%
$38,700 $82,500 22%
$82,500 $157,500 24%
$157,500 $200,000 32%
$200,000 $500,000 35%
$500,000 37%

For Heads of household:

Taxable income over But not over Is taxed at
$0 $13,600 10%
$13,600 $51,800 12%
$51,800 $82,500 22%
$82,500 $157,500 24%
$157,500 $200,000 32%
$200,000 $500,000 35%
$500,000 37%

For Married taxpayers filing joint returns and surviving spouses:

Taxable income over But not over Is taxed at
$0 $19,050 10%
$19,050 $77,400 12%
$77,400 $165,000 22%
$165,000 $315,000 24%
$315,000 $400,000 32%
$400,000 $600,000 35%
$600,000 37%



Standard Deduction

The standard deduction increases to $24,000 for married people filing jointly, to $18,000 for the head of household filers, and $12,000 for single filers.


Personal Exemption Repealed

The personal exemption of $4,050 per person in your family has been repealed.


Itemized deductions

The group of taxpayers that itemize rather than taking the standard deduction is going to drop substantially due to the increase of that deduction.  However, if it is beneficial or required for you to itemize then here are the changes that will affect you.

  • State Tax deductions, which include state income taxes and personal and real property taxes, will be limited to $10,000 per year total. The sales tax deduction is still allowed subject to the $10,000 limit.
  • The home mortgage interest deduction has been limited to loans of $750,000 or less.
  • The home equity loan deduction has been repealed.
  • The deduction for charitable contributions made to colleges for athletic event seating rights has been removed. There were some other small changes, but it is basically the same.
  • Miscellaneous itemized deductions subject to the 2% adjusted gross income floor have been repealed. The big ones here are investment advisory fees, unreimbursed employee expenses, and tax preparation fees not otherwise deductible elsewhere.


Child Tax Credits

The child tax credit was increased to $2,000 per qualifying child.  Also, the phase-out of the credit was increased to $400,000 for married filing jointly returns and $200,000 for single filers.  This is a big deal for parents.


Estate Tax Changes

The act has doubled the estate tax exemption from approx. $5 million to $10 million.  Those with estates below this amount need not file an estate tax return.


Alternative Minimum Tax Changes

The AMT is still around.  However, the exemptions were increased and the exemption phase-out range had over a three-fold increase.  These changes should drastically limit the number of our clients that fall into AMT situations.


Individual Health Insurance Mandate

The mandate that requires all individuals to get and maintain health insurance or pay a tax has been repealed for all years starting in 2019.



There are many other changes to the tax laws that went into effect.  These listed above and the ones listed in the business tax changes article on our website are the bulk of the changes that will affect you.

If nothing is done by the end of 2025 to extend or adjust the new tax system mentioned here, the tax rates and rules will revert back to the laws in effect in 2017.

Dan Busenbark
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