The Tax Cuts and Job Acts bill that was enacted in December 2017 will probably impact your 2018 Federal income tax return. The bill made sweeping changes to the tax laws changing tax rates, deductions, exemptions, and much more. Here are some highlights.

Standard Deduction Nearly Doubled

• $12,000 for single, married filing separately (was $6,350 in 2017)
• $24,000 for married filing jointly, qualifying widow/widower (was $12,700 in 2017)
• $18,000 for head of household (was $9,350 in 2017)

Several Itemized Deductions Were Changed

• You can deduct certain unreimbursed medical expenses that exceed 7.5% of your 2018 adjusted gross income. This is down from 10% in 2017 and goes back up in 2019.

• You can deduct state and local income, sales, and property taxes but only up to a total of $10,000 ($5,000 if married filing separately).

• The interest deduction for home mortgages has changed. If your mortgage was originated before December 15, 2017, you may deduct the interest on up to $1 million ($500,000 if married filing separately) in qualifying debt. If your mortgage was originated after this date, you may deduct the interest on up to $750,000 ($375,000 if married filing separately).

• The interest paid on home equity loans is not deductible unless the loan proceeds were used to buy, build, or substantially improve your main or second home.

• You can no longer deduct moving expenses. Any moving expenses reimbursed by an employer will be taxable income.

Other Changes

• You can no longer claim a personal exemption deduction for yourself, your spouse or your dependents.

• The child tax credit for each child under 17 is doubled to $2000. The income limit at which the credit begins to phase out is increased to $200,000 or $400,000 if married filing jointly. To claim the credit, your child must have a Social Security Number issued by the Social Security Administration.

For More Information

For more details about these and other changes, the IRS has provided these resources:

• Tax Reform Basics for Individuals and Families (pdf) can help you understand the tax changes and how they may affect you.
• Tax Reform provides information for individuals, businesses, and tax exempt entities.
• Additional resources can be found in this tax tip.