Here are some of the most significant changes in taxation for 2018 – 2025:
Individual Tax Changes
1. Individual tax rates have been reduced – maximum rate reduced to 37%
2. Miscellaneous itemized deductions – not deductible from 2018-2025!
a. Applies to total of all miscellaneous deductions
b. Includes home office, auto, and similar deductions
3. State and local tax deduction – $10,000 limitation
Some states have enacted (or are preparing to enact) laws that permit taxpayers to make a charitable contribution in lieu of taxes, hoping to get around the $10,000 limit on deducting state and local taxes.
In the case of individuals, the IRS has announced that it will issue regulations which disallow any such payments as charitable contributions. The $10,000 limit will certainly apply to such payments.
The IRS has issued rules that allow business entities that make such payments to deduct them as ordinary and necessary business expenses, but not as charitable contributions. The rule doesn’t spell out what happens to any remaining balance of tax payments made that exceed $10,000, but it appears likely that any such will not be deductible.