With the end of this season we also see the end of tax laws as they have been for decades. Now we have to look ahead and make sure there won’t be any unpleasant surprises and taxpayers will be subject to the new laws.
If you are planning on a divorce this year, you’ll want to review the new rulings. If you’re buying a new home, again, you’ll want to make sure you are clear about whether or not you can write off the interest on your loan.
I’ve put together a quick review of some of the more relevant changes, so keep them in mind as you go through the year.
One of the biggest changes to the tax law is that there were 7 new rate brackets created that will extend into 2025: 10%, 12%, 22%, 24%, 32%, 35% and 37%. While capital gain rates are unchanged, the thresholds of the 15% and 20% brackets have changed along with the ordinary income rate brackets. In addition, personal exemptions are discontinued for 2018 – 2025.
Next, in order of importance, the standard deduction is more or less doubled to $24,000 if married filing jointly. It’s $18,000 for head of household, and $12,000 for single filers.
You’ll want to remember that the deduction for personal taxes (property taxes, and state, local or foreign taxes) is capped at $10,000 for 2018 – 2025.
If you pay alimony, take note: After 2018 alimony will be nondeductible to the payer and tax-free to the recipient.
There are more changes, however, it may take time to fully digest these top considerations. And, believe it or not we’re almost halfway through the year!
Have a question? Contact Barry Fowler.
Your comments are always welcome!