It finally happened. After years of campaign promises and an endless news cycle, the Federal tax bill has come to fruition. Regardless of which side of the political fence you might sit, the tax bill is sweeping and will affect all individuals and businesses in the country. It is therefore important to understand just what was passed so that you can ascertain how it might affect you.
- Standard deduction increase. The standard deduction will increase across the board, which will reduce the number of people itemizing their deductions and will also result in tax savings for many. The deduction will increase to $12,000 for single taxpayers, $18,000 for a head of household, and $24,000 for married filers.
- Revised tax brackets. The tax bill made changes to the tax brackets, with most taxpayer generally paying less. Most people will see this change reflected in their paychecks as the withholding tables have been modified accordingly.
- Self-employment tax deduction. Owners of a small business, such as a sole proprietorship, partnership, or S corporation can deduct up to 20% of certain business income.
- The Child Tax Credit will increase from $1000 to $2000.
- Individual mandate. Beginning in 2019, there will no longer be a penalty for failure to obtain health insurance in accordance with the Affordable Care Act.
- Alimony deduction eliminated. People who pay alimony for orders entered beginning January 1, 2018 can no longer claim a deduction for these payments in their individual tax return, nor does the dependent person have to report alimony payments as income.
- Limitation on state and local tax deduction. There will now be a $10,000 limit on deductions for state and local taxes, including property taxes. This is a significant change for people who pay high property taxes and has led many people to attempt to early pay their property taxes before the change kicked in.
- Estate tax exemption change. In 2017, the estate tax exemption was $5.49 million for an individual and close to $11 million for a married couple. This meant that an estate was not liable for estate taxes until its value surpassed the applicable exemption amount. The next tax bill essentially doubles the exemptions (adjusted for inflation) for wealthy estates so that an individual is exempt up to $11.2 million and a couple is exempt up to $22.4 million. Significantly, these exemptions are only written to last between 2018 through 2025, so an estate-planning attorney can help you prepare accordingly.
Call Robert S. Thomas, An Experienced Attorney
Taxes can have significant implications for various aspects of your life, including family law matters, estate planning, and tax appeals. If you need assistance in any of these subject matters, contact me. With over twenty years of legal experience, I can provide you with smart, relevant legal advice to meet your needs. Call the Law Offices of Robert S. Thomas at 847-392-5893 to schedule a consultation or visit our website today.