-Editor's Commentary-

There are a lot of changes in the new Tax Cuts & Jobs Act, which was signed into law on December 22, 2017 and takes effect in 2018.

You can use this commentary as a high-level overview of some of the most significant items in the new act. Because major tax reform like this happens so seldom, it may be worthwhile for you to schedule a tax-planning consultation early in the year to ensure you reap the most tax savings possible during 2018.

Doubles Standard Deductions

Married Filed Jointly, standard deduction limits increased to $24,000
Single Taxpayers and Married Filed Separately. Standard deduction limits increased to $12,000
Head of Households, standard deduction limits increased to $18,000.

Eliminates Personal Exemptions

Personal Exemptions have been completely eliminated.

Reduces Income Tax Rates

Retains seven brackets, but at reduced rates, with the highest bracket dropping to 37% from 39.60%, This new top tax bracket will affect individual taxpayers with incomes of $500,000 or higher. The top rate for Married Filed Jointly will affect taxpayers with incomes of $600,000 or higher.

Doubles Estate Tax Exemption

Estate tax exemption doubles to $11.2 Million per individual and $22.4 Million per couple for 2018.

Doubles Child Tax Credit

Credit has be raised to $2000 per child under 17. A $500 credit is eligible for those who do not qualify for this credit.

Caps Mortgage Interest Deduction

Deduction for mortgage interest capped at new $750,000 limit for any balanced closed after December 15 2017. Anything prior is under the old plan.

Caps State and Local Tax Deductions

State and local tax deductions are limited to $10,000 total for all property, income, and sales taxes.

Expands use of 529 Education Savings Plan

Qualified Distribution for 529 now includes tuition payments for students in K-12 grades.

Weakens the AMT

AMT remains but changes the exemption to $109,400 for married filed jointly and increases phase out to $1 Million.

Increases Contribution Limits for Retirement Savings

Employees who participate in certain retirement plans- 401(k), 403(k), and most 457 plans, and the Thrift Savings Plan - can now contribute as much as $18,500 this year, a $500 increase from the $18,000 limit for 2017.

Savers who contribute to Individual Retirement Accounts (IRA) will have higher income ranges following cost-of-living adjustments. For Single Taxpayers, the income limits are from $69,000 to $73,000 For Married Filed Jointly, and spouse who has access employer program, the income limits are from $101,000 to $121,000. For Married Filed Jointly, which an individual taxpayer that does not have a retirement account but married to someone who does, the income limits are from $189,000 to $199,000

For Roth IRA, Single or Head of Household, income phase out limits are now $120,000 to $135,000. Married Filed jointly, income phase out limits are now $189,000 to $199,000 Married Filed Separately, income phase out limits have not been changed; $0 to $10,000.