2018 Tax Law Updates

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Federal Income Tax Brackets:

Married Filing Joint Return:

10%        from $0 to $19,050

12%        from $19,050 to $77,400

22%        from $77,400 to 165,000

24%        from $165,000 to $315,000

32%        from $315,000 to $400,000

35%        from $400,000 to $600,000

37%        from $600,000

Married Filing Separate Returns:

10%        from $0 to $9,525

12%        from $9,525 to $38,700

22%        from $38,700 to $82,500

24%        from $82,500 to $157,500

32%        from $157,500 to $200,000

35%        from $200,000 to $300,000

37%        from $300,000

Single:

10%        from $0 to $9,525

12%        from $9,525 to $38,700

22%        from $38,700 to $82,500

24%        from $82,500 to $157,500

32%        from $157,500 to $200,000

35%        from $200,000 to $500,000

37%       from $ 500,000

Head of Household:

10%        from $0 to $13,600

12%        from $13,600 to $51,850

22%        from $51,850 to $82,500

24%        from $82,500 to $157,500

32%        from $157,500 to $200,000

35%        from $200,000 to $500,000

37%        from $500,000

Long Term Capital Gains Brackets

Single:

0%       from $0 to $38,600

15%     from $38,600 to $425,800

20%     from $425,800

Married Filing Jointly:

0%       from $0 to $77,200

15%     from $77,200 to $479,000

20%     from $479,000

Married Filing Separately:

0%       from $0 to $38,600

15%     from $38,600 to $239,500

20%     from $239,500

 

Head of Household:

0%       from $0 to $51,700

15%     from $51,700 to $452,400

20%     from $452,400

Contribution limits and phase out income thresholds for retirement savings accounts

Traditional IRA:

Contribution limit amounts remain the same – $5,500 or $6,500 for individuals over 50.

For individuals covered by an employer retirement plan the deduction phase-out ranges for modified adjusted gross income are:

 

2017

2018

Single and Head of Household

$62,000 to $72,000

$63,000 to $73,000

Married Filing Joint Return, for covered spouse

$99,000 to $119,000

$101,000 to $121,000

Married Filing Joint Return, for non-covered spouse

$186,000 to $196,000

$189,000 to $199,000

Married Filing Separate Returns

$0 to $10,000.

$0 to $10,000.

Roth IRA:

Contribution limit amounts remain the same - $5,500 or $6,500 for individuals over 50.

Contribution phase out ranges for adjusted gross income are:

 

2017

2018

Single and Head of Household

$118,000 to $133,000

$120,000 to $135,000

Married Filing Joint Return

$186,000 to $196,000

$189,000 to $199,000

Married Filing Separate Returns

$0 to $10,000.

$0 to $10,000.

Employer sponsored plans

Contribution Limits for employees that participate in a 401(k) or 403(b) plans increased from $18,000 to $18,500.

The Total Contribution limitation increased in 2018 increased from $54,000 to $55,000.

 

Standard Deduction Amount

For year 2018 standard deduction amounts are:

  • Married Filing Joint Return – increased from $12,700 to $24,000
  • Married Filing Separate Returns – increased from $6,350 to $12,000
  • Single - increased from $6,350 to $12,000
  • Head of Household - increased from $9,350 to $18,000

For year 2018 the personal exemption has been eliminated and set to 0. (Personal exemptions was $4,050 in 2017).

Additional standard deduction amount for aged or blind:

  • Married Filing Joint Return - $1,250
  • Married Filing Separate Returns - $1,250
  • Single - $1,550
  • Head of Household - $1,550

Income Limit subject to Social Security Tax:

In 2018, the income subject to Social Security tax increased from $127,200 to $128,700.

Estate Tax Exclusion Amount

The basic exclusion amount for determining the amount of the unified credit against estate tax has been increased from $5,490,000 to $10,000,000.

Note: This limit has not been adjusted by inflation:

https://www.irs.gov/businesses/small-businesses-self-employed/whats-new-estate-and-gift-tax

Child Tax Credit

The Child tax credit amount has been updated from $1,000 to $2,000.

The phase-out threshold updated to:

 

2017

2018

Married Filing Joint Return

$111,000

$400,000

Married Filing Separate Returns

$55,000

$200,000

Single

$75,000

$200,000

Head of Household

$75,000

$200,000

Mortgage Interest Deduction limit

 The mortgage interest deduction limit was updated from $1,000,000 to $750,000.

Limit on State Tax Deduction

State tax deduction now limited to $10,000

Changes not implemented

Refundable portion of the Child Tax Credit not implemented.

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