Field Notes Blog > 2018 Tax Law Changes

  • 2018 Tax Law Changes

    November 07, 2018

    Featured Guest Writer: Angela Pecora, AgChoice Farm Credit farm accounting manager 

    The recently enacted Tax Cuts and Jobs Act (TCJA) is a sweeping tax package. Below are key elements that will impact individuals. Unless otherwise noted, the changes are effective for tax years beginning in 2018 through 2025.

    Individual Tax Impacts:

    • Tax rates.  The new law imposes a new tax rate structure with seven tax brackets.  The top rate of 39.6 percent reduced to 37 percent.  The top rate applies to taxable income above $500,000 for single taxpayers or $600,000 for married filing jointly (MFJ).
    • Standard deduction.  The new law increases the standard deduction to $24,000 for MFJ, $18,000 for heads of household and $12,000 for single and married filing separate (MFS) taxpayers.
    • Personal exemptions.  The new law suspends the deduction for personal exemptions.  Starting in 2018, taxpayers can no longer claim personal or dependency exemptions.
    • Child tax credit.  The new law increases the credit for qualifying children (i.e. children under 17) to $2,000 from $1,000.
    • Medical expenses. For 2018, medical expenses are deductible to the extent that they exceed 7.5 percent of adjusted gross income (AGI).  Previously the AGI “floor” was 10 percent.
    • State and local taxes.  The itemized deduction for state and local income and property taxes is limited to a total of $10,000 starting in 2018.  This limitation does not apply to state, local and foreign property taxes and sales taxes that are presently deductible in computing income on Schedules C, E or F.
    • Mortgage interest.  Under new law, mortgage interest on loans used to acquire a personal residence and a second home is only deductible on debt up to $750,000 (down from $1 million), starting with loans taken out in 2018.  There is no longer any deduction for interest on home equity loans, regardless of when the debt was incurred.
    • Miscellaneous itemized deductions.  Tax preparation costs, investment expenses, union dues and unreimbursed employee expenses are no longer deductible. These deductions were formerly deductible to the extent they exceeded 2 percent of adjusted gross income.
    • Alimony. For pst-2018 divorce decrees and separation agreements, alimony will not be deductible by the paying spouse and not be taxable to the receiving spouse.
    • Health care “individual mandate”. Starting in 2019, there is no longer a penalty for individuals who fail to obtain minimum essential health coverage.

    This is a glimpse of the various new or changed legislations under the TCJA.  Consult a tax professional to learn more about the changes.  

    It's never too early to start tax planning! Watch our webinar recording to learn how the recent tax law changes will impact your 2018 return:



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