New Tax Brackets
| Tax Rate | Taxable Income (Single) |
Taxable Income (Married Filing Jointly) |
|---|---|---|
| 10% | Up to $9,700 | Up to $19,400 |
| 12% | $9,701 to $39,475 | $19,401 to $78,950 |
| 22% | $39,476 to $84,200 | $78,951 to $168,400 |
| 24% | $84,201 to $160,725 | $168,401 to $321,450 |
| 32% | $160,726 to $204,100 | $321,451 to $408,200 |
| 35% | $204,101 to $510,300 | $408,201 to $612,350 |
| 37% | Over $510,300 | Over $612,350 |
| Tax Rate | Taxable Income (Married Filing Separately) |
Taxable Income (Head of Household) |
|---|---|---|
| 10% | Up to $9,700 | Up to $13,850 |
| 12% | $9,701 to $39,475 | $13,851 to $52,850 |
| 22% | $39,476 to $84,200 | $52,851 to $84,200 |
| 24% | $84,201 to $160,725 | $84,201 to $160,700 |
| 32% | $160,726 to $204,100 | $160,701 to $204,100 |
| 35% | $204,101 to $306,175 | $204,101 to $510,300 |
| 37% | Over $306,175 | Over $510,300 |
Standard Deduction was nearly doubled… $24,000 for married couples, $12,000 for single filers and $18,000 for head of household.
Personal Exemption deduction has been eliminated!
State and Local Taxes deduction has been capped at $10,000. Property tax remain fully deductible for business such as real estate rentals.
Certain deductions eliminated: All misc write-offs subject to 2% of AGI threshold… Employee business expenses, Tax prep costs, Hobby expenses, Brokerage and IRA fees. Theft losses. Alimony on post-2018 divorce documents.
Obamacare is on the way out! The requirement to have health insurance or pay a fine has been repealed for tax years 2019 and forward.
Child Tax Credit has been doubled to $2,000 per qualifying dependent under age 17. There’s also a new $500 credit for each dependent who is not a qualifying child.
Business Taxes
All “C” corporations will be taxed at a flat rate of 21%, down from the previous top rate of 35%.
Owners of pass-through entities are eligible for a new 20% deduction of qualified business income. Limits however do apply, for example … income in excess of $315,000 for married filers and $157,500 for all others.
Certain Business deductions have been eliminated… Business entertainment, Country Club dues, the 9% domestic production deduction. Net operating losses can only offset 80% of taxable income.
These are only a few of the many changes that took place with the new tax reform, but possibly the most significant.