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Mortgage interest deduction limit

In 2018, the mortgage interest deduction limit on qualified acquisition debt is reduced from $1,000,000.00 to $750,000,000.00. This means that interest is deductible to the extent that the loan balances up to $750,000.00 are deductible to buy, build or improve your primary or second home.

State and local taxes changed

For 2018, the state and local taxes deduction will be capped at $10,000.00 (for the sum of state and local property taxes and income taxes). Property taxes paid in carrying on a trade or business will not be subject to this $10,000.00 cap.

  • Doubles estate tax exemption. Estate taxes will apply to fewer people, with the exemption doubled to $11.2 million ($22.4 million for a married couple).
  • Reduces pass-through business taxes. Most owners of pass-through entities such as S corporations, partnerships and sole proprietorships will see their income tax lowered with a new 20 percent income reduction calculation.
  • Cuts some above-the-line deductions. Moving expense deductions get eliminated except for active-duty military personnel, along with alimony deductions beginning in 2019.
  • Weakens the alternative minimum tax (AMT). The bill retains the alternative minimum tax but changes the exemption to $109,400 for joint filers and the phaseout threshold to $1 million. The changes mean the AMT will affect far fewer people than before.
  • Expands use of 529 education savings plans. Tax-deductible contributions to 529 education savings plans can now be used to pay tuition for students in K-12 private schools.
  • Suspension of miscellaneous itemized deductions subject to 2% of AGI. These categories of deductions will no longer be deductible subject to 2% of AGI through December 31, 2025: 1) Unreimbursed employee expenses, 2) Tax preparation fees, 3) Other expenses ie fees to collect interest and divindends, appraisal fees for casualty loss or charitable contributions, excess deductions allowed a beneficiary on termination of an estate

 

 

Wages, self employment income, and compensation in excess of certain threshold amounts will be subject to an additional 0.9% Medicare tax . Note that tips and fringe benefits (wages not paid in cash) are also subject to the additional Medicare tax.

 

Filing Status  Threshold amount
 Married Filing Jointly  $250,000.00
 Married Filing Separately  $125,000.00
 Single  $200,000.00
Head of Household (with qualifying person) $200,000.00
Qualifying Widow(er) with dependent child $200,000.00
   

 

 

 

  • Double standard deductions: The standard deduction nearly doubles to $12,000 for single filers and $24,000 for married filing jointly. To help cover the cost, personal exemptions and most additional standard deductions are suspended.

 

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