1. The standard deduction is increased. The law raises the standard deduction to $24,000 for married couples filing jointly in 2018 (from $13,000 under current law), to $12,000 for single filers (from $6,350), and to $18,000 for heads of household (from $9,550). These changes expire after 2025.
2. Individual rates will range from 10% to 37%. 

   This new table minimizes the marriage penalty, where the combined income of joint filers puts them at a higher rate than if they filed as single. For example, if each person earned $200K, they will be subject to the same rate of 32% whether they filed married filing joint or single.

   Also note that the old withholding worksheet, Form W4, does not currently follow the new provisions. We anticipate that the IRS will issue the initial withholding guidance in January, and employers and payroll service providers will be encouraged to implement the changes in February. The IRS emphasizes this information will be designed to work with the existing Forms W-4 that employees have already filed, and no further action by taxpayers is needed at this time.

3. The personal and dependent exemptions are eliminated in 2018 through 2025.
4. The Child Tax Credit is enhanced and a new Family Tax Credit is enacted. The law temporarily raises the child tax credit to $2,000, with the first $1,400 refundable, and creates a non-refundable $500 credit for non-child dependents.
5. Mortgage interest deductions will be limited to underlying indebtedness of up to $750,000 ($375,000 for married filing separate or MFS). In the case of acquisition indebtedness incurred on or before December 15, 2017, the $1 million limitation or $500,000 for MFS is grandfathered in, as in any refinancing of grandfathered debt.  The new law repeals the deduction for interest on home equity indebtedness, no matter when the debt was incurred.
6. Individuals may deduct a maximum of $10,000 ($5,000 in the case of married filing separate) in all nonbusiness state and local taxes, including property taxes.
7. No deduction is allowed for miscellaneous itemized deductions subject to the 2% floor through 2025. Examples are employee unreimbursed expenses, union dues, work clothes, professional dues, etc.
8. The ACA individual mandate (Obamacare Penalty) is eliminated and the shared responsibility payment is $0. The law ends the individual mandate, a provision of the Affordable Care Act or "Obamacare" that provides tax penalties for individuals who do not obtain health insurance coverage. This begins in January 1, 2019.
9. AMT for individuals is retained but exemption amounts are increased.
10. Medical expenses deduction is temporarily enhanced. The new law lowers the threshold for the deduction to 7.5% of adjusted gross income from 10%, for tax year 2017 and 2018.
11. The new law repeals the deduction of alimony payment and their inclusion in the income of the recipient. This new rules will apply only to divorce or separation instruments executed after December 31, 2018.
12. The new law generally retains the current rules for 401(k) and other retirement plans. However, it repeals the rule allowing taxpayers to recharacterize ROTH IRS contribution as traditional IRS contributions to unwind a ROTH conversion.
13. The exclusion of gain from the sale of a principal residence and its requirements remain the same, not affected by the new law.

- We are CPAs, tax accountants, tax preparers, business managers and consultants based in Torrance, CA near Los Angeles & OC, serving the entire U.S. See us at Yelp & Facebook. Call us (424) 278-4838 or e-mail us at This email address is being protected from spambots. You need JavaScript enabled to view it. .