Please note that these new laws are effective for tax years beginning after Dec. 31, 2017. Most of them will have no bearing on your 2017 tax returns.
1) New Income and Tax Rate Brackets: Previously, individuals were subject to 6 different tax rates based on taxable income. For tax years beginning after Dec. 31, 2017 and before Jan. 1, 2026, seven tax rates apply for individuals: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. (Code Sec. 1(i), as amended by Act Sec. 11001)
2) Standard Deductions Increased: Taxpayers are allowed to reduce their adjusted gross income (AGI) by the standard deduction or the sum of itemized deductions to determine their taxable income. For tax years beginning after Dec. 31, 2017 and before Jan. 1, 2026, the standard deduction is increased to $24,000 for married individuals ling a joint return, $18,000 for head-of-householdlers, and $12,000 for all other taxpayers. (Code Sec. 63(c)(7), as added by Act Sec. 11021(a))
3) Personal Exemptions Suspended: For tax years beginning after Dec. 31, 2017 and before Jan. 1, 2026, the deduction for personal exemptions is effectively suspended by reducing the exemption amount to zero. (Code Sec. 151(d), as modified by Act Sec. 11041(a))
4) Capital Gains Provisions Conformed: The adjusted net capital gain of a noncorporporate taxpayer (e.g., an individual) is taxed at maximum rates of 0%, 15%, or 20%. (Code Sec. 461(l), as added by Act Sec. 11012)
5) Expanded Use of 529 Accounts: For distributions after Dec. 31, 2017, “qualified higher education expenses” include tuition at an elementary or secondary public, private, or religious school, up to a $10,000 limit per tax year. (Code Sec. 529(c) (7), as added by Act Sec. 11032(a))
6) AMT Retained, with Higher Exemption Amounts: For tax years beginning after Dec. 31, 2017 and before Jan. 1, 2026, the Act increases the AMT exemption amounts for individuals as follows: For joint returns and surviving spouses, $109,400. . . . For single taxpayers, $70,300. . . . For marrieds ling separately, $54,700. (Code Sec. 55(d)(4), as amended by Act Sec. 12003(a))
7) Medical Expense Deduction Threshold Temporarily Reduced: For tax years beginning after Dec. 31, 2016 and ending before Jan. 1, 2019, the threshold on medical expense deductions is reduced to 7.5% for all taxpayers. (Code Sec. 213(f), as amended by Act Sec. 11027(a))
8) State and Local Tax Deduction Limited to $10,000: For tax years beginning after Dec. 31, 2017 and before Jan. 1, 2026, subject to the exception described below, State, local, and foreign property taxes, and State and local sales taxes, are deductible only when paid or accrued in carrying on a trade or business or an activity described in Code Sec. 212 (generally, for the production of income). State and local income, war profits, and excess profits are not allowable as a deduction.
9) Moving Expenses Deduction Suspended: For tax years beginning after Dec. 31, 2017 and before Jan. 1, 2026, the deduction for moving expenses is suspended, except for members of the Armed Forces on active duty who move pursuant to a military order and incident to a permanent change of station. (Code Sec. 217(k), as amended by Act Sec. 11049(a))
10) Repeal of Obamacare Individual Mandate: For months beginning after Dec. 31, 2018, the amount of the individual shared responsibility payment is reduced to zero. (Code Sec. 5000A(c), as amended by Act Sec. 11081) This repeal is permanent.