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Taxpayers who are married and filing jointly will have an increased standard deduction of $24,000, up from the $13,000 it would have been under previous law. Single taxpayers and those who are married and file separately now have a $12,000 standard deduction, up from the $6,500 and for heads of households; the deduction will be $18,000, up from $9,550.
The personal exemption has been eliminated with the tax reform bill.
For taxpayers with incomes of $500,000 and higher, the new tax rate is 37 percent. This top rate is also applicable to married taxpayers who file jointly at $600,000 and up. This new tax law also includes changes to other tax brackets.
Child tax credit has been increased to $2,000 per qualifying child, for those who are under 17, up from $1,000. A $500 credit is also available for dependents that do not get the $2,000 credit.
The itemized deduction is limited to $10,000 for both income as well as property taxes paid during the year.
The deduction for interest is limited to $750,000 for mortgage loan balances taken out after December 15th of 2017. The limit is still $1,000,000 for mortgages that were established prior to December 15th of 2017.
Taxpayers who take part in certain retirement plans such as 401k, 403(b), 457 plans, the Thrift Savings Plan can now contribute as much as $18,500 this year, a $500 increase from the $18,000 limit for 2017.
For taxpayers who are single or head of households, the income phase out has been increased to $120,000 to $135,000. For married couples who file jointly, the range increases to $189,000 to $199,000. However, the phase out was not adjusted for married individuals who file a separate tax return. Which is $0 to $10,000?
The exemption has more than doubled from $5,490,000 per individual to $11,200,000. For married couples, the estate tax exemption also doubles from $10,980,000 to $22,400,000