Last week, I had a fabulous opportunity to speak to a very attentive audience at the Arlington County Public Library about individual tax changes due to the 2017 Tax Cuts and Jobs Act. Libraries are a tremendous community resource. I felt privileged to be part of their program to help our neighbors gain awareness of the new taxes law and its impact.
We covered a lot of ground in 90 minutes (plus questions). The material was pretty general, geared toward increasing awareness the many tax changes impacting individual taxpayers. The impact of those changes varies based on individual income, family size, geography and other factors.
Six of the factoids from my presentation could be valuable information for you:
- Good news! Tax brackets are reduced for the top six of seven individual tax brackets. Most taxpayers benefit from the new, lower rates. However, some taxpayers in the 33% marginal tax bracket move up to 35% in 2018 (e.g., singles $200-400K).
- The decision whether to itemize or take the standard deduction has completely changed. The standard deduction is doubled, and some taxpayers will get a higher deduction be taking it. Another benefit is preparing a simpler tax return, without Schedule A. For those who still itemize, the itemized deduction phase-out for high-income taxpayers is eliminated.
- Personal exemptions are eliminated. As a “consolation prize” a credit of up to $500 per qualified dependent is available. Qualified dependent does not include your spouse.
- Taxpayers who itemize deductions will see many changes. One big change is the new $10,000 deduction cap that was imposed on the total of all state and local taxes. If you don’t have that memorized, that total includes state income taxes, real estate taxes and personal property taxes,
- Qualified residence loan interest is limited to $750,000 of total indebtedness for first and second homes acquired after December 15, 2017 ($375K if married filing separately). Indebtedness that existed prior to that date is “grandfathered” and not subject to the new limit.
- Miscellaneous itemized deductions are generally eliminated, including employee business expenses, tax preparation fees, investment advisory fees, and safe deposit box fees. Moving expense deductions are also eliminated other than for active duty military.
I thoroughly enjoyed my time at the Arlington County Public Library helping a very engaged group of interested taxpayers gain awareness of individual tax changes. This important information was enthusiastically received. Thanks to the Library and its incredible Research Librarian for making this event happen for the community!