In addition to changes to the tax rates changes, assuming that the Tax Reform bill passes by the end of 2017, 2018 will also see large changes to the system of deductions.
Standard Deduction Amounts
For 2018, the standard deduction amounts will increase to $12,000 for individuals, $18,000 for heads of household, and $24,000 for married couples filing jointly and surviving spouses.
If you are over age 65, blind or disabled, you will be entitled to an additional $1,300 to your standard deduction ($1,600 for unmarried taxpayers).
These are being abolished for 2018. This will mean no additional exemptions for Children and other dependents.
Alternative minimum tax (AMT) exemption
The AMT amounts are adjusted for inflation:
Some additional tax credits and deductions are being adjusted for 2018. These include:
- Child Tax Credit – The child tax credit will be increased to $2,000 per qualifying child and will be refundable up to $1,400, subject to phaseouts. The bill also includes a temporary $500 nonrefundable credit for other qualifying dependents (for example, older adults).
- Student Loan Interest Deduction –For 2018, the maximum amount that you can deduct for interest paid on student loans remains at $2,500.
- State and Local Taxes- the deduction will be capped at $10,000
- Mortgage Interest deduction- you can currently claim a deduction on mortgages up to $1m, this is being reduced to $750,000.
- Casualty Losses – these will only be allowable where a disaster has been declared by the President
Moving Expenses – these will no longer be deductible.