As you may be aware, there will be some drastic tax changes that will go into effect in 2018. Many clients want to know how this will affect them. Please consider the following changes:
- There will still be 7 income tax brackets for individuals, but the rates are all slightly lower for the most part. The standard deduction will double, and the personal exemption will be eliminated.
- Many itemized deductions will be eliminated.
- Alimony will no longer be deductible to the person paying it but will be deductible for the person receiving it for divorces signed in 2018.
- Deductions for charitable donations, student loan interest, and retirement contributions will remain.
- Mortgage interest deductions will be limited to the first $750,000 amount of the loan, but this does not include current mortgage holders.
- The Obamacare tax will be repealed for those without insurance effective in 2019.
- The estate tax exemption will be doubled.
- The child tax credit will be increased from $1,000 to $2,000.
- The corporate tax rate will be lowered from 35% to 21%. The standard deduction is increased to 20% for pass-through businesses. This is phased out for professional service businesses at certain individual income levels. Small businesses may want to delay income to the extent permissible by law until 2018 to take advantage of this.
Contact Mendes Weed, LLP
This is only a summary of a select few of the changes that will go into effect in 2018. For more information about other changes to the tax laws, you should reach out to and meet with a tax lawyer.
Mendes Weed, LLP has offices in Walnut Creek, Sacramento, and San Francisco. If you would like to know how the tax changes will affect you, contact us.