Important Changes for Individuals in the New Tax Law
January 3, 2018
The new tax law — commonly known as the Tax Cuts and Jobs Act (TCJA) — is 479 pages long and covers a lot of ground. The TCJA includes many expected changes, some unexpected ones and some that didn't make the final cut.
Standard Deduction and Personal and Dependency Exemptions
A big decision for individual taxpayers will be: Should I itemize deductions or take the standard deduction? Under the new law, many more taxpayers are likely to take the standard deduction, rather than itemize deductions. Why? The TCJA significantly increases the standard deduction amounts, starting in 2018, to:
- $12,000 for singles (up from $6,350 for 2017),
- $24,000 for married couples who file jointly (up from $12,700 for 2017), and
- $18,000 for heads of households (up from $9,350 for 2017).
Additional standard deduction amounts for elderly and blind individuals are still allowed.
Unfortunately, the TCJA eliminates personal and dependency exemptions. (Under prior law, personal and dependency exemptions would have been $4,150 each for 2018.)
The TCJA represents a major tax overhaul. It will take time and effort to understand its full effect on your personal tax situation. We can help you take advantage of beneficial changes and avoid pitfalls. And stay tuned for more articles about additional aspects of the new law.