Standard Deductions
Those who are married and filing jointly will have a standard deduction of $24,000. Single taxpayers and those and those who are married, and file separately will see their standard deduction rise to $12,000. For heads of households, the deduction will be $18,000.
Child Tax Credit
The child tax credit has been raised to $2000.00 per qualifying child who are under 17.
Higher contributions limits for retirement savings
Employees who participate in certain retirement plans- 401(k)s, 403(b)s, most 457 plans and the Thrift Savings plan-will be able to contribute as much as $18,500, a $500 increase from the current $18,000 limit.
Personal Exemption has been eliminated
Due to the standard deduction being increased.
Estate tax
The basic exclusion amount for estates of decedents who die in 2018 will be $5.6 million, up from $5.49 million in 2017.
For Businesses
Corporate tax rates are now a flat rate of 21% (permanent change) Pass through entities such as LLC’s get a 20% deduction. If your business is a pass-through entity (sole proprietorship, partnership, LLC or S-Corp) then you can deduct 20% of your Qualified Business Income. Qualified Business Income represents the bottom line profits from our business expenses.
Planning is the key. It’s a good idea to contact Account Management & Tax Service when you want to prepare for oncoming changes!