Income Tax Law Changes for Individuals

  • For individuals, the new law provides for the same number of income tax brackets, but with different income thresholds and lower tax rates ranging from 10% to 39.6%.
  • The standard deduction is $24,000 for married filers and $12,000 for single filers.
  • The additional standard deduction for individuals who are age 65 or older, or blind, is retained.
  • Personal and dependent exemptions are eliminated.
  • The deduction for state and local taxes is significantly changed. This deduction will be capped at $10,000 for the total sum of state and local property taxes and income taxes (or sales tax in lieu of income tax). Property taxes paid in carrying on a trade or business will not be subject to this $10,000 cap.
  • Mortgage interest deduction limit on qualified acquisition debt is reduced from $1,000,000 to $750,000. This means interest is deductible on loan balances up to $750,000 used to buy, build, or improve your primary home or one second home. This reduction applies only to debt incurred on or after December 15, 2017.
  • Mortgage interest deduction is eliminated for interest paid on home equity debt, meaning debt used for something other than to buy, build, or improve your home.
  • Deductions for investment expenses, tax prep fees, and unreimbursed employee expenses are eliminated.
  • Medical expenses exceeding 7.5% of your adjusted gross income are deductible (down from 10%). This reduced limit applies only for 2017 and 2018.
  • Casualty losses are limited to those attributable to a federally-declared disaster area.
  • The phase-out of itemized deductions for higher-income taxpayers is eliminated.
  • The child credit increases from $1,000 to $2000. The income level at which the credit begins to phase out also increases allowing more taxpayers to benefit.
  • Alimony payments for divorce agreements entered into and/or modified after December 31, 2018 will no longer be deductible by the payer and will not be considered income to the recipient.
  • Cash contributions to charitable organizations may now offset up to 60% of your adjusted gross income (up from 50%).

Estate and Gift Taxes

2018 Federal Estate Tax Exemption is adjusted to $11,180,000.00 per person (indexed annually for inflation). There is a sunset provision – on January 1, 2026, the Federal Estate Tax Exemption will revert to $5,490,000.00 per person.

  • The Federal “portability” election, permitting a deceased spouse to transfer unused exclusion amounts to a surviving spouse, is unchanged.
  • The rules providing a “step-up” in cost basis to date of death value for capital assets are unchanged.
  • Maximum tax rate is 40%

2018 New York State Estate Tax Exemption remains $5,250,000.00 per person

  • No NYS gift tax
  • No portability in NY
  • Maximum tax rate is 16%

2018 Annual Gift Tax Exclusion is $15,000.00 per person, per calendar year

Pursuant to U.S. Treasury Department Circular 230, unless we expressly state otherwise, any tax advice contained in this communication (including any attachments) was not intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax-related penalties or (ii) promoting, marketing or recommending to another party any matter(s) addressed herein.