Important Changes for Individuals in the New Tax Law
For individual taxpayers, the new tax law — commonly known as the Tax Cuts and Jobs Act (TCJA) — includes many expected changes, some unexpected ones and some that didn't make the final cut. Here are the most important things that individual taxpayers need to know about the TCJA, which was signed into law on December 22, 2017. Except where noted, these changes are effective for tax years beginning after December 31, 2017, and before January 1, 2026. Changes to Individual Rates and Brackets For 2018 through 2025, the TCJA retains seven tax rate brackets, but six of the rates are lower than before. The tax brackets for ordinary taxable income are as follows:Single | Married, Filing Jointly | Head of Household | |
10% tax bracket | $0 – $9,525 | $0 – $19,050 | $0 – $13,600 |
Beginning of 12% bracket | $9,526 | $19,051 | $13,601 |
Beginning of 22% bracket | $38,701 | $77,401 | $51,801 |
Beginning of 24% bracket | $82,501 | $165,001 | $82,501 |
Beginning of 32% bracket | $157,501 | $315,001 | $157,501 |
Beginning of 35% bracket | $200,001 | $400,001 | $200,001 |
Beginning of 37% bracket | $500,001 | $600,001 | $500,001 |
Single | Married, Filing Jointly | Head of Household | |
0% tax bracket | $ 0 – $38,599 | $0 – $77,199 | $0 – $51,699 |
Beginning of 15% bracket | $38,600 | $77,200 | $51,700 |
Beginning of 20% bracket | $425,800 | $479,000 | $452,400 |
- $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).
- A qualifying 17- or 18-year-old,
- A full-time student under age 24,
- A disabled child of any age, and
- Other qualifying (nonchild) relatives if all the requirements are met.
Other Noteworthy News The Tax Cuts and Jobs Act is 479 pages long and covers a lot of ground. Here are some lesser-known aspects of the new law that might affect you personally. Adoption. The TCJA retains the tax breaks for adoption expenses. Alimony. Starting in 2019, taxpayers can no longer deduct alimony payments if they're required to by a divorce agreement entered into after December 31, 2018. Recipients of affected alimony payments will no longer have to include them in taxable income, as they currently do. (The current tax treatment stays in place for divorce agreements entered into on or before December 31, 2018, however.) Gift and estate taxes. Starting in 2018, the unified federal gift and estate tax exemption will increase to roughly $11.2 million or $22.4 million for a married couple. "Green" vehicles. The TCJA retains the tax credit of up to $7,500 for new qualified plug-in electric vehicles. Moving expenses. Starting in 2018, deductions for most miscellaneous itemized expenses and moving expenses (with an exception for members of the military in certain circumstances) are eliminated. Tax-free employer reimbursements for moving expenses are also eliminated. Personal casualty and theft losses. Starting in 2018, itemized deductions for personal casualty and theft losses are eliminated, except for personal casualty losses incurred in federally declared disaster areas. |