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The new Tax Cuts and Jobs Act introduced a number of reforms to individual and corporate taxes. While it was signed into law on December 22, 2017, the changes won’t go into effect until the 2018 tax year—meaning your 2017 taxes will be unaffected.

This article is not meant to be comprehensive. Instead, we’ve picked out four highlights that may affect your tax situation.

1) Tax bracket adjustments

Though a reduction in the number of tax brackets was discussed, the final law keeps the current seven brackets, while slightly lowering most of the tax rates for each bracket.



Married Filing Jointly


Up to $9,525

Up to $19,050


$9,526 to $38,700

$19,051 to $77,400


$38,701 to $82,500

$77,401 to $165,000


$82,501 to $157,500

$165,001 to $315,000


$157,501 to $200,000

$315,001 to $400,000


$200,001 to $500,000

$400,001 to $600,000


Over $500,000

Over $600,000

The rates for capital gains stay the same, but they still line up with the old tax brackets.

2) Personal exemptions replaced by larger standard deductions

Personal exemptions—a type of deduction for each taxpayer and dependent in your household—are being repealed and replaced by a larger standard deduction. The current standard deduction of $6,350 for individuals and $12,700 for married couples will almost double to $12,000 and $24,000 respectively.

In addition, many itemized deductions are either being repealed or reformed. These changes, in partnership with a larger standard deduction, mean even less people will be itemizing deductions on their tax returns.

3) Child tax credit increased

The new tax law increases the child tax credit from $1,000 to $2,000. In addition, more families will be able to claim the credit, as the income phase-out is increased to $200,000 for individuals and $400,000 for married couples (up from $75,000 and $110,000).

The expanded child tax credit should make up for the reduced deduction that larger families will experience with the repeal of personal exemptions. For example, currently a married couple with two children would have personal exemptions totaling $16,200 ($4,050 personal exemption x four people). Combined with a standard deduction of $12,700, their total deduction would be $28,900.

Since the tax law is getting rid of exemptions, this family’s new deduction would be “only” $24,000. However, they would be eligible for $4,000 in child tax credits in 2018, up from just $2,000 prior! This should translate into tax savings for this particular family.

4) Obamacare’s Individual Mandate repealed

Finally, the Affordable Care Act’s “individual mandate” to have health insurance (along with the tax penalty for non-compliance) will be repealed beginning in 2019. It’s important to note that the mandate and penalty will still be in place for 2018

Though not an all-out transformation of the tax code, the Tax Cuts and Jobs Act is still significant and brings several changes (and opportunities) to an individual’s tax situation. However, the changes to personal taxes are temporary and will lapse after 2025 (unless a future act of Congress makes them permanent).

In the meantime, one idea is to consider a Roth conversion for any pre-tax retirement accounts, as five of the seven tax brackets are receiving tax rate reductions of one to four percent. This can benefit you by moving future retirement dollars to a tax-free Roth IRA!

Ready to plan for the year ahead? Schedule a time with us!