by DAVID NOVAK
The new tax law enacted a little more than a year ago was the largest piece of
tax legislation passed in more than 30 years. As you get ready to file your
taxes for 2018, here’s a reminder of some of the major changes:
• Individual tax rates were lowered by about 2 percent at each bracket to 0,
10, 12, 22, 24, 32, 35 and 37 percent.
• Personal exemption was eliminated and standard deduction increased to
$12,000 for individuals and $24,000 for married couples.
• Taxpayers are now allowed to deduct property taxes and state and local
income taxes (or sales taxes in lieu of income taxes) up to a $10,000 maximum.
• The child tax credit was increased from $1,000 to $2,000 and is refundable
up to a $1,400 maximum, but begins to phase-out for families earning over
• The mortgage interest deduction was preserved for new mortgages on a
first or second home. Home equity debt interest not used to improve the home
• The estate and gift tax exemption doubled from $5 million to $10 million.
Some of the top tax changes for small businesses:
• The corporate tax rate was lowered from 35 to 21 percent.
• A 20 percent tax deduction is allowed for income earned from sole
proprietorships, limited liability companies, partnerships and S corporations. The
deduction applies to the first $315,000 of income for joint filers (and $157,500 for
other filers) and reduces their effective marginal rate to a 29.6 percent maximum.
Wage income is not eligible for the lower rates on business income.
• Businesses are now allowed to write off the full cost of new equipment
• Small businesses can continue to write off interest on loans.
One final note: If you are still working, whether part-time or full-time, check
the amount of your tax withholdings. Many have been surprised with refunds
that are lower than they expected, not realizing the reason was an adjustment
in withholdings by their employer.
The IRS Withholding Calculator (at www.irs.gov) can help you determine the right amount of tax to withhold from your paycheck. You may need to complete a new Form W–4 to adjust the amount withheld.