Recent tax law changes have people nervous and excited to say the least. In this post we will discuss some of the major changes that could affect you and your family.
1. The standard deduction is changing. As you can see by the table listed below most standard deductions have almost doubled, making itemizing more difficult and trivial in households.
2. Personal Exemptions are going away. If you have ever done your taxes or looked into how the tax numbers are calculated then you have definitely seen these. This is the $4,050 exemption for everyone living in your home. Personal Exemptions are cancelled for the next 10 years under the new tax plan.
3. Tax brackets have also changed under the new law, decreasing each bracket by as much as 3% in some cases as the chart illustrates below.
4. Many Minnesotans are concerned with the State and local tax deductions (SALT). High net worth individuals and property owners are especially concerned about SALT because it limits the amount of State and local property, income and sales to $10,000. Anything above $10,000 is no longer viable.
Another big one lumped into this issue in the mortgage deduction to mortgage values of $750,000 and below. If you have a million-dollar home with an $800,000 mortgage on the home, you cannot deduct the interest on your taxes. Anything below $750,000 in mortgage value will be allowed.
5. The Medical Expense Issue, currently staying in effect for 2018 tax returns is the medical expense deduction, which is a deduction for any medical expense paid out of pocket that is above 7.5% of a person’s Adjusted Gross income. You may be asking why this is on here while it is staying the same. Going forward into 2019 this deduction will actually end up increasing to 10% of your adjusted gross income.
Contact our experts at Strategic Tax & Retirement to answer all of your tax questions and concerns.