Income Tax Reform
As a result of the December 20, 2017 Tax Reform legislation, the following item will affect your Tax Year 2017 tax return:
Tax Reform Changes Affecting Tax Year 2017 (01/01/2017 to 12/31/2017)
- Medical Expense Deduction: 2017 medical expenses that exceed 7.5% of your 2017 gross income can be deducted on your 2017 Tax Return (due on April 18, 2018). For example, if you made $40,000 in 2017 and 7.5% of that is $3,000, this means you can deduct everything above $3,000 on your 2017 Tax Return. The efile.com software will calculate this for you when you prepare and e-file your tax return.
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The information below will only be relevant next year!
Tax Reform Changes Starting in January 1, 2018 for Tax Years 2018, 2019, etc.
Here is the latest bill that was passed by Congress (House and the Senate) and signed by the President in December 2017:
View the Latest Tax Reform Bill Introduced on December 15, 2017
View the First Tax Reform Bill Introduced on November 2, 2017
Here are the things that are increased or eliminated from the current tax code:
- Changes the Seven Tax Rates: The new rates will be 10%, 12%, 22%, 24%, 32%, 35%, and 37%. They would phase out in eight years.
- Doubles the Standard Deduction: The standard deduction amount is increased from $6,350 to $12,000 for single filers, $12,700 to $24,000 for married filing jointly and widow filers, and $9,350 to $18,000 for Heads of Household.
- Eliminates the Personal Tax Exemption: The personal tax exemption will be replaced by the doubled standard deduction.
- Decreases the Home Mortgage Interest Tax Deduction: For new loans starting in 2018, the deduction amount is decreased from $1 million to $750,000 (current homeowners will be carried over to current tax code rules). It will go back to the original amount in 2026.
- Increases the Tax Deduction for Charitable Contributions: The limit for charitable cash donations to public charities and certain other organizations increases from 50% to 60%. The charitable standard mileage rate stays at 14% with no adjustment for inflation.
- Increases the Child Tax Credit: The Child Tax Credit is increased from $1,000 to $2,000 per child (first $1,400 is refundable). The credit will start to phase out at $400,000 and more than $200,000 for other taxpayers. This increased amount would phase out in eight years.
- Adds a New Tax Credit for Non-Child Dependents: There will be a new $500 nonrefundable tax credit for non-child dependents/parents. The credit can be applied to children over 17 years old, senior parents, or children with disabilities.
- Reduces the State and Local Tax Deduction: State and local property taxes up to $10,000 can be deducted, in addition to income taxes or sales taxes.
- Decreases the Medical Tax Deduction Rate: The Medical Tax Deduction rate will decrease from 10% to 7.5% for 2017 and 2018 Tax Returns, regardless of age. It will rise back to 10% in 2019.
- Eliminates the Moving Expenses Deduction: Starting in 2018, you will not be able to deduct moving expenses related to a new job (there are some exceptions for the military). This would apply until 2025.
- Eliminates the Tax Deduction for Casualty and Theft Loss: All tax deductions for casualty and theft loss are eliminated (except for those losses attributable to a federal disaster as declared by the President) from 2018 to 2025.
- Eliminates the Tax Deduction for Alimony
- Eliminates the Tax Deduction for
Educator Expenses
- Eliminates the Tax Deduction for Tax Return Preparation Expenses
- Doubles the Estate or "Death" Tax: The Estate Tax amount is doubled from $5.5 million to $11.2 million ($22.4 million for married taxpayers), which will increase with inflation. The doubled amount will expire on December 31, 2025.
- Eliminates the Individual Health Care Tax Penalty: The tax penalty for not having health insurance will be eliminated in 2019. This means you would still be required to pay the penalty in 2018 (for 2017 Tax Returns) and 2019 (for 2018 Tax Returns), but not in 2019 (for 2020 Tax Returns).
What is Not Changing in Tax Reform
Here are items from the current tax code that will not change:
- Earned Income Tax Credit: The
maximum amount is $6,444 for taxpayers filing jointly who have 3 or more qualifying children.
- American Opportunity Tax Credit
- Student Loan Interest Deduction
- Adoption Tax Credit
- Alternative Minimum Tax: The amounts permanently adjusted for inflation are
$70,300 for single and head of household, $109,400 for married filing joint filers and widowers, $54,700 for married filing separately
- Tax Deductions for 401K and IRA Retirement Savings Options
- Capital Gains and Dividend Rates
- Investment Interest Expense Tax Deduction
- Real Estate Tax Deduction up to $10,000
Tax Reform Individual Tax Rate Schedule
| Tax Rate |
Single |
Married/Joint
& Widow(er) |
Married/Separate |
Head of Household |
| 10% |
$1 to $9,525 |
$1 to $19,050 |
$1 to $9,525 |
$1 to $13,600 |
| 12% |
$9,526 to $38,700 |
$19,051 to $77,400 |
$9,526 to $38,700 |
$13,601 to $51,800 |
| 22% |
$38,701 to $82,500 |
$77,401 to $165,000 |
$38,701 to $82,000 |
$51,801 to $82,500 |
| 24% |
$82,501 to $157,000 |
$165,001 to $315,000 |
$82,501 to $157,000 |
$82,501 to $157,500 |
| 32% |
$157,001 to $200,000 |
$315,001 to $400,000 |
$157,001 to $200,000 |
$157,501 to $200,000 |
| 35% |
$200,001 to $500,000 |
$400,001 to $600,000 |
$200,001 to $300,000 |
$200,001 to $500,000 |
| 37% |
over $500,000 |
over $600,000 |
over $300,000 |
over $500,000 |
Single
10% | $1 to $9,525
12% | $9,526 to $38,700
22% | $38,701 to $82,500
24% | $82,501 to $157,000
32% | $157,001 to $200,000
35% | $200,001 to $500,000
37% | over $500,000
Married/Joint & Widow(er)
10% | $1 to $19,050
12% | $19,051 to $77,400
22% | $77,401 to $165,000
24% | $165,001 to $315,000
32% | $315,001 to $400,000
35% | $400,001 to $600,000
37% | over $600,000
Married Separate
10% | $1 to $9,525
12% | $9,526 to $38,700
22% | $38,701 to $82,500
24% | $82,501 to $157,000
32% | $157,001 to $200,000
35% | $200,001 to $300,000
37% | over $300,000
Head of Household
10% | $1 to $13,600
12% | $13,601 to $51,800
22% | $51,801 to $82,500
24% | $82,501 to $157,500
32% | $157,501 to $200,000
35% | $200,001 to $500,000
37% | over $500,000
Still confused? We don’t blame you! To help you see the details of tax reform and how it might affect you, you can estimate your tax return with the above changes by using our Tax Reform Calculator below. The Tax Reform Calculator will estimate high level details of your Tax Return and any estimated tax refund, or taxes owed, on your return.
View the Latest Tax Reform Bill Introduced on December 15, 2017