With the passage and implementation of the Tax Cuts and Jobs Act (TCJA), comes a lot of changes for taxpayers to wrap their heads around – but we’re up to the challenge. Even with all the information floating around these days, it’s easy to overlook or misinterpret how the law works. Don’t worry; with this presentation, we'll provide you the important tips and insights surrounding this law.

2. Now that theTax Cuts and Jobs
Act (TCJA) is in effect, there are
a lot of changes for taxpayers
to understand.
Luckily for you, “tax” is our
second language.

3. Tax Rate Deductions
The focal point of the TCJA is the reduction of individual
tax rates. While the number of tax brackets have remained
at seven, each rate has slightly decreased with
accompanying charges to the base rates.
These tax rates are progressive, meaning the taxes you pay
will increase as your income increases.

4. Tax Rate Deductions
Rates Under TCJA Single Return
10 Percent
12 Percent
22 Percent
24 Percent
32 Percent
35 Percent
37 Percent
$0 to $9,525
$9,525 to $38,700
$38,701 to $82,500
$82,501 to $157,500
$157,501 to $200,000
$200,001 to $500,000
More than $500,000
$0 to $19,050
$19,051 to $77,400
$77,401 to $165,000
$165,001 to $315,000
$315,001 to $400,000
$400,001 to $600,000
More than $600,000
Married Filing Joint

5. Standard Deduction
The standard deduction increases
across the board.
Married Filing Jointly/Surviving Spouse: $24,000
Heads of Household: $18,000
Single: $12,000
Married Filing Separately: $12,000
The deduction for the elderly and
the blind remains and unchanged
and is added to the standard
deduction.
Personal Exemption
The TCJA repealed the personal
exemption and changed the filing
requirements. Now, you won’t have
to file until your gross income for
the year exceeds the standard
deduction.
The rules for withholding income tax
is adjusted to reflect this change.

6. Itemized Deductions
The TCJA has altered itemized deductions with some being
completely eliminated.
Pease Limitation: The Pease Limitation has been totally repealed (until
1/1/2026)
Medical Expenses:
Home Mortgage
Interest:
Only mortgage interest to acquire, construct or improve a
primary residence or second home is included in the
deduction. Also, acquisition indebtedness is now $750,000 for
new mortgages, and special rules apply to home equity
indebtedness.
For 2018, medical expenses are deductible once they exceed
7.5 percent of adjust gross income. In 2019, the threshold will
jump up to 10 percent of adjusted gross income.

8. Alternative Minimum Tax
The Alternative Minimum Tax (AMT) is calculated using a different
set of tax rules. Per AMT rules, the taxpayer is responsible for whatever is
higher, AMT or regular income tax.
Overall, the calculation rules have remained the same, but the
exemption and phase-out amounts have been modified.

9. Married Filing Joint
Single or Head of Household
Married Filing Separate
Filing Status AMT Exemption Amount AMT Phase-Out
$109,400
$70,300
$54,700
$1,000,000
$500,000
$500,000
Alternative MinimumTax

10. Under theTCJA, the child tax credit will double to $2,000 per qualifying child
under the age of 17, with up to $1,400 being refundable for those who don’t
fully utilize the $2,000 per child.
Additionally, the credit will be available to more households because of the
boost to the phase-out thresholds.
ChildTax Credit

11. Child Tax Credit
Tax Filing Status Maximum Adjusted Gross
Income for Full Credit
Adjusted Gross Income
Where Credit Disappears
(Depends on # of children)
Married Filing Jointly
Single
Head of Household
Married Filing Separately
$400,000
$200,000
$200,000
$200,000
Greater than $440,000
Greater than $240,000
Greater than $240,000
Greater than $240,000

12. Other Important Provisions
The following rules will also have a substantial effect on individual filers:
The 529 College Savings Plan will continue to be withdrawn tax-free if used for
higher education expenses. Now, $10,000 per year can also be used to help pay for
elementary or high school education at private and religious schools.
Like-kind exchanges are limited to real property not available for sale.
The Chained Consumer Price Index for All Urban Consumers will be the indicator for
any adjustments. This will ultimately result in a slower adjustment for items based
on the inflation rate.

13. Many of the provisions in theTCJA, including the standard deduction, are slated to
sunset in 2025. It’s always in your best interest to work with a credentialed tax
professional to help identify long-term tax saving solutions that work for you.
Learn more about Rea & Associates and
sign up to receive more insights at www.reacpa.com