It’s tax season – 10 tax-law changes that will most affect your 2018 personal return

The IRS has started accepting returns, and tax season is officially underway. Almost all of the Tax Cuts and Jobs Act (TCJA) changes that will affect individual taxpayers kick in starting with your 2018 Form 1040. So here are the 10 changes that are most likely to affect your return.

1. Lower individual rates

As did prior law, the TCJA has seven tax rate brackets. But five of the rates are lower. Here are the 2018 rates and brackets.

Most folks will benefit from the new rates, but some who were in the 33 percent marginal tax bracket in 2017 will find themselves in the 35 percent marginal bracket in 2018. This unfavorable change will mainly affect singles and heads of households with taxable income between $200,000 and $400,000. However, the new lower rates on income below $200,000 will offset some or all of the negative effect of being in the 35 percent marginal bracket.

2. Much bigger standard deductions but no more personal and dependent exemptions

The TCJA almost doubled the standard deduction amounts for 2018. However, personal and dependent exemption deductions, which would have been $4,150 each for 2018, were eliminated. These changes will benefit some taxpayers and harm others. If you have lots of dependents, you may not be pleased. The 2018 standard deduction amounts are as follows.

  • $12,000 for singles (up from $6,350 for 2017).
  • $24,000 for married joint-filing couples (up from $12,700).
  • $18,000 for heads of households (up from $9,350).

Additional standard deduction amounts for the elderly and blind are allowed by the TCJA, as under prior law.

Read the full story at Market Watch. 
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