The 2018 tax reform bill, also known as the Tax Cuts and Jobs Act, was signed into law in December, 2017. It is the first major overhaul of the tax code since 1986. Most of the laws took effect immediately and will be reflected in the return you file in 2019. The act is set to expire on Dec. 31, 2025.
Some of the most significant changes included in the Tax Cuts and Jobs Act are:
- New tax brackets and lower income tax rates overall
- The personal exemption was eliminated
- The standard deduction increased to $12,000 for individuals, $18,000 for heads of household, and $24,000 for married filing jointly.
- The child tax credit doubled to $2,000 per qualifying dependent and is partially-refundable
- A new $500 non-refundable family tax credit for dependents who do not qualify for the child tax credit
- State and local tax deductions are capped at $10,000
- The new Pass-through Entity Deduction allows small businesses to deduct up to 20% of their income
- Miscellaneous deductions were completely eliminated
- The tax penalty for no health insurance will be repealed beginning in January, 2019