The 2018 tax season is bringing many changes, including personal exemptions. Personal exemptions are now a thing of the past. What does this mean for your tax return?
For 2017 and prior tax return, personal exemptions decreased taxable income by $4,050 for every person claimed on the return, including the taxpayer. In the later part of 2017 a new tax reform bill was passed that eliminated personal exemptions for future returns. This will have the largest impact on high income families, single parents, and families with multiple dependents. Since exemptions are not limited or phased out based on income those families may see an increase in their taxable income for the 2018 and 2019 tax years.
Taxpayers now have a higher standard deduction to decrease their taxable income. The 2018 standard deductions are nearly doubling with an additional increase in 2019.
If you would like more information on how the new tax reform is affecting standard deduction, you can read more about it here.