The Tax Cuts and Jobs Act of 2017 produced some of the most significant changes to the federal tax code in decades. We've aggregated for you some of the most pertinent numbers and tax limits for 2018. (Note: these changes affect income earned in 2018 and tax returns filed in early 2019).
Some of the Significant Changes for 2018:
- Reduced Individual Tax Rates for Most Income Levels
- Individual tax payers still fall into one of seven brackets, but those income levels for the brackets have been adjusted and most individual tax rates have been reduced. The seven brackets are 10%, 12% (down 3%), 22% (down 3%), 24% (down 4%), 32% (down 1%), 35%, and 37% (down 2.6%) - Reduced Corporate Tax Rates
- From 35% to 21% - Elimination of the Personal Exemption
- The personal exemption that allowed most households to reduce their taxable income by $4,050 per person has been eliminated.
- Increased Standard Deductions
- Single filers: $12,000 (an increase of $5,500)
- Married couples filing jointly: $24,000 (an increase of $11,000)
- Head of Household filers: $18,000 (an increase of $8,450) - Local and State Tax Deductions Capped
- The deduction for local and state taxes is now capped at a combined $10,000 (for income, sales, and property taxes). - Child Tax Credit Increased
- From $1,000 to $2,000
Qualified Retirement Plan Limits
| Limit | 2017 | 2018 | Change |
| 401(k) Elective Deferrals | $18,000 | $18,500 | $500 Increase |
| 403(b) and 457 Elective Deferrals | $18,000 | $18,500 | $500 Increase |
| 401(k) Catch-up Contributions | $6,000 | $6,000 | No Change |
| 403(b) and 457 Catch-up Contributions | $6,000 | $6,000 | No Change |
| Annual Defined Contributions (401(k) plans, profit sharing plans, money purchase plans) | $54,000 | $55,000 | $1,000 Increase |
| Annual Defined Benefit (Defined Benefit Plans) | $215,000 | $220,000 | $5,000 Increase |
| Annual Compensation | $270,000 | $275,000 | $5,000 Increase |
| Highly Compensated Employees | $120,000 | $120,000 | No Change |
| Social Security Taxable Wage Base | $127,200 | $128,400 | $1,200 Increase |
| SIMPLE Contribution | $12,500 | $12,500 | No Change |
| SIMPLE Catch-up Contributions | $3,000 | $3,000 | No Change |
| SEP Contribution | $54,000 | $55,000 | $1,000 Increase |
Individual Retirement Account
| IRA and Roth IRA Contributions | |
| Under Age 50 | $5,500 |
| 50 and Over | $6,500 |
Income Tax Rates
| Marginal Tax Rate | Single | Married, Filing Jointly | Married, Filing Separately | Head of Household | Estates and Trusts |
| 10% | $0 - $9,525 | $0 - $19,050 | $0 - $9,525 | $0 - $13,600 | $0 - $2,550 |
| 12% | $9,526 - $38,700 | $19,051 - $77,400 | $9,526 - $38,700 | $13,601 - $51,800 | N/A |
| 22% | $38,701 - $82,500 | $77,401 - $165,000 | $38,701 - $82,500 | $51,801 - $82,500 | N/A |
| 24% | $82,501 - $157,501 | $165,001 - $315,000 | $82,501 - $157,500 | $82,501 - $157,500 | $2,551 - $9,150 |
| 32% | $157,501 - $200,000 | $315,001 - $400,000 |
$157,501 - $200,000 |
$157,501 - $200,000 | N/A |
| 35% | $200,201 - $500,000 | $400,001 - $600,000 | $200,001 - $300,000 | $200,001 - $500,000 | $9,151 - $12,500 |
| 37% | $500,001 + | $600,001 + | $300,001 + | $500,001 + | $12,501 + |
Long-Term Capital Gains & Qualified Dividends
| Tax Rate | Single | Married, Filing Jointly | Married, Filing Separately | Head of Household |
| 0% | Up to $38,600 | Up to $77,200 | Up to $38,600 | Up to $51,700 |
| 15% | $38,600 - $425,800 | $77,200 - $479,000 | $38,600 - $239,500 | $51,700 - $452,400 |
| 20% | Over $425,800 | $479,000 | Over $239,500 | $452,400 |
HSA Limits
| Type of Limit | 2017 | 2018 | Change | |
| HSA Contribution Limit |
Self-only |
$3,400 $6,750 |
$3,450 $6,850 |
Up $50 Up $100 |
| HSA Catch-up Contributions | Age 55 or Older | $1,000 | $1,000 | No Change |
| HDHP Minimum Deductible | Self-only Family |
$1,300 $2,600 |
$1,350 $2,700 |
Up $50 Up $100 |
| HDHP Maximum Out-of-Pocket | Self-only Family |
$6,550 $13,100 |
$6,650 $13,300 |
Up $100 Up $200 |
Estate Tax
| Transfer Tax Rate (Maximum) | 40% |
| Estate Tax Exemption | $10,000,000 |
| Gift Tax Exemption | $10,000,000 |
| Generation-Skipping Transfer Exemption | $10,000,000 |
Education
| 529 Plan Contributions - per Individual | $15,000 per Year Before a Gift Tax |
| 529 Plan Contributions - per Couple | $30,000 per Year Before a Gift Tax |
| Accelerate 5 Years of Gifting into 1 Year per Individual | $75,000 |
| Per Couple | $150,000 |
Student Loan Interest
| Deduction Limit | $2,000 |
This blog post does not constitute tax, legal, or accounting advice. Its intended purpose is for educational use only.
