On December 22, 2017, the President signed into law the Tax Cut and Jobs Act (TCJA) and sent people and CPA's scrambling to make sense of it all.  We are not tax experts, and you should always check with your tax preparer, but we wanted to highlight some of the major changes and possible implications for you.  While the reduction in US Corporate taxes from 35% to 21% received the most headlines, there were many changes to individual taxes.  Some of the main changes are:

And those are just the highlights.  There were also changes to retirement savings contribution limits, income limits for Roth IRA contributions and fully deductible IRA contributions, capital gains income ranges and estate and gift tax exemptions.  For a handy summary sheet, send us a message using our Contact Form.

Here in New Jersey, where we have both high real estate taxes and state income taxes, the focus has naturally been on the elimination of the SALT deductions. While this is obviously concerning, it may not be as bad as it looks, as there may be offsetting factors in the other changes to the law.  For those with low income, but high property taxes, such as retirees, the doubling of the Standard Deduction may offset or even exceed the lost SALT deduction.  On the other hand, high earners were already subject to phaseouts of the standard deductions, personal exemptions, and the AMT, which eliminated many of their deductions in any case.  The much higher exemptions ($109,400 for Joint and $70,300 for individuals) and phase out levels ($1,000,000 for joint and $500,000 for individuals) in the AMT, combined with lower rates could offset some of this. This is just one example of the many facets of the new law's changes.  Since each person's situation is unique, we would recommend you talk to your tax adviser to go over how you might be affected.