Hi. With all of the talk of changes to Income Tax filing, I thought I would put together a synopsis of the changes. As always, please get the advice of a CPA, as I am "only" a Realtor.
Personal Filing Changes*
1st of all The Changes are Temporary
Many of the following changes in the tax code are Temporary and apply for tax years beginning before Jan 1, 2026. Whereas most of the business provisions are permanent
Personal Exemption Suspended
Personal exemptions from income were generally allowed for spouses and dependents, the amount for 2018 was going to be $4150. Under the new law there is no personal exemption.
State and Local Tax Deduction Limited (SALT)
The deduction for state and local taxes is now limited to $10,000 whereas before there was no limit aside from the AMT.
Can currently be deduction up to $1,000,000. The new tax law limits the deduction to $750,000. The mortgage deduction is based on acquisition indebtedness (Buy build or improve). The deduction applies to primary residences and as many 2nd homes as you want up to the $750,000 max aggregate.
Miscellaneous Deductions Gone
These were always subject to a floor which made the deduction useless for most people, however most CPA put down 2106 expenses for their clients even though they could not get a deduction which actually hurt mortgage applicants.
Expanded Use for 529 Accounts
Currently a 529 savings account could only be used for qualified higher education. The new definition now includes tuition at an elementary or secondary public, private or religious school.
Essentially the estate/gift tax doubled from $5.6 for individuals to approximately $11.2 million for individuals and from $$11.2 million for married couples to approximately $22.4 million