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US Tax Changes for Tax Year 2018

IRS Tax Year 2018 Changes

The Internal Revenue Service has announced the annual inflation adjustments for a number of tax-related provisions for 2018, and this includes the latest tax rate schedules and tax tables. Below are the numbers for the tax year 2018.

Standard Deduction

The standard deduction for married filing jointly rises to $13,000 for tax year 2018, up $300 from the prior year. For single taxpayers and married individuals filing separately, the standard deduction rises to $6,500 in 2018, up from $6,350 in 2017. For heads of households, the standard deduction will be $9,550, up from $9,350 for tax year 2017.

Personal exemption

The personal exemption for tax year 2018 rises to $4,150, an increase of $100. The exemption is subject to a phase-out that begins with adjusted gross incomes of $266,700 ($320,000 for married couples filing jointly). It phases out completely at $389,200 ($442,500 for married couples filing jointly.)

Itemized Deductions

The limitation for itemized deductions to be claimed on tax year 2018 returns of individuals will begin with incomes of $266,700 or more ($320,000 for married couples filing jointly).

AMT Exemption

The Alternative Minimum Tax exemption is $55,400 and begins to phase out at $123,100 ($86,200 for married couples filing jointly for whom the exemption begins to phase out at $164,100). The 2017 exemption amount was $54,300 ($84,500 for married couples filing jointly). For tax year 2018, the 28 percent rate applies to taxpayers with taxable incomes above $191,500 ($95,750 for married individuals filing separately).

Max earned income tax credit

The maximum Earned Income Tax Credit is $6,444 for taxpayers filing jointly who have three or more qualifying children, up from a total of $6,318 for tax year 2017.

Foreign Earned Income Exclusion

For tax year 2018, the foreign earned income exclusion is $104,100, up from $102,100 for tax year 2017.

Estate exclusion

Estates of decedents who die during 2018 have a basic exclusion amount of $5.6 million. This figure is up from a total of $5.49 million for estates of decedents who died in 2017.

Gift exclusion

The annual exclusion for gifts increased to $15,000, an increase of $1,000 from the exclusion for tax year 2017.

Retirement Plan Limitations

The annual contribution limit rises to $18,500, a $500 jump, for employees who participate in 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan.

Tax Brackets and Tax Rates

US tax brackets and tax rates for tax year 2018

If you want to discuss your US taxes, please contact us.

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