2018 Income Tax Brackets
|Rate||Individuals||Married Filing Jointly|
|10%||Up to $9,525||Up to $19,050|
|12%||$9,526 to $38,700||$19,051 to $77,400|
|22%||38,701 to $82,500||$77,401 to $165,000|
|24%||$82,501 to $157,500||$165,001 to $315,000|
|32%||$157,501 to $200,000||$315,001 to $400,000|
|35%||$200,001 to $500,000||$400,001 to $600,000|
|37%||over $500,000||over $600,000|
The top rate will fall from 39.6% to 37%. The bottom rate remains at 10%, but it covers twice the amount of income compared to the previous brackets.
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The new tax rules also make big changes to the standard deduction and exemptions.
The standard deduction in 2018 as the law currently exists is $13,000 for a couple filing jointly. That number will jump to $24,000. For single filers it jumps from $6,500 to $12,000.
The personal exemption, currently at $4,150 for 2018, would be repealed. That's the bad news. The good news the child tax credit gets a big boost.
It currently sits at $1,000 and starts to phase out at $110,000 in income for couples and $75,000 in income for everybody else. Under the new law, the credit doubles to $2,000, $1,400 of which is a refundable tax credit. Further, it doesn't start to phase out until $400,000 in income for couples and $200,000 for singles.
2018 Itemized Deductions
Several key changes are coming for itemized deductions. State and local taxes can still be itemized, but they are now capped at $10,000. This concession attempts to address the uproar from states that levy big taxes on their citizens.
Interest on mortgages for primary and secondary residences is still deductible. The limit, however, has come down from loans up to $1 million to loans up to $750,000.
Medical expenses in 2017 and 2018 are deductible to the extent the exceed 7.5% of income (down from 10%).
Preparing Your Tax Returns
This end-of-year change to the 2018 tax brackets shouldn't affect 2017 returns. You can find a comparison of the best tax prep programs here.
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Rob Berger is the Deputy Editor of Forbes Money Advisor and founder of Doughroller.net and allcards.com. He is the author of the upcoming book, Retire Before Mom and Dad.