The Tax Cuts and Jobs Act (TCJA) includes a bevy of important tax changes for individuals and businesses. However, it’s sometimes hard to keep track of which changes are permanent and which are scheduled to expire at the end of 2025 — unless Congress extends them.
Here’s a scorecard to help you keep track of the temporary changes as the tax law currently stands. You will find the permanent changes HERE.
These changes take effect for tax years beginning in 2018, and expire at the end of 2025, unless otherwise noted:
- Reduced federal income tax rates.
- More-favorable alternative minimum tax (AMT) rules.
- Expanded standard deductions.
- Increased child tax credit (up to $2,000 per qualifying child, with up to $1,400 that can be refundable), and higher income thresholds for the child credit phaseout.
- Credit of up to $500 for dependents who aren’t qualifying children.
- Lower income threshold for itemized medical expense deductions (scheduled to expire at the end of 2018).
- Elimination of the phaseout rule that can reduce some itemized deductions for higher-income individuals.
- 60% adjusted-gross-income limit for itemized deductions for cash donations to public charities.
- Tax-free treatment for forgiven student loans due to death or disability.
- Increased federal gift and estate tax exemptions ($11.18 million or effectively $22.36 million for married couples for 2018).
- Deduction for up to 20% of qualified business income (QBI) from pass-through entities for non-corporate owners.
- Elimination of personal and dependent exemption deductions.
- Limitations on itemized deductions for home mortgage interest.
- Limitation on itemized deductions for state and local income and property taxes.
- Elimination of itemized deductions for miscellaneous expenses.
- Elimination of itemized deductions and tax-free employer reimbursements for moving expenses (except for certain military personnel).
- Elimination of itemized deductions for personal casualty and theft losses (except for losses incurred in federally declared disasters).
- Elimination of itemized deductions for hobby expenses.*
- Revised kiddie tax rate structure.*
- Stricter deduction rule for non-wagering expenses incurred by professional gamblers (such as for travel and lodging).
- Limitation on deducting large business losses recognized by individual taxpayers.
- 100% bonus depreciation for qualified business assets (expires after 2022).*
- Bonus depreciation with declining percentages for 2023 through 2026.*
- New tax credit for employer-paid family and medical leave for payments made in tax years beginning in 2018 and 2019.*
* Indicates that this provision is not included in the “Protecting Family and Small Business Tax Cuts Act.”
In September, the House Ways and Means Committee introduced the “Protecting Family and Small Business Tax Cuts Act of 2018.” This bill would make the many temporary TCJA provisions permanent. House Republican leaders are expected to have trouble mustering the 216 votes needed to pass the measure. However, even if the measure passes the House, the Senate isn’t expected to take up the legislation before the November elections.
Talk with Your Tax Pro
These lists contain only the most widely applicable TCJA provisions; some changes may not be included. Your tax advisor can provide details about the temporary and permanent TCJA changes that could affect you and your business interests.
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Brought to you by: Gregory Sharer & Stuart, CPAs