The Tax Cuts and Jobs Act of 2017 (the “Act”) was recently signed into law and with it significant changes in the taxes you may pay. We will be providing a few summaries of some of the more substantial of these changes as well as some thoughts on how to respond to those changes. While your CPA might also be providing a summary with respect to the Act, this article will focus on a limited number of individual income tax changes.
Individual income tax rates will be reduced. However, along with a reduction in rates, many deductions are changing.
URGENT: The new law limits state and local income tax, sales tax and property tax deductions to $10,000 in the aggregate. So, if you are likely to owe more than that amount of property taxes in 2018, you may inquire as to whether your county will permit payment of 2018 taxes in 2017 and pay them THIS WEEK. Within the last week Tarrant County has changed their long-standing position and indicated their willingness to take payments in 2017 for 2018 taxes so long as the check is post marked on or before December 31, 2017. Please check your county's website or call the tax assessor's office for details.
There is also a temporary change to the medical expense deduction allowing a deduction for medical expenses that exceed 7.5% of adjusted gross income (instead of 10%) in 2017 and 2018 only. So, continue keeping medical receipts and expense records for the next year.
There are a number of other changes that will be taking effect. Please review other summaries that you might be receiving to see if you need to change your planning.