The Tax Cut and Jobs Act of 2017
The Tax Cut and Jobs Act of 2017 (2017)1 is the most significant tax legislation since the Tax Reform Act of 1986. The law entails consequences for all taxpayers. Some of these consequences are beneficial, some are adverse. Below is a summary of the most significant changes organized by taxpayer category (individual, business, investor). These changes are further subdivided according to those who may be 'helped' and those who may be 'hurt' by the new law and what the net effect of this change is.
Individual taxpayers either take the standard deduction, which in 2018 is $24,000 for married filing jointly (MFJ) & $12,000 for filing single (S), or itemize their deductions. The IRS requires all taxpayers to utilize the greater of the two. In short, if your itemized deductions do not exceed the threshold of the standard deduction, you are required to use the standard deduction. The net effect of the TCJA is that only 12% of tax filers will now itemize their deductions, down from 31% prior to the change in law. Those who continue to itemize their deductions are likely to be impacted and those who itemize and live in states with high taxes are likely to be adversely affected by the new law.