Share

January 3, 2018 update: This guide INCLUDES changes made by the Tax Cuts and Jobs Act.

 

Quick Reference Guide for 2018 and 2017 Federal Taxes

The following guide includes many of the most important federal tax amounts for 2018 and compares them to the amounts currently applicable for 2017 tax returns.

Bader Martin 2018 Tax Quick Reference

 

Federal Income Tax Rates 2018 [1] 2017
Maximum individual income tax rate 37% 39.6%
Individual tax rates (seven brackets) 10%, 12%, 22%, 24% 32%, 35%, 37% [2] 10%, 15%, 25%, 28%, 33%, 35%, 39.6%
Taxable income beyond which top rate begins:

Married filing jointly and surviving spouse

Single

Head of household

Married filing separately

 

$600,000

$500,000

$500,000

$300,000

 

$470,700

$418,400

$444,550

$235,350

Maximum rate for qualified capital gains and dividends 20% [3] 20%
Maximum corporate income tax rate 21% 35%
Standard Deduction  2018  2017
Married filing jointly and surviving spouse $24,000 $12,700
Single and married filing separately $12,000 $6,350
Head of household $18,000 $9,350
Personal Exemption  2018  2017
Exemption amount, per person N/A $4,050
Alternative Minimum Tax (AMT) Exemption Amounts  2018  2017
Exemption, married filing jointly and surviving spouse
(phase-out)
$109,400
($1 million)
$84,500
($160,900)
Exemption, single
(phase-out)
$70,300
($500,000)
$54,300
($120,700)
Exemption, married filing separately
(phase-out)
$70,300
($500,000)
$42,250
($80,450)
Exemption, estates and trusts
(phase-out)
$22,600
($82,050)
$24,100
($80,450)
Exemption, corporate AMT AMT N/A $40,000
Itemized Deduction Phase-Out  2018  2017
Phase-out begins (adjusted gross income, or AGI):

Married filing jointly and surviving spouse

Single

Head of household

Married filing separately

 

N/A

N/A

N/A

N/A

 

$313,800

$261,500

$287,650

$156,900

Deductions  2018  2017
Deduction for pass-through entities
Percentage of qualified business income
Limit: 50% W-2 wages, or 25% wages + 2.5% of property’s unadjusted basis
20% [4] N/A
Deduction for state and local taxes
Sales or state income taxes
Deduction for property taxes
$10,000 total Not limited
Deduction for medical expenses >7.5% of AGI [5] >7.5% of AGI
Maximum cash donations to public charities (income-based limit) 60% 50%
Maximum mortgage debt for mortgage interest deduction
Maximum debt for home equity interest deduction
$750,000 [6]
N/A
$1 million
$100,000
Maximum nontaxable IRA distributions to charities, if at least age 70 ½ $100,000 $100,000
Maximum deduction for teacher classroom expenses $250 $250
Maximum American Opportunity education credit $2,500 $2,500
Driving deductions, per mile:

Business mileage
Charitable mileage
Medical and moving mileage

 

54.5¢
14.0¢
18.0¢

 

53.5¢
14.0¢
17.0¢

Deduction for alimony Not limited [7] Not limited
Deduction for moving expenses N/A Not limited
Miscellaneous itemized deductions, including tax preparation fees N/A >2% AGI
Business Equipment 2018 2017
Maximum Section 179 expense deduction $1 million $510,000
Phase-out for Section 179, based on asset additions $2.5 million $2.03 million
Bonus first-year depreciation 100%[8] 50%
Qualified Transportation Fringe Benefit Exclusion  2018  2017
Commuter highway vehicle and transit pass, per month $260 $255
Qualified parking, per month $260 $255
Domestic Employees  2018  2017
Annual threshold when a domestic employer is liable to withhold and pay FICA for babysitters, housekeepers, etc. $2,100 $2,000
Kiddie Tax  2018  2017
Net unearned income not subject to kiddie tax $2,100 $2,100
Earned income tax rate Single individual Child’s
Net unearned income tax rate Trust and estate Parents’
Exclusions and Credits  2018  2017
Exclusion of gain on qualified small business stock (QSBS) 100% 100%
Exclusion of qualified moving expense reimbursements N/A Not limited
Exclusion of foreign income $104,100 $102,100
Child tax credit, per child $2,000 with
$1,400 refundable
$1,000 with
$1,000 refundable
Federal Estate and Gift Tax  2018  2017
Maximum tax rate 40% 40%
Estate/gift exemption amount (double for married couple) $11.2 million $5.49 million
Annual gifting limit, per recipient (double for married couple) $15,000 $14,000
Miscellaneous  2018  2017
Affordable Care Act insurance mandate Repealed Required
Hospital insurance tax (on income > $250,000 for married couples
and $200,000 for single persons)
0.9% 0.9%
Social Security and Medicare 2018 2017
Social Security taxable wage base $128,400 $127,200
Social Security tax:

Employee

Self-employed

 

6.2%

12.4%

 

6.2%

12.4%

Medicare taxable wage base No limit No limit
Medicare tax:

Employee

Self-employed

 

1.45%

2.9%

 

1.45%

2.9%

Medicare surtax on net investment income 3.8% 3.8%
Individual Retirement Accounts  2018  2017
Individual IRA, up to 100% of earned income (combined limit for traditional and/or Roth) $5,500 $5,500
Additional annual catch-up contributions for account owners, age 50 and older (Roth and traditional IRA) $1,000 $1,000
Annual Qualified Plan Limits  2018  2017
Maximum compensation used to determine contributions $275,000 $270,000
Deferral limits for plans:

§401(k) and §403(b)

SIMPLE

§457

 

$18,500

$12,500

$18,500

 

$18,000

$12,500

$18,000

Additional catch-up contributions for employees, age 50 and older:

§401(k) and  §403(b)

SIMPLE

§457

 

$6,000

$3,000

$6,000

 

$6,000

$3,000

$6,000

Highly Compensated Employee threshold $120,000 $120,000
Compensation defining Key Employee in top-heavy plan $175,000 $175,000
Compensation triggering Simplified Employee Pension (SEP) contribution requirement $600 $600
Maximum annual addition for Defined Contribution Plan $55,000 $54,000
Maximum annual benefit for Defined Benefit Plan $220,000 $215,000

Disclaimer:

This document provides a general summary of the provisions of the Tax Cuts and Jobs Act (renamed “An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018”). Specific provisions may be more detailed and complex — with various limitations, thresholds, phase-ins, phase-outs and other exceptions. Contact your tax advisor to discuss how provisions of the Act apply to your personal tax situation.

Notes

[1] Unless otherwise noted, all federal individual income, estate and gift tax changes under the Act are temporary. The current rules and rates are suspended and the Act’s rules apply beginning January 1, 2018. The federal tax rules for individuals revert back to the pre-Act tax rates and rules after 2025. The Act’s corporate tax changes, however, are permanent.

[2] The maximum income levels for various brackets have increased, further reducing applicable tax rates.

[3] New three-year holding period required for carried interest preference. Also, the maximum income levels for various brackets has increased, further reducing applicable tax rates.

[4] It’s a complex calculation, subject to various limitations, phase-ins, thresholds and exclusions. The deduction is not applicable to most professional service businesses, except for those individuals with taxable income under $157,500 ($315,000 for married couples).

[5] Applies to 2017 and 2018 only.

[6]  Applies to mortgage debt incurred after December 15, 2017, excluding refinancing of original debt.

[7] Alimony will no longer be deductible. Similarly, spouse/recipient will not include alimony in income. The change applies to divorce or separation agreements executed or amended after December 31, 2018.

[8] Applies to property acquired and placed in service after September 27, 2017.

 

 

 

Need assistance with your own tax planning?

Let us hear from you. We can help.

RODNEY FUJITA
Bader Martin EmailBader Martin PhoneLinkedInBader Martin Profile